Ofgem confirms National Grid has tools to keep the lights on this winter

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What’s the outlook for the security of electricity supply in Ofgem’s latest analysis?
Capacity margins have been falling as many older coal and oil-fired power stations are closing due to age and European Environmental Regulations. Most of these plants have already closed and the rest will shut down by 2015 or earlier. Unprofitable gas fired power stations have also been closing or mothballing.

The margin is likely to be tighter than previously expected for winter 2015/16 due to further power station closures over the last year. However to manage lower margins Ofgem has given National Grid tools it can use to balance the electricity system if needed.

These tools allow National Grid to contract with generators and businesses to provide additional balancing services, outside the normal operation of the market. You can find out more about how National Grid does this, and view an infographic guide, in our section Electricity Security of Supply.

Using the tools National Grid has secured 2.56 gigawatts of additional balancing services for this winter. As a result National Grid projects a manageable margin for this winter at 5.1 per cent above demand.

There is uncertainty on the outlook in 2016/17, and a significant opportunity for industry to play a role in delivering security of supply, for example by returning mothballed plant to the market or improving the availability of their plant. Margins could also be boosted by higher imports from neighbouring countries.

National Grid will also consult on extending the additional balancing services for winter 2016/17. We think this is a prudent step.

We expect a reduction of the risks to security of electricity supply for 2017/18 due to plant returning to the market.