Last week the National Grid used one of its “last resort” emergency powers for the first time to tell companies to reduce their electricity usage in an effort to avoid the risk of blackouts. It asked firms to reduce their power demand immediately, issuing a so-called demand-side balancing reserve (DSBR) notice to companies that have signed a contract to say they will take part in the demand reduction scheme.
When these measures were announced, the National Grid had been adamant that they would only be used as a last resort and after all other actions available in the market have been exhausted. However, last month it announced that it was becoming increasingly likely that the UK would have to draw on extra sources of power through the new balancing provisions this winter to keep the country’s electricity running.
The practice of using the demand response contingencies that have been put in place is part of their overall supply plan as they say in the article to ensure that we are not over-generating as well as that unexpected peak demand can be met. The new balancing services are Demand Side Balancing Reserve (DSBR) and Supplemental Balancing Reserve (SBR). DSBR is targeted at large energy users willing to reduce their demand during winter weekday evenings between 4pm and 8pm in return for payment. SBR involves paying generators to maintain power stations that are not currently operational to be switched on during times of peak demand.
On Wednesday last week, the National Grid issued an urgent request for energy companies to make more power available, an extra 500 megawatts (MW) between 4.30pm and 6pm, after multiple breakdowns at UK power stations. The alert was withdrawn at 6pm when it was announced that the crisis had successfully been averted.
The National Grid has been keen to play down the significance of this event but the chance of blackouts is at its highest for a decade and becoming more likely as we descend into winter. In its Winter Outlook report, it stated that margins were tight this winter (around 5%) however they were expected to be manageable. What is more alarming is that, without the new demand reduction scheme, margins are predicted to be as low as 1.2% – its lowest level for 10 years.
As old coal and gas-fired power stations are being retired, they are not being replaced fast enough with new generation facilities. SBR is targeted at keeping power stations in reserve that would otherwise be closed or mothballed. Whilst this appears in theory to be a robust contingency, the reliability of such facilities is worrying. During a mandatory periodic testing, a major power station that is fundamental to the plan for this winter failed to start. This would be disastrous had it been called upon to keep the lights on.
Whilst the National Grid maintains that it is ‘as confident as always’ that there will be no blackouts this winter, the pressure on Britain’s energy capacity is such that, one has to ask – How confident is that? This could be a very dark winter indeed!