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UK 'at much greater risk' of winter blackouts than indicated: trader Hartree

Highlights

Competition for imports not factored in by Grid

Spreads indicated 99.7% risk of blackouts

Margins could be 3 GW lower once IFA2 up

London — The UK is at much greater risk of electricity blackouts than indicated in National Grid's Winter Outlook, energy trading house Hartree Solutions said Oct. 22.

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The system operator's Oct. 15 outlook acknowledged that generation margins were lower this year than last, but that they remained well above loss-of-load risk targets set by the government.

Should the UK experience periods of tightness, "we would expect GB prices to escalate and interconnectors to import," National Grid said.

Reliance on imports from continental Europe to meet demand "shouldn't be taken for granted," Hartree said, with market spreads "at times implying a 99.7% risk of blackouts."

While historic flows show the UK typically imports during the winter, market prices point to a much tighter scenario with the UK likely to be exporting for many of the high-demand periods, creating a lower margin and thus a greater risk of supply problems, Hartree's Adam Lewis said.

Although the UK baseload price for January had recently ticked over into a small premium against the equivalent French price, the majority of peak hours were still indicating UK interconnector exports, he said.

If the UK was exporting across the interconnectors margins would be 3 GW lower than forecast in the Winter Outlook, giving a revised margin of 1.8 GW, he said.

That is below the level required by the government to meet a three-hour loss of load equivalent.

Hartree's figure included start-up of a second interconnector to France, IFA2, due to come online in November. It would potentially increase the flow of exports.

"Rather than the comfortable picture that Grid looks to be painting, the market's most extreme forecast Interconnector flows would see the UK's margin shrink to minus 1.95 GW giving a 99.7% likelihood of a blackout using National Grid's Loss of Load Probability (LoLP) calculation," Lewis said.