Tight supply margins have been a feature of the electricity system this winter during periods of high power demand and low wind output. These conditions have been combined with several unplanned and extended planned power plant outages. As a result, reducing National Grid Electricity System Operator’s (ESO) cushion of spare capacity.
Plant outages impacting this winter have included two 850MW CCGT plants following Calon Energy entering into administration during the summer, several stations in EDF’s nuclear fleet, and the 1GW BritNed interconnector with the Netherlands.
These, combined with near-freezing temperatures and low wind across GB led to the ESO issuing three system warnings last week: two Electricity Margin Notices (EMN) for the evening peaks on 6 and 9 January and a Capacity Market Notice for 18:30 on the 8 January.
These system warnings provide a signal to the market that extra capacity is needed, incentivising generators with spare capacity to sell their power either via the wholesale market or in the Balancing Mechanism (BM). This can result in significant spikes in wholesale and imbalance prices; we saw several exceptional price spikes last week, with N2EX day-ahead hourly prices peaking at £1,000/MWh for 18:00-19:00 on Wednesday, and imbalance prices rising to a high of £4,000/MWh on Friday for 19:00-20:00.
In this ‘Chart of the week’, we look at BM activity during the tightest periods of last week, 16:00-20:00, over Wednesday 6 – Friday 8 January. The chart shows accepted offer volumes by technology and the Single Imbalance Price (SIP) by half-hourly settlement periods.