Britain 'will Pass the Winter Test': Grid
British gas and power grid manager National Grid Electricity System Operator (NGESO) expects "no additional adequacy or operability challenges for the coming winter as a result of the UK’s planned exit from the European Union," it said October 10.
"We have tested our planning assumptions in a broad range of scenarios and via engagement with industry. The gas supply margin is expected to be sufficient in all of our security of supply scenarios. And even if there is a challenge to gas and power operability," it said, "we have the tools and services we need."
The central assumption is that in a no-deal situation there will be no impact on the trading arrangements for the gas interconnectors, of which there are two: one linking the UK and Belgium and one linking the UK and the Netherlands. The latter will probably carry more gas. Capacity contracts that underpinned Interconnector UK (to/from Belgium) have expired, although NGW understands that Gazprom has booked some. NGESO also expects gas to continue to flow to the island of Ireland from Moffat. Irish demand is a little higher, owing to declines at the Corrib gas field, among other factors.
Pipeline flows from Norway, the UK continental shelf, deliveries of LNG and storage are unaffected by the UK’s planned exit from the European Union, even in the very unlikely scenario that both the two interconnectors carry no gas. This might be because the EU-27 is no longer bound by subsidiarity principle and governments will want to look after their own needs first.
NGESO says: "There will still be sufficient sources of gas supplies to meet peak demand, even in a 1-in-20 day. There would need to be sufficient price signals in the market to attract regular LNG cargoes to the UK, an obligation that sits with the shipper community. Market intelligence continues to indicate that LNG will flow more frequently with it being a favourable supply source, even at lower market prices."
NGESO expects gas demand of 52.3bn m³ this winter, which is 3.9 times greater than forecast electricity demand. It also forecasts that gas will meet 22% of power demand. This is percentage is down from last year, as there are more renewable generators on the grid.
In the winter of 2018, NGESO issued a gas deficit warning for the first time as the "beast from the east" held the country in an ice grip late in the winter, when most of the gas in storage had already been withdrawn. Now it has renamed the warning as 'gas balancing notification,' which might ease market nervousness. Grid will issue a GBN if there is a shortfall in gas supply compared to gas demand that presents a material risk to the end of day system balance.
The whole report, Winter Outlook 2019/20, may be read here.