Analysis by Bloomberg News reporter Jessica Shankleman, a specialist in renewable energy and climate change, suggests that the incoming weather system for Europe and the north Atlantic later this year is likely to drive up energy demand while reducing wind speeds, producing a spike in UK power prices this coming winter.
The La Nina weather pattern that generally follows El Nino may cool temperatures and curtail wind speeds from the UK to Germany. That in turn would boost winter heating needs at the moment when weaker air currents reduce output from wind farms, forcing utilities to call on more expensive backup supplies.
This view is backed by UK government meteorologists. "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. "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 seven plants, the buffer of surplus generation may fall below zero at times next winter, prompting National Grid to draw on its reserves. 7 GW of closures are scheduled for 2016, equivalent to 11% of UK peak demand.
As a result the UK runs the risk of severe price spikes next winter after a wave of plant closures according to James Brand, an analyst at Deutsche Bank AG. Additional capacity has been withheld for a reserve of back-up supply, leaving fewer plants available at the market price.
"A cold and windless period is most likely to result in high power prices, particularly if accompanied by multiple unplanned outages," according to Brand. National Grid will only be able to meet demand by calling on its Strategic Balancing Reserve. That's an expensive option only used when power prices reach £3000 per MWh.
The UK's National Grid is more confident. Its CEO John Pettigrew told analysts on 19 May that the winter will be "tight but manageable." To prevent blackouts, National Grid will pay £122.4 m ($185 million) to keep 3.58 GW
on standby in 2016-17, up from 2.56 GW the previous year. It also will award contracts to businesses and factories agreeing to curb demand at short notice.
The La Nina effect is a bounce-back from the warming characterised by El Nino, which came to an end in the last week of May after helping to generate the hottest temperatures in 130 years and parching farmland across the world.
-There is also the possibility that the first quarter of 2017 could show another reversal as storms come off the Atlantic across Europe. That would boost temperatures above average and increase wind speeds, said the UK Met Office. Higher wind speeds reduce the value of subsidies under the UK's renewable obligation. This could be bad news for utilities, pushing down power prices, said Elchin Mammadov, an analyst at Bloomberg Intelligence.
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