UK energy demand poised to soar two-year high as cold snap bites
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UK energy demand will hit a two-year high tomorrow as plunging temperatures pile pressure on the nation’s overstretched power grid. An analysis prepared by Refinitiv suggested the figure will hit 38.9 GWh/h on Thursday – more than 10 percent higher than normal for this time of year and a gap equivalent to a fifth of the national energy consumption witnessed in June.
In what is being dubbed “Red Thursday”, demand will also reach pre-Covid levels which have not been seen since January 2019.
Wayne Bryan, Director at Refinitiv Gas Research, said: “The combination of cold weather and low wind speeds is always bullish for gas usage.
“However, the record mild start to the winter heating season in October and November and unprecedented levels of US Liquified Natural Gas exports have put the UK and Europe in much better position storage-wise.
“This is especially important given the loss of Russian gas volumes so the probability of gas shortages has weakened considerably.”
The daily average temperature forecast for Thursday is -1C, significantly lower than the 5.5C usually recorded at this time of year.
Additionally, wind power generation is also set to be roughly 3.7 GWh/h below normal levels.
The cold weather and low winds will place further pressure on UK gas capacity which is forecast to see the highest daily residential gas demand since January 8 of last year, at 281mcm/d.
Total gas demand is predicted at over 400mcm/d with exports to Ireland ramping up while below normal wind speeds continue to incentivise additional demand from power generators.
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With more than 85 percent of the UK population using gas for heating/cooking, residential demand is the biggest driver of prices and sentiment for the wholesale gas market due to it accounting for the majority of daily gas demand.
Office Christmas parties and other festive activity are unlikely to off-set the impact of increased homeworking due to the weather combined with industrial action on the railways.
Refinitiv’s analysis comes against a backdrop of National Grid’s Demand Flexibility Scheme aimed at suppressing demand in tight hours and now-scrapped plans to increase supply through bringing coal fired power stations onto the grid.
Sebastian Sund, Power Analyst at Refinitiv, added: “As far as 2022 goes, based on our current forecasts, we find that shortages in power supply are unlikely, and the UK avoid invoking any of its emergency contingency plans in 2022.”
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Britain’s electricity grid operator has told two of its coal-fired power stations to stand down after preparing them to generate electricity amid pressure from freezing weather conditions.
National Grid said it had asked the winter “contingency” plants to prepare for operation to “give the public confidence in Monday’s energy supply”.
It said the plans meant the coal-fired stations could be used as “tools for additional contingency” as needed to allow the network to run as usual.
However, it told the units they would not be needed later on Monday as there was “adequate available contingency” to power households across the country this evening.
UK next day electricity prices surged yesterday to help attract power imports through interconnectors from Europe and record prices are expected during the peak demand hours between 5pm and 7pm on Monday.
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