It has been an interesting week in energy markets, with power and gas prices spiking to record highs after a “perfect storm” of generator outages, interconnector availability, and reduced wind output amid a global shortage of natural gas and high commodity prices.
Beginning at the start of the week, abnormally high day-ahead power prices in the GB power market for delivery Monday 6 September at 18:00 where we saw the clearing price for power breach £720/MWh depending on the market. The real-time balancing market (Balancing Mechanism/ BM) was similarly extraordinary as we saw National Grid ESO accept BM offer prices at nearly £4000/MWh by EDF’s West Burton coal stations and a record-breaking £4950/MWh by Uniper’s Grain station to meet the shortage.
Extreme volatility on wholesale markets saw an auction for UK intraday power prices clearing at £2,000/MWh from noon to 12.30 pm – a price that was nine times higher than the intraday power values that prevailed at 8 am. System prices for the evening peak continued to reach peaks of around £4,000/MWh for much of the week.
Source: Elexon BMRS
On Thursday it was announced that Ireland had been forced to freeze power exports on the Moyle interconnector to prevent an energy shortage – the Single Electricity Market Operator (Semo) has also been issuing warnings through the week of “generation shortfall(s)”. Ireland has also seen a similar trend in prices with power reaching €4000/MWh on Thursday evening. This further exacerbated near record-high electricity prices in GB and across Europe.
Throughout the week the shocks kept going with the loss of load probability (the likelihood of the system not being able to satisfy the load demand for a given time period) reaching 15% for some time periods and system margins in the hundreds of MW (not the thousands normally seen).
Late last week, the GB power market, and some other interconnected markets were dealing with issues during the commissioning of the North Sea Interconnector, due to go live October 1st. The North Sea interconnector is under-sea and links the UK power market with Norway. From August 17th, commissioning and testing began. On 2 September at 15:30-16:00, a huge export surge on the interconnector caused frequency issues on the UK power market triggering very active and costly action in the Balancing Mechanism for the next few hours.
Looking further back, one driver of the high prices can be traced back to activity in the gas market. Over the last month, gas prices have reached three-year highs driven by concerns over low European gas storage levels and prolonged maintenance works across the GB-Norway interconnector. But the gas market has failed to respond to news that Nord Stream 2 is expected to be operational by the end of the year following the completion of pipelaying. Instead, the market is being driven by the need for gas in power generation at the same time that utilities across Europe seek to replenish gas stocks ahead of winter.
Although events such as these are very difficult to predict and forecast, GridBeyond offers a robotic trading capability to deal with the situations of price volatility in real-time, to both reduce exposure and increase revenues with Artificial Intelligence. For flexible generation assets, such as batteries, demand-side response, and gas peakers, accurately forecasting and predicting energy prices is essential so these market participants can decide where the best value for their MW is, not only in terms of the market (energy/ancillary services) but also in terms of the specific periods of the day.
If you have any questions about the potential for your site, contact our team, or learn more about the complimenting services offered by GridBeyond’s intelligent energy platform, our Point Ai. Services brochure.