National Grid pledges to work with regulator to maintain power supplies
MIDLAND-based utility National Grid has said it will work with the Government and energy regulator Ofgem to ensure that power supplies continue to be managed correctly.
Ofgem sparked concerns yesterday when it issued a capacity adequacy report claiming that not enough electricity was being generated and that supplies were likely to come under severe pressure by the middle of the current decade – much earlier than anticipated.
The report provoked fears of electricity blackouts in industry as the need to conserve power became more pressing.
In a statement, Warwick-based National Grid said: “We have been working with the Department of Energy and Climate Change (DECC) and Ofgem to consider what measures we can take and are proposing two new balancing services to help us manage the day to day operation of the power networks.
“We are consulting on these two services with the industry. This does not mean that disruption is imminent or likely, but Ofgem, DECC and ourselves believe it appropriate to consider what measures could be taken in case margins deteriorate further.”
In its report, Ofgem said: “The report shows that electricity supplies are set to tighten faster than previously expected in the middle of this decade.
“The risk to electricity supplies is projected to increase from the current near zero levels, although Ofgem does not consider disruption to supplies is imminent or likely, providing the industry manages the problem effectively.”
Ofgem also highlighted the uncertainty around supply and demand for electricity. It said National Grid’s projections on power demand varied greatly depending on assumptions on economic activity and energy efficiency.
There is also uncertainty over the timing and scale of plant closures and mothballing, it added.
Andrew Wright, Ofgem’s Chief Executive, said: “Ofgem’s latest report on electricity security of supply highlights the need for reform to encourage investment in generation.
“This is why Ofgem welcomes DECC’s commitment to introduce a capacity market that will provide a longer term solution to this problem at a time when Britain’s energy industry is facing an unprecedented challenge to secure supplies.
“Ofgem’s analysis indicates a faster than anticipated tightening of electricity margins toward the middle of this decade. Ofgem, together with DECC and National Grid, think it is prudent to consider giving National Grid additional tools now to procure electricity supplies to protect consumers as the margin between available supply and demand tightens in the mid-decade.”
