With electricity supplies the lifeblood of many manufacturing businesses, comments made recently by investment bank Jefferies may have caused alarm among those in the sector.
After it was revealed that the Yorkshire power plant of Eggborough is set to close in March next year, the bank stated that the UK may struggle to meet peak demand for energy next winter.
Jefferies analysts suggested that the shutting down of the Eggborough facility will mean more than a total of 16 gigawatts of coal-fired electricity capacity will have been taken offline over the course of four years.
They claim that should temperatures plummet in the middle of next winter, forecast demand for energy could reach 56 gigawatts, but just 53 gigawatts of capacity would be available to meet this.
Interruptible contracts
This could be a particular concern for commercial energy users that are on interruptible contracts as they will be a greater risk of any supply curbs.
Diesel generators can provide an effective backup source of power for companies, and specialist suppliers such as ADE Ltd offer large-scale solutions with capacities of up to 3,500kVA. However, the prospect of mains power shortages could still cause anxiety among a range of businesses.
‘First time in living memory’
In a note published this month, utilities analyst at Jefferies Peter Atherton said: “This would be the first time in living memory that the UK could not cover peak demand with dispatchable generation.”
Meanwhile, speaking to the Daily Telegraph, he added: “Things are moving into uncharted territory in terms of security of supply. We have never had such a low ratio of conventional power plant capacity compared with renewables and the problem is going to get worse.”
Also offering his insights, Dieter Helm, professor of energy policy at Oxford university, told the Financial Times that the UK is now “sailing very close to the wind” in terms of energy supplies.
He added: “Supply is struggling to meet demand. But, remember, supply will equal demand. We can get to that point by allowing prices to rise – spikes – or by blackouts.”
Manageable
However, in its recent Winter Outlook Report, the National Grid said that while the electricity margin in the UK has decreased compared with recent years, the situation remains manageable and within the standards set out by the government. This could offer some reassurance to companies.
Taking the initiative
Manufactures may not have control over what happens in terms of energy at a national level, but there are things they can do to mitigate the effects of any potential power shortages on their operations.
For example, as well as investing in backup power supplies that kick in during mains outages, businesses may wish to avoid signing up to interruptible energy contracts. These contracts are cheaper, but they give the National Grid the authority to cut off transmission to customers.
As colder weather starts to kick in across the UK, causing an increase in demand from energy users, many companies in the manufacturing industry will be watching developments in energy supplies with interest.
What else can you do?
GDF SUEZ Energy UK and The Manufacturer are hosting a 30 minute webinar to provide an explanation of the National Grid Balancing Services and help companies ascertain if they can qualify to participate.
Participants in the Balancing Services can greatly reduce their energy bills or even potentially generate an income.
Click here to register for the webinar, which is taking place on November 11 at 10am.
The webinar will also cover the following topics:
- Understanding your energy consumption
- What is TRIAD avoidance and how can it help your business save money
- Other ways to benefit from any on-site generation
What are the Balancing Services?
In 2014, National Grid launched two new balancing service products to help ensure the uninterrupted supply of electricity during the 2014/15 and 2015/16 winter periods.
The two balancing services, Demand Side Balancing Reserve (DSBR) and Supplemental Balancing Reserve (SBR), offer UK manufacturers the opportunity to significantly reduce their energy bills and even potentially generate an income.
Demand Side Balancing Reserve (DSBR) will pay large energy users to reduce their demand by an agreed amount during evenings between November and February, when National Grid suspects demand will be significantly outstripped by supply.
Supplemental Balancing Reserve (SBR) will pay for moth-balled or would-be closed generating plants to remain available over the winter periods to provide backup power in the event of a spike in demand or the loss of a generating unit.
