We have today published our latest assessment of electricity capacity margins.
Our results show that electricity margins are tightening over the next two winters to within broadly similar ranges to those set out in our 2013 report. However the probability of disconnections has reduced due to measures we've taken alongside National Grid and government.
Capacity margins are the surplus of electricity generated compared with demand in Britain. We expect a reduction in these margins over the next two winters. However there has been some improvement in expected margins for next winter (2014/15) compared with our 2013 report. Margins are still expected to drop to their lowest level in 2015/16 resulting from closure of older power stations. After this, the margins are expected to improve as new power stations are introduced.
Our assessment is based on data from National Grid accompanied by our own analysis.
New tools help keep the lights on
Since our 2013 Capacity Assessment, we’ve taken action to reduce the risk of disconnections by giving National Grid new tools it can use to help balance the electricity system and manage these lower margins.
The new tools mean National Grid will tender for new contracts with power stations so that they can provide extra reserve power when needed. National Grid will also carry out additional tenders for large businesses which are willing to reduce their power consumption during peak demand times in return for a payment. The government has also set out firm plans to introduce the Capacity Market to reduce risks to security of supply in the medium term and beyond.
Having these new tools in place means that the likelihood of disconnections for consumers will be around once in 120 years for winter 2014/15. And for winter 2015/16 it will be up to around once every 73 years on average for National Grid’s most optimistic demand and supply scenario, and once every 31 years for the most pessimistic of these scenarios.
Reduced disconnection risk
This is a significant improvement for consumers, as without these extra measures the risk of disconnections would be between around once in eight years and once in four years under the same scenarios. The improved risks of disconnection are also better than the Government’s Reliability Standard for secure supplies under which a once in eight years risk of disconnection in winter 2015/16 would be the highest acceptable.
This is good news for consumers and businesses and we are confident National Grid has the right levers in place to manage the tighter electricity margins over the coming winters. However, no system anywhere in the world can give a full guarantee that the lights will stay on and given the tighter margins, there can be never be any room for complacency. National Grid and industry must remain vigilant at all times.
View the 2014 Electricity Capacity Assessment.