Britain's National Grid warns of tight electricity supply this winter

© Reuters. FILE PHOTO - A section of gas pipeline is seen at a National Grid facility near Knutsford, Britain, October 11, 2021. REUTERS/Phil Noble

By Susanna Twidale

LONDON (Reuters) - Britain's National Grid (LON:NG) said on Thursday there could be periods where electricity supply is tight this winter, given uncertainty over supplies of Russian gas to Europe, but that it expects to be able to meet demand.

Countries across Europe are making contingency plans for winter after Russia reduced natural gas flows and said supplies could be cut further or even stop. Many European leaders believe those actions are a reaction to Western sanctions on Russia in response to its invasion of Ukraine.

"While Britain is not reliant on Russian gas to the extent that the rest of Europe is, it is clear that the cessation of flows of gas into Europe could have knock-on impacts, including very high prices," National Grid's Electricity System Operator (ESO) said in an early winter outlook published on Thursday.

Wholesale British gas prices have hit record highs this year, following Russia's Feb. 24 invasion of Ukraine, in turn pushing up energy prices for consumers. A cap on the most widely used domestic energy contracts is expected to rise by around 65% in October.

Gas-fired power plants were responsible for more than 40% of Britain's electricity production last year while the fossil fuel is also used to heat around 80% of British homes.

National Grid ESO said its modelling showed the tightest period for electricity demand and supply is likely to be in the first half of December.

During tight periods it can use its tools to bring more supply to the market, such as issuing electricity margin notices which alert generators that more power is needed, it said.

ESO has already secured contracts with operators of some coal-fired power plants to keep them open longer than scheduled to provide back-up electricity if needed this winter.

ESO's base-case scenario assumes there are no disruptions to fuel supplies for power plants such as gas, and that power links with Europe are able to provide imports when needed.

It said however that issues with France's nuclear power fleet mean there could be more exports of power to France from Britain when Britain's electricity system is not tight.

ESO said average cold spell electricity demand is expected to peak at 59.5 gigawatts (GW) this winter, similar to last year.

Its base case for de-rated margin, which is a measure of the amount of excess capacity expected above peak electricity demand, is currently 4 GW for winter 2022/23, or 6.7% of capacity.

National Grid ESO is a separate legal entity within National Grid and is responsible for overseeing the country's electricity supply.

In a separate announcement, National Grid's gas transmission team said its current scenarios for winter gas demand range from 363 million cubic metres/day (mcm) for a mild winter to 465 mcm/day for a cold winter.

Further details on likely gas supply and demand scenarios are expected in September, National Grid said. Full winter outlooks for both gas and electricity supply will be published in autumn.