Britain’s National Grid to pay firms to use power this summer

Source: By Susanna Twidale, Reuters • Posted: Thursday, April 28, 2016

LONDON, April 21 (Reuters) – A dozen British companies will be paid to use electricity under a scheme National Grid will launch next month aimed at balancing the system in summer, when output is high from renewable energy sources such as wind and solar.

National Grid said 12 companies have won contracts for the Demand Turn Up scheme which will run from May until September.

“For the 2016 service period we have procured 309 megawatts of Demand Turn Up,” National Grid’s Nick Blair, senior account manager of the scheme, said in an email.

Under the scheme, companies will conduct some operations at night or at midday when there is a lot of electricity generation from wind farms and solar power plants.

As a part of the tender, companies were required to prove they need to carry out such operations and that the electricity would not be wasted.

National Grid declined to name the winning companies but said an example could be a water firm shifting their pumping processes to a time when supply is high but demand is low.

The scheme was also open to small scale power generators that can also reduce their output at short notice, such as combined heat and power units, which generate electricity as a by-product of heating.

The companies will be paid 1.5 pounds per megawatt hour (MWh) for participating in the scheme. They will be paid a further 60-75 pounds/MWh if called upon to act.

British spot electricity prices currently trade around 37 pounds/MWh.

In 2014 National Grid paid 10 million pounds ($14.43 million) to wind power generators to stop production when electricity demand was low to ensure the system was not oversupplied.

National Grid forecasts electricity demand will hit a record low this summer.

Meanwhile renewable electricity output in Britain is rising. It accounted for a record 25 percent of the country’s generation in 2015.