Your Basket
Your Basket
There are no funds in your basket. To add funds to your basket use the Green Plus Icon wherever you see it next to a fund.
Fund name
Aberdeen American Growth  
Fidelity American  
Schroder UK Mid 250  
M&G Recovery  
Jupiter Merlin UK Growth  
Close Basket Open basket

Login

Login

Register

It's look like you're leaving us

What would you like us to do with the funds you've selected

Show me all my options Forget them Save them
Customise this table

OFGEM

Electricity Capacity Assessment
RNS Number : 0090I
OFGEM
27 June 2013
 



 

 

 

 

 



Thursday 27 June 2013

OFGEM REPORT HIGHLIGHTS THE IMPORTANCE OF GOVERNMENT REFORMS TO ENCOURAGE MORE INVESTMENT IN GENERATION

·      Tightening electricity margins highlight the need for timely delivery of the capacity market

·      Without action, risks to electricity supply could increase during the middle of this decade faster than expected

·      Ofgem to consult on approving additional tools that could help National Grid manage tighter mid-decade electricity supplies

 

Ofgem has today published its second report into electricity capacity, which illustrates the need for the timely implementation of the Department for Energy and Climate Change's capacity market. 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 highlights the uncertainty around supply and demand for electricity. National Grid's projections on power demand vary greatly depending on assumptions on economic activity and energy efficiency. There is also uncertainty over the timing and scale of plant closures and mothballing.

 

Electricity margins could tighten in 2015-2016 to between around 2 and 5 per cent depending on demand. This means that the probability of a supply disruption increases from 1 in 47 years now to around 1 in 12 years for 2015/16 or lower. If the projected decline in demand does not materialise margins could fall to 2 per cent.

 

Ofgem, DECC and National Grid have been working together to explore options that would provide consumers with additional safeguards against the increased risk to mid-decade security of supply. All three organisations agree that it is prudent to consider the case for additional tools to help National Grid balance the electricity network during the middle of this decade when capacity margins could be tight. These measures would give National Grid the option to buy extra demand-side response and reserve generation to balance the electricity network. Preventive action taken now will help protect consumer supplies.

 

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."

 

Ofgem's Project Discovery report in 2009, which fed into DECC's review of the electricity market, first identified the issue of tightening capacity margins in the mid-decade. It found that Britain's energy industry faces an unprecedented challenge to secure supplies to consumers due to the global financial crisis, tough environmental targets, increasing gas import dependency and the closure of ageing power stations.

Ends

Notes to editors

2.   Additional  tools for National Grid

While we consider the imminent risk of outages is low, in light of the uncertainty facing electricity margins Ofgem, DECC and National Grid think it prudent to consider the need for National Grid to design, procure and dispatch two new balancing services to help them secure additional sources of power.
 
These are:
 
1.  Demand Side Balancing Reserve: This allows large energy users to sell back the energy they would have used at times when the electricity system needs additional power.
2.  Supplementary Balancing Reserve. This is aimed at generators and large energy users making more power available. It allows National Grid to competitively tender to ensure they have extra reserve margins to balance the system.
 
 
National Grid could then draw on these products after exhausting its usual balancing tools in order to preserve supplies to consumers. Ofgem has published an open letter asking for stakeholder views on the need for these measures.  The open letter can be found here: http://www.ofgem.gov.uk/Markets/WhlMkts/EffSystemOps/Documents1/Consultation%20on%20the%20potential%20requirement%20for%20new%20balancing%20services%20to%20support%20an%20uncertain%20mid.pdf
 
 
For further press information contact:
Judith Hewitt: 020 3263 2746
Chris Lock: 020 7901 7225
Out of hours contact:  07766 511470
 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCGCGDLCUDBGXR
 
  • Stay connected with FE trustnet
  • Authorised and Regulated by the
    Financial Conduct Authority
  • © Trustnet Limited . All Rights Reserved.
  • Please read our Terms of Use / Disclaimer
    and Privacy and Cookie Policy.
  • Data supplied in conjunction with Thomson Financial Limited,
    London Stock Exchange Plc, StructuredRetailProducts.com
    and ManorPark.com