In Q2 2022, Britain became a net exporter of electricity for the first time, according to new analysis from EnAppSys.
Due to a combination of factors, including the war in Ukraine, Britain’s position in relation to LNG imports within Europe and nuclear outages in France, the country exported 3.6TWh over the quarter.
This was equivalent to around 5.7% of British electricity generation and a flip from the country importing 5.2TWh in Q1.
Paul Verrill, director of EnAppSys explained that maintenance on gas interconnection assets with Europe and Ireland, Britain’s limited gas connection capacity and its decline in gas storage capacity, together with increased levels of LNG imports to Britain, led to the there being a relative excess of gas in the market.
This led to low gas prices when compared to the continent, fuelling a rise in gas-fired electricity generation in Britain, rising to its highest level since Q1 2021.
“Following Russia’s military action in Ukraine, gas supplies to Europe from Russia were cut substantially and future plans for expansion, including a Nord Stream 2 pipeline from Russia to Germany, were shelved,” continued Verrill.
“This caused some uncertainty surrounding European gas supplies, which resulted in gas prices increasing significantly across the continent in the immediate aftermath of the invasion. Prevailing gas prices had peaked at £208/MWh on March 7 but fell back at the beginning of Q2 to £86/MWh, declining further to close the quarter at £51/MWh. However, these prices were still significantly higher than those in GB, where prices dropped as low as £4.57/MWh on June 9.”
These lower gas prices led to lower wholesale electricity prices in Britain than its neighbours, therefore the flow of electricity was mainly from the island to the continent.
Prices in France were impacted by stress corrosion cracking in its nuclear units, which led to many being switched off while assessments are undertaken. This decreased supply further increased the country’s need for imports from Britain.
Gas-fired CCGT remained the biggest contributors to Britain’s power mix during Q2, with 29TWh of total generation, the highest level since Q4 2019. This was despite wind generation reaching its highest level of any Q2 period on record with 15.8TWh of generation – and hitting a new record on 21 May – and demand falling to its lowest level since Q3 2020.
Output from nuclear during the quarter was 12.1TWh, its highest since Q4 2020, and coal generation remained low, with no output for over a month during Q2 2020. There have been concerns recently around the continued phase out of coal, and Drax and EDF have agreed to keep coal-fired power stations online over winter at the request of the government.
Wholesale power prices were down around 20-30% on Q1 2022, but still around double those seen in Q2 2021. Day-ahead prices averaged £155.28/MWh for the EPEX auction and £153.37/MWh for Nordpool.
Paul Verrill said: “When gas prices took a tumble on Saturday June 11, day-ahead prices fell to their lows for the quarter at £0.44/MWh for EPEX and -£2.49/MWh for Nordpool. These are the lowest day-ahead prices seen since early January, before the war in Ukraine began. This highlights the effect that low demand, high wind generation and strong gas supply levels can have on the market when combined with the capacities of energy infrastructure in the GB market.”