National Grid buys back up power to get through winter, DSR tender to follow

161 Grid has procured some 3.58 GW of back-up power for next winter at a cost of £122.4 million.

The system operator ran the supplemental balancing reserve tender last month. It proposes to issue contracts to 12 power stations, paying them to be available if needed between November 2016 and February 2017.

The plant that stands to provide the single biggest chunk of power is the Eggborough coal-fired station. The plant’s owners said in September that they plan to close the station in March 2016. However, it will provide 681MW derated capacity over next winter, according to National Grid’s tender document. Should any of the plants be called upon to generate, they will be paid a premium to prevent the National Grid having to take more drastic measures to maintain supply.

National Grid plans to run a similar auction for demand-side response providers in spring.

Meanwhile, National Grid also ran the second capacity auction earlier this month, procuring 46GW of back-up power for winter 2019 at a cost of £18 per kW. Effectively an insurance policy, the costs of capacity payments will soon start to appear on power bills.

Crunch time

The system operator is paying power stations to be on standby and companies to load shift because the UK has little spare capacity, with tightness already felt this winter in the form of a Notice of Insufficient Supply Margin last month. National Grid has predicted that it may issue 7-10 such notices this winter.

Next winter is expected to be even tighter.

While MPs recently questioned National Grid about system security following the last NISM (which spawned reports that suggested some generators had taken advantage of capacity shortfalls to make windfall gains), the system operator reiterated its confidence in managing the system. However, director Cordi O’Hara admitted “no system operator in the world” would guarantee 100% system security.

From NISMs to blackouts explained

Some industry commentators continue to warn that the UK faces imminent blackouts. Others are not worried about this winter, but are less keen to speculate on winter 2016/17.

National Grid’s Duncan Burt, however, says Grid has the tools to manage system tightness. He explained the steps to blackouts to MPs last month.

First comes the Notice of Insufficient Supply Margin (NISM). If things continue to get tight and generators and demand response providers do not bring forward enough reserve, National Grid issues a High Risk of Demand Reduction (HRDR) warning. “Then we would look at market response and ongoing reliability,” said Burt. “Most of the time that will be adequate. If we continue to have difficulties or further losses we would move into emergency measures, such as calling on generators for assistance.”

Burt said National Grid could also use ‘Max Gen’, where generators are called on “to open all the stops” and generate above their normal load for a short time.

After that, Grid asks the distribution network operators to reduce voltage (brownouts). “Typically that would be enough to achieve balance,” said Burt.

If not, it tells the DNOs to start disconnecting customers.

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