A spate of unexpected power plant closures will not lead to power blackouts in Britain this winter, according to the country’s grid operator.

National Grid say that despite weakening electricity capacity, they are taking measures to ensure the lights stay on, with implications for both British industry and the wholesale power market price.

National Grid engineers view pylon

In its winter outlook, the operator of pipes and pylons said that electricity margins – the difference between peak demand and available supply – had fallen to 4.1 per cent from 5 per cent at peak periods last year because of planned generator closures, breakdowns and delays to new plants.

A fire at the 1.4 GW Didcot plant was the third at a fossil fuel-fired power station this year. E.ON already decided not to bring back online one 370 MW unit at its Ironbridge power station in Shropshire while SSE shut the 1GW Ferrybridge coal-fired power plant in West Yorkshire.

EDF Energy also took two of its nuclear plants out of service in August for inspections after a fault was found.

Contracts Provided to Three Power Plants as Contingency

In a bid to reassure industry and the public National Grid points to the strong gas supplies the UK possesses as a result last year’s mild winter, although the Ukraine crisis could impact on those resources.

As a contingency, Britain could import liquefied natural gas to maintain supplies even if there was a cold winter and all exports from Russia were disrupted, National Grid said.

The operator added that it was close to signing contracts for power plants at Littlebrook in Kent, Rye House in Hertfordshire, and Peterhead in Aberdeenshire to provide extra reserves.

National Grid, which operates Britain’s electricity and gas systems, said the additional capacity combined with measures agreed with businesses to cut demand at peak times would add 1.1 GW and take the electricity margin to a more comfortable 6.1%.

Cordi O’Hara, National Grid’s director of market operations, said: “It’s clear the country has the ability to meet its energy needs in a cold winter. But we cannot be complacent and will be monitoring the situation right through to spring next year.

“The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by government. We will continue to keep a close watching brief across both electricity and gas throughout the winter so that we’re strongly placed to respond to any unanticipated events.”

“Profit Margins for Power Generation remain tight”

Zoe Double, Head of Power at ICIS told Power Engineering International about what this meant for the UK wholesale power market price. She said that while there is confidence that capacity is sufficient, ‘profit margins for power generators remain tight.’

“Supply margins for the winter are tighter than usual, but wholesale market prices for both gas and power contracts delivered over the winter have fallen steadily over the last month, and this implies that market participants are less concerned about supply disruptions and/or high demand as we approach the winter. “

Along with the high levels of gas in storage Double said that increased installation of renewable electricity generation has had the effect of lowering demand on the grid. Long range weather forecasts indicate continuing mild weather, which further increases the margin of security

Participants in the market will have other concerns , she says.

“Profit margins for power generation remain tight, and this is demonstrated by some existing generation to leave the market and to operate in National Grid’s supplemental balancing reserve (SBR) scheme. Both Littlebrook (1250 MW) and Rye House (715 MW) have opted out of market pricing. Littlebrook is oil-fired and typically only operates in times of peak demand, but Rye House is gas-fired, and last week generated up to 500 MW at a time.

“This is unlikely to cause any shortage, as they’ll be available to National Grid in an emergency, but it shows how long-term falling electricity prices are making market signals for investment more difficult – it’s been a feature of the ICIS Power Index for the whole of 2014 to date.”

Time to Deliver Electricity Market Reform

Critics are saying that it’s unacceptable that UK industry should have to reduce its operational potential in order to ensure no blackouts.

But Britain’s influential business lobby, the Confederation of British Industry (CBI) says it understands the need for flexibility to maintain the country’s power, but wants to see more done in terms of investment in the UK’s power infrastructure.

Nicola Walker, CBI Business Environment Director told PEi, “In the short term, it makes sense for industries to voluntarily shift their operations to times of lower electricity demand – where they are able to do so – to ease the pressure on our capacity margins.”

“To shore up our energy security for the future, it’s essential that we get on with delivering electricity market reform to attract the significant levels of investment we need, while managing demand through a renewed focus on energy efficiency.”