This week’s issue of Current± Price Watch – powered by Enact – explores National Grid ESO’s plans to speed up grid connections, the UK achieving a major milestone in generating its first trillionth kilowatt hour of renewable energy, a look into Ireland’s long term power price forecast and how UK-EU cooperation could cut energy costs.
Day ahead: ESO five-point plan to speed up grid connections by up to 10 years
Day ahead prices for w/c 15 May were extremely stable until 20 May experiencing a slight dip to £54/MWh before stabilising for the remainder of the week between £56/MWh to £99.9MWh.
Last week saw the National Grid ESO announce that its five-point plan to upgrade electricity grid connections will slash connection waiting times for 70% of projects with post-2026 connection dates by up to ten years.
Streamlining the connection process time for renewables waiting to connect to the grid will make more cheap energy available in the UK thus, driving down energy prices.
The ESO five-point plan is laid out below:
- Allow customers to leave the connection queue free of charge
- Updating how the ESO calculates project connections dates
- Alternate how it calculates the impact of batteries and other energy storage technologies
- Develop new, more efficient contractual terms for connection contracts, so that projects that are progressing can connect and those that aren’t leave the queue
- The ESO confirmed on 16 May that it would now enable energy storage projects to connect to the grid more quickly
“The big news that we wanted to make clear is that for those projects that have connection dates after 2026, there’s action we are taking that will hopefully mean that they will have an improved connection date,” said Stephen Walker, senior media manager at the ESO.
“This process, first come first served, was good when it was designed, but we’re getting thousands of applications to the grid and the process needs to move with the times.
“Not all of the solutions are things we can do within our gift at the ESO, and that’s where we’ve mentioned longer term reforms, and that involves working with other parts of the energy sector, the energy regulator, and government as well. That’s obviously going to be the next stage of coming up with: what are the solutions, what regulations can we change, what code modifications can be made to try and really bring this connections process into the 21st century,”
The announcement preceded Cornwall Insight’s final price cap prediction for Q3 this year at £2,053.77, £1,227 lower than Ofgem’s Q2 price cap.
Intraday: UK generates one trillionth kWh of renewables
Intraday prices last week started with an average market price of £83.36/MWh with a slow decline until Monday (22 May) when prices climbed to £86.13/MWh. There was also a spike in prices on Friday (19 May) when the average price climbed from £71.67/MWh on the Thursday (18 May) to £82.76/MWh.
Current± reported on 16 May that the nation had surpassed one trillion kilowatt hours (kWh) of electricity generated from renewables. It took the nation took 50 years to reach but based on current projections however, it will take just over five years to reach the next trillionth kWh, the National Grid said.
It is key to highlight how far the UK has come from since records began in 1970. According to National Grid, renewables represented just 1.9% of the total generation in 1970 with hydro having been the main source of renewable energy totalling 4.5TWh.
But offshore and onshore wind in addition to solar – some of the key technologies enabling the UK to transition to low carbon – did not enter the generation mix until 2010, National Grid said. It added this was in line with the emergence of key pieces of legislation including the Energy Review in 2006 and the renewable energy directive in 2009.
Ben Wilson, interim president for National Grid Ventures, said: “This major milestone re-affirms the UK’s position as world leaders in renewable energy and highlights the vital role renewables play in our transition to a cleaner energy future.
“Accelerating the delivery of renewable energy must continue to be a priority for a cleaner, more secure and more affordable energy future for everyone, but it requires the right framework to make it happen. We are committed to working with government and our partners to make it a reality.”
“Incredibly exciting to see one trillion kilowatt hours (kWh) of electricity generated from renewables to date. Looking forward, this is a sign of the future as the GB power system decarbonises further in the coming years with almost 100GW of intermittent renewable capacity on the system by 2030,” said Sam Hollister, head of markets at LCP Delta.
“LCP Delta analysis suggests that available renewable and nuclear generation will outstrip demand in almost half of the hours in just 7 years, meaning we need to ensure we maximise the value of low carbon output through storage, electrolysis and flexibility. Given the make-up of the power system and that high or low wind patterns can last days or weeks, we see an urgent need for policy to support long duration energy storage to help balance the system and utilise the volume of available low carbon power.”
Imbalance: Prices remain stable as increased UK-EU cooperation could save billions
Average imbalance prices remained steady throughout the week despite a drop in the minimum prices from £56.65/MWh on 19 May to £-28.49/MWh on 20 May before rising to £43.05/MWh on 22 May.
The maximum imbalance market price began at £155/MWh on 15 May, dipping to £120/MWh on 21 May before rising back to £150/MWh on the 22 May. Average imbalance prices started at £79.37/MWh and ended at £81.47/MWh.
In the past week, trade association Energy UK released new analysis showing that increased UK cooperation with the EU could cut wholesale energy costs by up to £1.1 billion a year. Leaving the EU’s Internal Energy Market (IEM) has led to a ‘patchwork’ of trading arrangements and a less efficient system for trading electricity between Great Britain and mainland Europe, leading to higher prices.
Energy UK said it was urging the UK government to build on the Windsor Framework agreement on UK-EU relations and accelerate engagement on energy trading and carbon pricing. New trading arrangements for emissions should have already been in place, but the UK has been slow to implement new trading arrangements after leaving the EU.
“The new relationship between the UK and EU was intended to maintain close cooperation over energy and the sooner we can bring in new trading arrangements – instead of temporary and imperfect alternatives – the sooner both sides can maximise the benefits,” said Andy Berman, Energy UK deputy director.
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