National Grid will be using two new balancing services for the first time this winter to strengthen the electricity supply network during times of peak demand. But why are they needed and how will they work? Balancing Services Contracts Manager Mike Edgar explains the rationale.
"As consumers we all expect to be able to flick a light switch or turn on the heating when we need to. For National Grid this means that we must be able to balance demand on a second-by-second and day-by-day basis."
Mike Edgar, National Grid Balancing Services Contracts Manager.
Contracts agreed under DSBR this year will see an additional 319MW of reserves available on the electricity supply network this winter.
Source: National Grid.
British summer time has ended, the clocks have gone back and there’s already been plenty of media speculation about whether we can keep our lights on and homes warm this winter.
We’ve seen rather less detail on the practical measures being taken to make sure this happens. So it seems an appropriate time to reflect on National Grid’s plans to secure the UK’s energy supply throughout the coming months.
The reality is that electricity margins – the buffer between supply and demand – are tighter this year than they’ve been for some time. We explained the reasons for this at length in our Winter Outlook Report.
These reasons include scheduled maintenance of some generators, breakdowns on others, and uncertainty whether some generators that were temporarily off line will be operating again in time for winter. Having said that, these margins are within Government reliability standards and are entirely manageable.
Against this background, as a responsible system operator, we have the right contingency measures in place to bolster the system, so that we can deal with the inevitable peaks and troughs of demand that winter brings.
The need for balancing
As consumers, we all expect to flick a light switch or turn on the heating when we need to. For National Grid this means that we have to balance demand for energy on a second-by-second and day-by-day basis.
There are many factors that influence demand, including the weather and, of course, the fact that it’s darker for longer during winter so people need more energy to heat and light their homes. For example, we tend to see a spike in demand between 4pm and 8pm on winter weekdays.
But we also plan ahead on a more seasonal basis, looking at the energy that we need to generate to meet demand across the whole of winter 2014/15. This is where our two new balancing services, Demand Side Balancing Reserve (DSBR) and Supplemental Balancing Reserve (SBR) will play a part.
How DSBR and SBR will work
DSBR falls under what we call demand-side measures, a term which covers anything that reduces demand on the transmission system.
With DSBR, we’re working with industrial energy users whose large-scale operations give them the flexibility to reduce their electricity demand at certain times. In return, they receive contracted payments from National Grid. We’re talking about users such as processing plants, factories, steelworks and other large businesses, a number of which will have back-up generation in place.
Over the summer, we signed 24 contracts made up of 431 individual meter points, which will result in an additional 319MW of reserves over winter. It’s also worth saying that DSBR allows us to keep energy system costs down for consumers by avoiding the need for generating companies to build additional power stations to meet peaks in demand.
The other side to the balancing equation is SBR, which is all about having sufficient energy available to cover us over the winter. This mechanism is aimed at returning generating plant to the grid that would otherwise be closed or mothballed for whatever reason. SBR is open to anyone who can generate electricity or has demand for electricity, so long as they can link to the Balancing Mechanism Systems at our National Control Centre. We recently closed the SBR tender process and have recently agreed three contracts with generators.
The response we’ve had to both these measures has been really positive, with a total of 1,1,00MW of additional capacity being made available for this winter. We’ve also seen participation from a significant cross section of energy users or providers, including factories, retail outlets, generators, refineries and aggregator groups of smaller contributors.
It’s important to add that National Grid has for a long time instigated other measures to reduce demand during peak times, such as Triad charges. These are levied on licensed electricity suppliers each year to stimulate reductions in demand over peak times.
So the overall message is that we have a number of measures in place to manage our energy supply this winter. We also recognise the positive impact that sensible demand-side actions can have in giving each of us access to the electricity we need, when we need it.
National Grid has published its 2014/15 Winter Outlook for electricity and gas, setting out how well placed the UK is to deal with the energy supply and demand challenges of the coming winter. Cordi O’Hara, National Grid Director of Market Operation, explains what the analysis tells us about security of supply. Click here for more information.