Electricity supply changes proposed

Mothballed gas-fired power plants could be placed on standby as a "last resort" if the UK faces an electricity supply crisis, under new measures announced by regulator Ofgem.

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Ofgem says disused power plants may be used if the UK's electricity supply 'runs out'

Mothballed gas-fired power plants could be placed on standby as a "last resort" if the UK faces an electricity supply crisis, under new measures announced by regulator Ofgem.

For the first time, capacity at these and other sites could be held in reserve outside the electricity wholesale market as a safeguard in case power runs out.

National Grid may already ask generators to produce more electricity at time of peak demand but Ofgem has introduced the additional measures for next winter as it acknowledges that margins - the portion left before supply reaches full capacity - are likely to tighten.

These could fall to as low as 2% by 2015-16, it said, so it "considers it prudent" now to introduce tools that will, from winter next year, allow the operator to balance the system by having otherwise unused sites as back-up.

"These plant would only be used by National Grid as a last resort when it needs more power and there is none available in the market," Ofgem said.

Old gas-fired power stations, closed because they were uneconomical, are the most likely to be used as the old coal-fired stations that have shut mainly did so because they did not meet environmental standards.

The new measures will also allow National Grid to ask more businesses to be on standby to cut back on usage of any scarce electricity for a four-hour period of high demand on winter weekday afternoons.

Chief executive Andrew Wright said: "Our latest assessment on security of electricity supplies published this summer showed that electricity margins are set to tighten more quickly than previously expected in the middle of the decade.

"This is mainly because older coal power stations will close sooner.

"Britain has one of the most reliable power systems in the world but, with margins tightening, there can be no room for industry complacency on security of supply.

"Therefore, we have approved these new tools to act as an extra insurance policy that is available for National Grid to protect consumers' power supplies."

Ofgem said it would regulate the costs of the new measures and only allow them to be passed on "in an efficient and economic manner". They should add no more than £1 a year to household bills, it said.

It is thought to be more likely that National Grid will use the extra measures to ask factories to cut production first before seeking to bring mothballed power stations back into use, which would be more expensive.

Ofgem said in October that even this winter, margins are "tighter than we have seen historically", forecasting that they could fall as low as 5% during peak demand in cold weather but that there is enough to meet the country's needs.