National Grid’s winter outlook last week confirmed concerns that the UK’s spare generating capacity would be just 2.1 per cent unless the operator secures a reserve supply of almost 2.5GW to guard against the heightened risk of blackouts.
But analysts already forecasting demand for the winter of 2016 say the string of planned coal plant closures expected next spring will drive capacity as much as 10 per cent lower to negative margins unless action is taken.
“National Grid is aware of this issue, as they have applied to Ofgem to extend the supplemental balancing reserve scheme beyond this winter, although the scale of the shortfall has not been publicly acknowledged yet,” said PA Consulting in an exclusive column for Utility Week.
The UK’s generation fleet has steadily dwindled over recent years as older plants close to comply with environmental regulation and new investment has been slow to materialise. The UK is set to lose Scottish Power’s 2.3GW Longannet plant, the 1.9GW Eggborough plant, and SSE’s 1GW Ferrybridge and 0.5GW Fiddler’s Ferry assets. The heavy losses will more than offset the expected roll out of new investment in renewable energy and gas-fired power, PA Consulting said.
And without National Grid’s emergency measures these coal plant closures expected in March 2016 would plunge the UK’s capacity margin to negative 5 per cent.
Jefferies utilities analyst Peter Atherton echoed the stark warning.
“Whilst National Grid’s emergency measures have been sufficient so far, and may be sufficient for the coming winter, the dislocation in the UK power market is slowly eating away at security of supply. Further coal closures, or an unexpected event, could prove a tipping point,” Atherton said.
National Grid currently has 58.9GW of dispatchable generation, including its reserve plant, but the upcoming coal plant outages could slash this level to 53GW by this time next year.