Posted: 19 October 2017

Winter Outlook Report published

Winter Outlook, demand, supply, gas, electricity, margins, security of supply, LOLE, interconnectors, storage, Rough, imports, exports, weather, Capacity Market, transmission, distribution

The report aims to help industry make informed and timely decisions in preparation for winter.

 

National Grid’s Winter Outlook Report for 2017/18 has been published. It sets out the demand and supply picture for electricity and gas over the coming winter.

With the nights drawing in and colder months approaching, National Grid assesses the security of supply for electricity and gas for this winter. The Winter Outlook Report  provides analysis from across the energy sector and aims to help industry make informed and timely decisions in preparation for winter.

So, what does this year’s report tell us?

The picture for electricity

After careful examination, we expect there to be sufficient generation and interconnector imports to meet demand during winter 2017/18. Similar to last winter, we expect transmission system demand to peak at 50.7GW in mid-December.

This winter will be the first delivery year for the Capacity Market (CM). Its goal is to ensure security of electricity supplies by paying for reliable sources of capacity, so power is available when it’s needed. The CM also encourages investment through reliable electricity revenues to replace older power stations and provides back-up for intermittent generation such as wind and solar power.

This winter we are quoting the surplus margin based on underlying demand – the total demand across the transmission and distribution systems. The forecast margin for the winter ahead is 6.2 GW or 10.3%. The corresponding Loss of Load Expectation (LOLE) is 0.01 hours per year. This figure measures the risk across the whole winter of demand exceeding supply under normal operation.

The margin this winter is presented as a percentage of the underlying demand (demand consumed by end users) rather than as a percentage of transmission demand.

Why change the way system margins are presented?

As we described in our Winter Review and Consultation, traditionally we have presented the system margin as a gigawatt figure and as a percentage of transmission system demand. This is the demand met by generation connected to the National Grid transmission network.

This approach can be misleading as it is difficult to compare percentage margins between years because the proportion of distribution-connected generation is increasing. Analysis for our Future Energy Scenarios in 2016 showed that 23% of installed capacity is now connected to either the distribution networks or to domestic, commercial and industrial buildings.

This limitation can be overcome by treating transmission-connected generation and distribution-connected generation in a consistent way. It also mirrors the approach used for the CM target capacity recommendation in our annual Electricity Capacity Report.

Outlook for gas

Great Britain benefits from a wide range of gas sources. We expect there to be sufficient gas available to meet winter 2017/18 demand.

We anticipate gas demand will be slightly lower than for winter 2016/17 (51.4 billion cubic metres compared with 52.9bcm). There is also a healthy margin of 116 million cubic metres per day between potential supply and a 1-in-20 peak day demand.

This winter we expect gas for electricity generation to remain high. Growth in gas-fired generation has been strong over the last few years with gas for electricity generation increasing from 7.9 bcm in 2013/14 to 13.8 bcm in winter 2016/17. However, we do expect a slight decrease in the amount of gas used to generate electricity compared to the very high levels experienced in winter 2016/17.

A reduction in electricity imports from France last winter led to an increase in gas-fired generation in Great Britain (GB). This winter we expect electricity imports from Continental Europe to be higher, more in line with previous years.  This will reduce the demand for electricity generated in GB.

We expect supplies from Norway to be similar to last year the UK Continental Shelf (UKCS) supplies to be slightly higher than last winter’s forecast. Gas exports to Continental Europe are likely to be lower than over the same period last year.

In June 2017, Centrica Storage announced a permanent end to storage operations at its Rough storage facility. As a result, no further injections of gas will be made into Rough. However, over the coming winter Centrica Storage expects almost 1bcm of gas to be withdrawn from the facility, starting in October.  We expect to see continued cycling of gas via the medium-range storage facilities. This is where gas is injected and withdrawn from storage rapidly, typically within a day or over a few days.

The last four winters have all been warmer than the long-term average. In our plans for winter, we assume that the weather will be ‘seasonal normal’, however we do prepare for colder conditions to account for the unpredictable British climate.

The landscape for GB gas supplies is changing. We will continue to work with industry to manage variations in supply and demand while meeting the needs of all customers.

Final thoughts

The Winter Outlook Report is just one publication from a suite of documents published by the System Operator exploring the Future of Energy. You can find out more information from our website. We also welcome your feedback. Please contact us at marketoutlook@nationalgrid.com or join the debate on Twitter using #NGWinterOutlook.

LCNI 2017: your ticket to the future
"We anticipate gas demand will be slightly lower than for winter 2016/17 (51.4 billion cubic metres compared with 52.9bcm)"

National Grid.