The electricity supply market is working more efficiently, with demand-side balancing proving cheap and effective, and unjustified fears over supply/demand margins have led to customers’ money being spent unnecessarily. That was the conclusion of a report published today by the Energy and Climate Intelligence Unit (ECIU), which called into question the deployment of extra backup power and the drive for investment in new, large plant.
The ECIU says that during the 2016/17 winter, National Grid did not even have to issue a request for the regular power market to step up and provide more power – the so-called Notice of Insufficient Supply Margin (NISM), although ECIU notes that “this was a tough winter” with: a long spell of cold weather with low wind output, an interconnector outage and French nuclear power stations out of action. That meant the System Operator was far from having to call on so-called Supplementary Balancing Reserve (SBR), in which plant that would otherwise have closed was paid to remain available. SBR has cost bill-payers £180 million over the three winters it existed but was not called on once, ECIU says.
Although reports regularly warn that the winter capacity margin is to tight, “our findings call this into question,” said ECIU. “The last two winters have seen capacity margins of 5.1% and 6.6% respectively – similar to those seen a decade ago. Then, NISMs were common; now, they are not. Simply put, supply and demand can be managed far more efficiently in this era of smarter technology.”
The evidence is that calls for more investment in generating capacity to build capacity margins up towards the 10% level “is a call to fix a problem that does not exist”, the ECIU says.
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