Post: Record day ahead prices seen in GB

Record day ahead prices seen in GB

On 12 December GB power prices reached almost £2,600/MWh at 17:00 GMT, and Winter contingency (Drax-5 and Drax-6) units are on call on for midday as wind is forecast to drop (1,489MW at 17:00) while demand is expected to be high (45,800MW at 17:00) due to low temperatures, and concerns over import availability.

This morning saw the Loss of Load Probability peaking at 94% (although at the time of writing this had fallen to 18%).

Although the Loss of Load Probability is automated and not indicative of how tight system is, it provides a signal to the market on scarcity in available surplus generation capacity that National Grid ESO has at its disposal. To deal with the low margin, we saw many actions being taken to try and resolve this issue.

National Grid ESO have called both Drax units (part of the coal contingency contracts) to be available. Drax 5 is set to synchronise at 11:15 GMT, and Drax 6 at 12:25 GMT. The notice isn’t a confirmation that these will be used, however it means that they will be available amidst the cold snap which is being felt into the end of this week. This will provide ESO an extra 1140 MW of generation, should they need it as a last resort. This is one of the last resort actions National Grid ESO can take.

The tight margin has coincided with the second test of National Grid ESO’s Demand Flexibility Service, as part of the monthly testing requirements. This allowed National Grid to call on (currently) an additional 155MW of demand reduction between 17:00-19:00. 

DFS has been introduced to market very quickly, specifically to address the tight margins we are expecting this winter. The speed of delivery is a testament to National Grid ESO and clearly shows their commitments to keeping the lights on. DFS is likely to play a big part this winter by providing additional capacity that is not already in markets such as the Capacity Market or frequency response market. It is delivering immediate benefit and highlighting the importance of flexibility in a Net Zero future.

The result of the tight system was that EPEX SPOT cleared at £2,586/MWh.

Although National Grid ESO has said it remains “cautiously confident” of adequate margins for winter, we expect the DFS to provide a significant contribution. This was only the second test and with more providers getting onboarded into market, we can expect DFS to grow over the winter allowing more flexibility and more MW for National Grid to call upon.