UK activates coal reserve to boost supply during cold snap

Bloomberg filepix for illustration purpose only.

Bloomberg filepix for illustration purpose only.

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(Jan 22): The UK’s grid operator asked three coal-fired power units to be ready to generate on Monday, as it boosts electricity supplies during the current cold snap.

It’s the first time this winter National Grid Plc has needed to call on the reserve. The units are warming up and will be ready to generate electricity early Monday if needed. Demand is set to surge during a spell of freezing weather in the UK, even as wind speeds drop, curbing supply.

We've issued a notification to warm three winter contingency coal units. This measure should give the public confidence in Monday’s energy supply. (1/3)
— National Grid ESO (@NationalGridESO) January 22, 2023

The grid “as a prudent system operator has these tools for additional contingency to operate the network as normal and the public should continue to use energy as normal,” National Grid’s Electricity System Operator said in a statement. 

The UK will phase out coal next year, as it seeks to cut emissions from the power sector. But the government asked coal-fired power producers to keep units available this winter, as Europe faces a shortage of natural gas. Using coal means less gas is needed to produce power. The grid operator has also been testing a tool that asks households to cut demand. 

Freezing fog is forecast to grip Britain overnight into Monday, sending temperatures tumbling. The cold weather is set to last this week, according to Bloomberg’s weather model. Wind generation will be low through Tuesday.

Demand is expected to peak at 42.2 gigawatts at 5 p.m. on Monday, up from 40.2 gigawatts on Sunday, grid data show. Power for tomorrow rose to £187.67 a megawatt-hour, the highest since Dec 21 on the N2EX exchange. The contract for 5-6 p.m. jumped to £260.40 a megawatt-hour on Epex Spot SE.

Britain is the second-biggest market for offshore wind in the world and is particularly exposed to troughs in generation, as it relies heavily on expensive gas for backup. Prices have eased after a run of mild weather allowed Europe to keep more gas in storage than expected. UK futures are still more than double the usual levels for this time of year, according to ICE Endex data.

Drax Plc’s units 5 and unit 6 and a unit at Electricite de France SA’s West Burton have been asked to get ready. These are two out of three stations that negotiated a winter contingency contract with National Grid for this winter, following a request from the government.