In a recent article from E.ON, the energy company discussed the UK’s energy security this winter. It stated that although it expected the forecast year on year decline in generation capacity to continue, it was confident the lights would not go out. In this article, E.ON gives its latest update on energy supply.
Since the original article was published, National Grid has released its Winter Outlook for 2014/15 and reinforced a number of our views. Firstly, although underlying demand has seen a gradual downward trend over the last 10 years, it is flattening ,and is expected to remain at 53.6GW over the coming winter. Also, that predicted generation capacity will continue to fall, from 74.7GW in the 2013/14 report to 71.9GW this year.
Source: National Grid Winter Outlook 2014/15
Although the Winter Outlook claims a predicted 4.1 percent margin between available electricity generation capacity and peak demand, this increases by nearly 50% when Demand Side Balancing Reserve (DBSR) and Supplementary Balancing Reserve (SBR) are taken into account. DBSR is a scheme under which consumers are paid to reduce their electricity use and SBR is where a small number of power stations are held in reserve and only fired up when demand gets close to available supply.
We also noted that in the Winter Outlook, European interconnector flows into Great Britain were shown to be cancelled out by flows out to Ireland, when in fact the forecast weekday view is that net flow will be 1.75GW.
All this confirms our belief that it’s unlikely the lights will go out this winter, but history tells us that prices can rise dramatically when the supply/demand balance is tight and we have a few tools that might help you manage this.
- Our Energy Toolkit helps you take control of your energy use. You’ll get the full picture of energy consumption within your business, helping you to monitor, analyse, manage and optimise.
- A TRIAD warning service enabling your business to alter behaviour and potentially reduce demand and therefore costs in peak demand periods.
- Fixed price contracts to help you manage your energy budget, while protecting your business from rising wholesale market prices for the duration of your agreement.
Find out more at www.eonenergy.com/corporates