Energy Crunch: Plan To Keep The Lights On

National Grid (LSE: NG.L - news) has warned the UK may be forced to resort to emergency measures to keep the lights on if bad weather strikes this winter, with households picking up the bill.

Its annual Winter Outlook report looking at the capacity margin - the gap between total electricity generating capacity and peak demand - was compiled as the country misses output from five key power stations following fires or safety checks.

The network operator put the figure at just 4.1% - its narrowest since 2006/7 - and said that margin of spare capacity could fall further to just 2.8% if weather conditions took a turn for the worse.

Such a scenario would mean the grid failing to meet its "basic reserve requirement" of spare capacity needed to run the system, forcing it to adopt contingencies such as paying factories to shut down and supplying reserves from mothballed power stations.

National Grid said it was finalising contracts with three sites, Littlebrook in Kent, Rye House in Hertfordshire and Peterhead in Aberdeenshire, to provide reserve capacity that would widen the margin by 2%.

Having to use these power stations would add £1 to the average family bill, the operator confirmed, as it would cost £25m.

The prospect of an electricity crunch has risen since the summer, when a key measure of risk, called Loss of Load Expectation (Lole) was forecast at 0.5 hours for the coming winter.

Since then the Lole risk measure has risen to 1.6 hours, factoring in the fires that have caused the permanent shutdown of Ironbridge in Shropshire and the temporary closure of Ferrybridge in West Yorkshire.

A power station in Barking will also close, while a planned return to service for four EDF (Paris: FR0010242511 - news) nuclear reactors at Heysham in Morecambe, Lancashire, and at Hartlepool , will see them return at only 75% capacity.

A fire earlier this month put half of operations out of action at Didcot B power station in Oxfordshire - which has capacity to supply a million homes.

The part of the site affected by the blaze is expected to return to around 50% service this week.

The Grid report said gas supplies were well ahead of expected peak demand but warned of the uncertain impact of tensions over Ukraine, which could strangle availability from the continent.

The report warned that in the "extreme scenario" of cold winter conditions and Russia cutting off supplies, the UK may have to arrange factory shutdowns as well and rely on expensive imports from markets further afield such as Asia and South America.

Cordi O'Hara, director of market operation, said: "The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by Government.

"As system operator, we have taken the sensible precaution to secure additional tools to bolster our response to tighter margins."

Energy Minister Matt Hancock said lights would stay on across the country.

He told BBC Radio 4: "There will be secure energy supplies this winter. There will be no power cuts to householders."