National Grid Facing Winter Energy Crunch

National Grid (LSE: NG.L - news) expects to activate special alerts to keep the lights on up to ten times this winter as the UK faces a tightening power supply, MPs have been told.

The network already faced an energy crunch earlier this month when it had to enact exceptional measures, in order to shore up the electricity supply, for the first time in three years.

It (Other OTC: ITGL - news) now expects to see seven to ten such notifications of inadequate system margins (NISMs) over the course of the winter - and even more if the weather is harsher than usual.

The last time it issued a NISM prior to this month was in February 2012. It has not issued more than seven in one year since 2008, when there were eight. The last time it issued 10 NISMs was in 2005.

National Grid sends out the alerts to ask power suppliers to increase generation when it faces a narrowing margin of supply and demand.

This month it also had to ask major business users of energy – who are paid by the network to be on standby – to reduce their usage of electricity. It was the first time it had to take these "demand" side measures since they were put in place last year.

National Grid’s winter outlook report predicted a 5.1% margin of electricity capacity, the narrowest in a decade.

This means that there is a 5.1% gap between generating capacity and peak demand.

Cordi O’Hara, UK system operator for National Grid, told MPs on the Energy and Climate Change Committee: "We're well within the planning and security standards set by government.

"At 5.1% we are clear that margins are tight but manageable."

While National Grid expects between seven and 10 NISMs this winter, executives could not rule out an increased risk if temperatures plummet unexpectedly.

Duncan Burt, the network's head of commercial operation, told the select committee that recent winters had been "more wet and windy than cold" but if the temperature drops below expectations this year, more NISMs could be issued.