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UK electricity supplies will be tight this winter although demand should be met

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The National Grid has said there will be enough electricity to meet the UK’s peak demand this winter, although supplies will be tight.

The annual winter report of The National Grid's Electricity System Operator (ESO) arm has predicted that while there would be a sufficient margin between peak demand and supply all winter round, it anticipates that it may have to issue Electricity Margin Notices and Capacity Market Notices.

Electricity Margin Notices are used to send a signal to the market of looming tightness in supply in a bid to ensure there is a greater safety cushion between power demand and available supply.

Six such notices were issued in winter 2020 - a record for the UK’s electricity grid. Only two notices were issued in the winters between 2011-2019.

The coming winter brings even tighter conditions than last year, with gas prices rising to historic highs and a fire at a French interconnector sending the cost of electricity soaring.

The ESO said its base case for de-rated margin, which is a measure of the amount of excess capacity expected above peak electricity demand, is currently 3.9 gigawatts (GW) for winter 2021/22, or 6.6 per cent of capacity, down from 4.8GW, or 8.3 per cent last winter.

Nevertheless, the executive directive of ESO Fintan Slye said: “We are confident that there will be enough capacity available to keep Britain’s lights on.”

In its winter gas outlook report, the National Grid was more positive about the UK’s gas supplies, saying that demand will be met this winter with Britain’s gas storage capacity currently 100 per cent full.

The maximum supply capability from all sources, such as pipeline gas, domestic gas production, liquefied natural gas imports, is comparable to last winter, it added. Last year, National Grid said peak supply for that winter was 61 billion cubic metres.

While UK gas prices have been surging in recent weeks, they dipped yesterday after Russian President Vladimir Putin said he would boost gas supplies to Europe in response to the escalating energy crisis.

While overall supplies of both electricity and gas are expected to meet demand this winter, analysts believe the turmoil could leave Britons with a 30 per cent rise in their energy bills.

Craig Lowrey, senior consultant at research agency Cornwall Insight, said: “With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap (£1,277 for a typical dual fuel direct debit customer) for winter 2021-22, the GB energy market remains on edge for fresh volatility and further consolidation.”

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