La Nina weather change may boost Britain’s power price, curb wind

Bloomberg

Electricity prices in Britain may rise this winter as the El Nino weather system ebbs away, driving up energy demand while quelling breezes that wind farms depend on to generate renewable power.
The La Nina weather patterns that generally follows El Nino may cool temperatures and curtail wind speeds from the U.K. to Germany, according to U.K. government meteorologists.
That in turn would boost winter heating needs at the moment when weaker air currents reduce output from wind farms. The result would force utilities to rely on more expensive backup supplies.
“If La Nina succeeds in pushing the European weather regime into high pressure patterns, it generally means colder temperatures,” said Hazel Thornton, a weather analyst at the Met Office, in a telephone interview.
“It’s also the case that we get the unfortunate relationship of lower wind speeds during that period, so that could mean we get lower wind power.”
The challenges to Britain’s power grid could be particularly acute. With coal-fired capacity reduced to just seven plants, the buffer of surplus generation may fall below zero at times next winter, prompting National Grid Plc to draw on its reserves. As much as 7-gigawatts of closures were announced for 2016, equivalent to 11 percent of U.K. peak demand.
The U.K. runs the risk of “severe” price spikes next winter after a wave of plant closures, James Brand, an analyst at Deutsche Bank AG, said by phone.
“A cold and windless period is most likely to result in high power prices, particularly if accompanied by multiple unplanned outages,” Brand said. National Grid will be able to ensure the “lights stay on” by calling on its Strategic Balancing Reserve. That’s an expensive option only used when power prices reach 3,000 pounds per megawatt hour —100 times the normal price.
National Grid Chief Executive Officer John Pettigrew told analysts on May 19 that the winter will be “tight but manageable.”
To prevent blackouts, the operator of England’s electricity grid will pay 122.4 million pounds ($185 million) to keep 3.58 gigawatts on standby in 2016-17, up from 2.56 gigawatts the previous year. It also will award contracts to businesses and factories agreeing to curb demand at short notice.