National Grid is confident it has procured sufficient reserve capacity for the coming winter but has warned that margins will remain tight for the next few years.
The power system operator has issued contracts to generators so that, if required, some 2.56GW of (derated) power capacity will be made available to balance the system over winter. The cost of having that capacity on standby is £36.5m. Should the plants be called upon to generate power, their owners will also need to be paid for output.
As will those providing demand-side measures.
Of the 2.56GW total, some 177MW has been allocated to demand side response. National Grid will likely offer contracts to almost all of those that bid in the second demand-side balancing reserve (DSBR) tender round.
In total, 325MW was offered in the second tender round, with National Grid “minded” to offer contracts to providers of 300MW worth of demand response (equivalent to 112MW of derated capacity), subject to validation of bids. National Grid had already procured 215MW (derated to 65MW) in the first DSBR tender round.
The system operator said it was “delighted” with the level of demand-side response being offered by companies. The 515MW of capacity procured this for this winter, compared to 330MW procured last winter, represents a 56% increase in DSBR.
Announcing the results of the tender, National Grid stated it was “encouraged by the growth in this [DSBR] service, particularly with new entrants coming into the demand-side market, given that demand side services will play an increasingly important role in supporting security of supply with the decarbonisation of electricity supplies into the future”.
However, ahead of the capacity market coming into play in 2018, the system operator warned of system tightness over the next couple of winters, and that it may need to rethink how it procures reserve.
“Looking ahead to 2016/17 and 2017/18, margins look set to remain tight. We will therefore be consulting with the industry in July on whether these arrangements should be extended, whether changes are required, or whether an alternative solution should be developed,” said the company.