French blackout fears mirror those in the UK

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31 July 2013, Electricity

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RTE has released a report on the state of demand and supply in France for the coming five years. The study highlights security of supply risks in 2016-17, assuming a particularly inclement winter and therefore higher than usual demand for electric heating, which accounts for 40% of demand. RTE predicts that if a cold winter strikes in 2016, a blackout of 40 hours could occur. Further, this estimate assumes rather stagnant growth in demand, based on conservative estimates of future GDP. An optimistic growth scenario would see the possible demand-supply gap evolve even more alarmingly by 2016.

Similar to the UK, driving the higher risk on the supply side is the EU's Industrial Emissions Directive, which will see some 7,700MW of French coal-fired capacity come offline by 2016. Further, lower spark spreads mean some 1,000MW of gas-fired generation will come offline following GDF Suez's announcement that it is temporarily stopping three out of four of its combined-cycle gas plants.

It is not likely that renewables will be able to cover this lost capacity. Despite a fair 18.5TWh of electricity generated in 2012 by wind and solar, renewable capacity remains too intermittent and more importantly is growing too slowly to fill the gap. RTE conservatively predicts just 12GW of wind capacity and 8.3GW of solar capacity in 2018.

The final factor influencing RTE's predictions is the expected end of some of EDF's significant demand-side reduction (DSR) contracts with industrial users in 2016, adding a possible 1,000MW to demand at peak times.

As for the UK, Ofgem's second electricity capacity assessment report in June 2013 estimated that the risk of a blackout had increased from one in 12 to one in four - equivalent to margins of between approximately 2% and 5%. The estimates assume that demand stays at current levels. Datamonitor concurs with this assumption; in our updated power forecast for the UK demand is forecast to remain largely flat, increasing by just 0.33% between 2013 and 2015.

The possible solutions for France echo those proposed in the UK. Renewing and expanding DSR contracts with large energy users as well as increasing import interconnection capacity beyond the forecast of 9,000MW have been suggested by RTE. In addition there is the reduction measure that has been in place since July 1, 2013 to reduce demand across the country by turning off publicity billboards and shop-front windows at night, which is predicted to reduce demand by 2TWh or 0.4% of demand.

One should not expect to see the lights across the UK's shop front windows fall dark. The UK is addressing its capacity gap, with a capacity market to be implemented as part of its electricity market reforms. The first new capacity under this measure is expected to arrive to market in 2018-19; in the meantime, DSR is being discussed by Ofgem, the DECC, and the National Grid. Similar measures plus the intended capacity mechanism in France due in 2015-16 will ensure that blackouts remain a risk but not a reality. / / @DatamonitorEN

Source: MarketLine

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