December’s cold snap saw attentions turn to the issue of available energy capacity this winter, with a spike in demand for both gas and electricity. Unlike the past two winters, margins look to remain relatively healthy, although the possibility of energy-intensive businesses being asked to shift or reduce demand remains. However, as the electrification of heat in the UK gathers pace, pressure on local grids could increase in the future. Here, we discuss the factors at play, as well as how Powerstar can help your organisation minimise their exposure to increased energy costs and the risk of disruption.
Winter Capacity Margin
Below freezing conditions over the first weekend in December saw a surge in demand for natural gas in the UK. As well as heating demand, up to two-thirds of the UK’s electricity demand was also met by gas generation. Reduced wind speeds and hours of sunlight contributed to a brief crunch period for demand. As a result, voluntary demand flexibility services, allowing households and businesses to secure payments in return for reducing their demand during peak periods, activated on the evening of 29th November.
However, more broadly, National Grid remain confident that the risk of disruption due to lack of capacity remains low. National Grid ESO have given a much brighter outlook that last winter, with more power generation available and healthier gas storage levels.
Impact of Electrification
Applications for the Boiler Upgrade Scheme in the UK saw a threefold increase following the decision to raise the grant for a new heat pump to £7,500. Demand has remained high, with applications remaining 60% higher than previously. A key part of the UK’s decarbonisation plans, the electrification of heat is a vital step in terms of meeting our net zero targets.
Electrification of heat for homes and businesses brings with it a substantial increase in electricity demand, putting further strain on what in many areas are already constrained local grids. As well as impacting on power resilience for some businesses, some may find that when it comes to electrifying their own heat, there is insufficient capacity available on their distribution grid to allow for it.
How Powerstar Can Help
A report released last week revealed that more than half of UK organisations are unprepared for future energy shortages or disruption. Even if, as expected, capacity margins remain healthy, surges in demand drive further volatility in wholesale energy prices, exposing businesses to further price rises in the future.
When it comes to both avoiding disruption and minimising costs, one of the most proactive steps an organisation can take is to reduce their reliance on the grid altogether. Powerstar specialises in helping clients to achieve this with a smart microgrid, combining on-site generation, storage and control software to increase their energy independence. While remaining connected to the grid during normal operation, smart microgrids help to deliver reduced exposure to risk, both in terms of power disruption and sudden wholesale prices rises.
