Peter Parsons, National Grid
Provides an overview of what happened in the previous winter, before considering the outlook for 2009/10. During the previous winter, there were periods of cold weather lasting around two weeks, but overall the winter was average; although one impact of the January cold snap was that it drove UK gas demand to near record levels. There were also: widespread gas supply disruptions across Europe in January as a consequence of Russia/Ukraine disputes; unprecedented IUK winter export flows; and higher demands met through significant flows from UK storage facilities at an early stage of the winter period, leading to concerns over the UK’s resilience to a late winter supply shock or prolonged period of cold weather. However, the impact of the economic recession also lowered overall demand. Looking forward to the 2009/10 winter, it is anticipated that this will be milder than the previous year, with a 1 in 7 chance of a cold winter. Forecast gas demand (weather corrected) is 2.5% lower, on top of 6% reduction last winter, whilst forecast non storage supply is similar to last winter with more upside, notably through LNG. Generation availability exceeds forecast peak and there is a capacity margin of 34% and an operational margin of 15%. The economics of coal versus gas for base load generation are marginal but coal is expected to be used at higher demand, due to price; whilst gas for CCGTs continues to provide flex for electricity market and potentially a market response for gas.