5th Jun 2015 15:39
LONDON (Alliance News) - National Grid PLC Thursday said it has secured over 2.5 gigawatts of additional electricity reserve for the winter period beginning in 2015, at a lower cost per unit than the previous winter.
The electricity reserve is the amount of electricity generation National Grid has access from generators to be able to deal with unforeseen demand increase or generation unavailability.
"As operator of the electricity system, it?s our role to ensure we?ve got the right tools in place to balance the system in even the toughest winter conditions," said Cordi O;hara, director of market operations. "Our competitive tender has secured the reserve we need to do our job, as early as possible, while providing market certainty and keeping costs down for consumers."
The FTSE-100 company said the second tender round results, in which National Grid purchased an extra 1.9 gigawatts of additional electricity generation, provides "early certainty for generators, value for money for bill payers and record levels of demand side response," it said in a statement.
The first tender round in December 2014 secured 665 megawatts, and the decision to buy increased volumes in the second round was also in response to recent public notifications from some generators that their capacity had fallen ahead of the upcoming winter.
In May, UK energy regulator Ofgem said it had opened investigations to see if five generators provided false or misleading information to National Grid about planning consents for some of their proposed generating units that took part in the December 2014 capacity auction.
The investigation will look into whether the five generators gave incorrect information about the capacity they had in the annual National Grid auctions, which aims to decide which generators and providers of demand-side response will be awarded a capacity agreement, in return for providing capacity at times of system stress.
The companies being investigated are GF Power Peaking Ltd, Berangere Ltd, Adret Ltd, Alkane Energy UK PLC and Power Balancing Service Ltd.
The extra 2.56 gigwatts procured is estimated to have cost GBP36.5 million, including the cost of testing, and represents around 0.5 pence a year on the electricity bill of the average customer, National Grid said. This compares with a cost of GBP31.3million for the additional 1.1 gigwatts procured for last year's winter.
In its own statement Thursday, Ofgem said: "National Grid has had a good response from generators and businesses to the tender for providing balancing services. We are confident that National Grid has the right levers to keep the lights on. But there is no room for complacency and it must remain vigilant at all times."
"We have approved the method National Grid use for deciding how much balancing services to buy. And we will be checking that their process provides good value for customers," Ofgem added.
National Grid will be awarding contracts following the completion of the second tender round to four power generating units owned by SSE PLC, and one owned by Centrica PLC, owner of British Gas.
Centrica's Killingholme station will be awarded a 660 megawatt contract.
SSE's power units in Peterhead will be awarded a 675 megawatt contract, the Fiddler's Ferry unit will be awarded a 32 megawatt contract, Ferrybridge 30 megawatts and Keadby 22 megawatts.
In May, SSE said it would close the Ferrybridge coal-fired plant at the end of March 2016.
National Grid shares were down 1.2% to 858.409 pence per share on Friday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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