National Grid agrees £328 million of contracts for stabilising UK electricity system

LONDON (Reuters) - National Grid's <NG.L> said on Wednesday it had agreed contracts with five parties worth £328 million over a six-year period for services to manage the stability of its electricity system in Britain.

National Grid's Electricity System Operator said the new approach, agreed with Drax <DRX.L>, Rassau Grid Services, Statkraft, Triton and Uniper <UN01.DE>, will save consumers up to 128 million pounds over the six years.

The key service to be provided is what is known as "inertia" on the grid, which helps to keep the electricity system running at the right frequency, National Grid said.

Last August, a power outage cut off 1.1 million electricity customers. This was because when 1 gigawatt (GW) of supply went offline there was a large drop in the frequency of electricity running through the grid.

Subsequent investigations into the incident also raised concerns about how the National Grid's Electricity System Operator manages the system.

Under the new approach, National Grid said inertia will be achieved without having to provide electricity. This will allow more renewable generation to operate and ensure system stability at lower costs.

"This approach is the first of its kind anywhere in the world and is a huge step forward in our ambition to be able to operate the GB electricity system carbon free by 2025," Julian Leslie, ESO Head of Networks said https://www.nationalgrideso.com/media/national-grid-eso-outline-new-approach-stability-services-significant-step-forwards-towards.

(Reporting by Nina Chestney and Noor Zainab Hussain in Bengaluru; Editing by Elaine Hardcastle and David Evans)