E.D.F. LONDON (Reuters) - Britain has measures in place to keep the lights on this winter despite the closure of several power stations likely leading to a narrower surplus of electricity supply over demand, network operator National Grid Plc (>> National Grid plc) said on Tuesday.
Power prices jumped on the report, with wholesale power prices for day-ahead delivery soaring by 22 percent to 52 pounds per megawatt hour.
The average excess supply over peak demand from October to March could fall to 4.1 percent compared with 5 percent in the same period last year, due to a series of planned and unplanned power plant closures and breakdowns, National Grid's annual winter outlook report showed.
National Grid data shows the margin was as high as 17 pct in the 2011/12 winter and as low as 1.5 pct in 2005/06, but the way it has calculated the figure has changed over the years so the figures may not be directly comparable.
Mid-winter generation capacity is forecast to be 71.2 gigawatts (GW), which when taking into account the availability of power plants and historic performance, has been reduced to 58.2 GW to calculate the margin, the report said.
Peak demand this winter is seen at 53.6 GW, down from around 60 GW last winter and 66 GW in 2005/6.
"Margins may be tight this winter following plant closures, particularly if we experience interconnector exports to Europe or low wind," the report said. "The outlook remains manageable and well within the reliability standard set by government.
It said it had additional tools to bolster its response to tighter margins, including a scheme to encourage utilities to make idle capacity available and paying offices and factories to cut power use between November and February. It also said three power plants in England and Scotland are on standby to provide electricity in case of emergency.
The schemes will provide an additional 1.1 GW of capacity and could increase the available margin to 6.1 percent, it said.
Britain's energy market regulator Ofgem said it was confident the lights will be kept on. "The risk to energy supply disruptions in the UK this winter are no higher than they have been in recent years," Rachel Fletcher, Ofgem senior partner, markets, told a press briefing. Ofgem put the probability of blackouts over the winter at one in 31, the same as last year.
MIXED RECORD
Yet analyst Peter Atherton at Liberum Capital said: "The already meagre reserve margin is dependent upon EDF (>> EDF) Energy being successful in returning Heysham and Hartlepool (nuclear plants) to service before Christmas as planned.
"But the record of (this nuclear) fleet of returning to service on time after fault outages is mixed to say the least," Atherton added, questioning whether Britain has enough plants available to cover a period with very low wind levels.
The government and Ofgem have expected margins to fall over the next two winters as older power stations close, but have said they should improve after the middle of the decade as new plants come online.
Reuters calculations based on their data show over 16 GW of coal, oil, gas or nuclear capacity is mothballed, offline or scheduled to shut next year.
Wayne Mitchell, head of industrial and commercial power at npower, part of Germany's RWE AG (>> RWE AG), said: "Over three quarters of businesses are concerned about security of supply and it's clear there is still a long way to go before the blackout fears ease off."
There are also fears that Russian supplies of gas to Europe via Ukraine will be disrupted this winter as a result of hostilities between the two countries.
But if Russian supplies are interrupted, the British gas market will be able to cope, National Grid said. "Supplies are in a strong position this winter ... with storage and network capacity well in excess of maximum expected demand," it said.
Britain does not directly receive gas from Russia but imports around 15 percent of its demand from continental Europe, a large part of which will have originated in Russia.
If European supply is disrupted, there will be greater diversions of Dutch and Norwegian gas imports away from Britain.
Weather forecasts indicate a milder than average winter and Britain's gas storage sites are 99 percent full. In the event of disruption and very cold weather, liquefied natural gas would be the most likely source of additional supply, National Grid said.
Gas demand for this winter is expected to total 47.5 billion cubic metres (bcm), similar to the 46.6 bcm demand seen last winter, it added.
(Additional reporting by Karolin Schaps; Editing by Emelia Sithole-Matarise and David Holmes)
By Nina Chestney and Susanna Twidale
