Proactive Investors - Britain’s electricity system operator (ESO) has said customers will likely be paid to cut energy usage again and coal will remain a backup as the UK bids to keep the lights on this winter.
National Grid PLC (LON:NG)’s ESO wing confirmed that energy supply and demand would remain tight in the UK next winter due to the knock-on effects of the war in Ukraine.
As a result, the demand flexibility service, which saw customers paid to reduce energy consumption, will likely return, the ESO said, while coal will also be used.
Unit Three of Uniper's Ratcliffe power station is the only coal unit which will certainly be available after being granted a contract in February’s T-1 energy auction, the ESO explained.
Talks are being held with Drax Group (LON:DRX) to bring two coal-fired units at the generator’s North Yorkshire power station out of retirement meanwhile, just months after they were closed.
Supplier Octopus Energy had urged the ESO to avoid using coal as a backup, arguing it was more expensive than using the demand flexibility service earlier this week.
£395mln was spent on warming the UK’s five contingency coal plants last winter, while asking customers to reduce demand by the same amount would have cost just £100mln, according to Octopus.
“We’re still in a cost of living crisis and it’s crazy to pay coal power plants when we could pay hard-pressed customers instead,” Octopus flexibility head Alex Schoch commented.
Drax closed its remaining coal units earlier this year, alongside EDF (EPA:EDF) which retired the West Burton A power station, though the former’s could reopen according to Thursday’s announcement.
3.3GW of energy was saved over 13 demand flexibility events meanwhile, with British Gas and Octopus Energy among suppliers which reduced consumer’s bills based on how much they reduced usage.
The ESO also hinted contracts would return with European countries to trade energy, which saw the UK warm coal stations last winter to aid France as workers launched strikes over pension reforms.