This week’s issue of Current± Price Watch – powered by Enact – explores the International Energy Agency’s (IEA) latest report forecasting significant growth for renewables, the National Grid ESO’s planned reforms for grid connectivity and a newly proposed interconnector between Northern Ireland and Scotland.
Day Ahead: Northern Europe witnesses low demand driver by good renewable output
Day ahead market prices fluctuated throughout the week with a max price of £95.1/MWh on 5 June and a min price of £12.2/MWh on 29 May.
Matthew Deitz, consultant at LCP Delta said: “Last week, we observed low demand driven by good renewable output across northern Europe, and warmer weather suppressing demand. This was particularly evident over the weekend (27-28 May).
“The warm weather brought with it bearish sentiment in the spot wholesale market, pushing prices on the continent negative. For example, France’s ahead wholesale price fell as low as -€37.13/MWh on 28 May (period 27) and -€45.60/MWh on 29 May (period 29).
“Interestingly, we did not see negative pricing in GB, but the market dynamics did once again highlight the inefficiencies of operating with two separate day-ahead auctions, with an average difference between the two markets of £4.50/MWh, or a spread of 8% – which is not insignificant.
“At the extremes, on 27/05 at 13:00, N2EX bottomed out at £3.60/MWh, in the same period APX cleared at £22/MWh. This is a wide spread of 84%. These differences are driven by the different market dynamics and what participants are trading in each auction. N2EX is a more liquid auction, with an average traded volume greater than 5000MW over APX for the week.
“In GB, the ESO had to take actions to address system constraints caused by this low demand. We forecast that in several occasions inertia provided by the market fell below the statutory requirement, and other transmission constraints (such as thermal) led to the curtailment of large volumes of wind on 27 May. There were also actions to curtail interconnector flows (reducing imports) between the 27 and 29 May and on the 3 and 4 June. These actions contributed to increased BSUoS charges over these days.”
IEA report predicts 4,500GW of renewable electricity capacity by 2024
On 1 June, the IEA released its latest Renewable Energy Market Update report forecasting that total renewable electricity capacity is set to rise to 4,500 GW by next year.
In total, global renewable capacity additions for 2023 are set to increase by 107GW (the largest absolute increase to date) to more than 440GW.
A number of renewable technologies are to see strong deployment including wind power and solar photovoltaic (PV). IEA stated this is a direct result of the energy crisis caused by volatility in the wholesale gas market.
Technologies such as solar and wind have seen a surge in deployment as a means to increase energy security and to drive down the cost of energy bills.
However, the IEA warned that wind turbine supply chain growth is unlikely to match demand over the medium term due to rising commodity prices and supply chain issues reducing manufacturer profitability.
The UK has seen significant growth in its wind generation sector with further growth forecasted for the coming years. Less than two weeks into 2023 saw UK wind generation set a new record generating 21.62GW on 10 January.
“Solar and wind are leading the rapid expansion of the new global energy economy. This year, the world is set to add a record-breaking amount of renewables to electricity systems – more than the total power capacity of Germany and Spain combined,” said IEA executive director, Fatih Birol.
“The global energy crisis has shown renewables are critical for making energy supplies not just cleaner but also more secure and affordable – and governments are responding with efforts to deploy them faster. But achieving stronger growth means addressing some key challenges. Policies need to adapt to changing market conditions, and we need to upgrade and expand power grids to ensure we can take full advantage of solar and wind’s huge potential.”
Intraday: New ESO reforms to clear out connection queue
Intraday prices saw a high of £105.07/MWh on 1 June and a low of £-36.2/MWh on 29 May.
Following on from its five-point plan to accelerate grid connections revealed in mid-May, ESO has announced it will introduce new measures to clear the connection queue.
These measures will see energy generators whose projects are not progressing be either moved backwards in the queue or removed entirely.
ESO has said this measure will speed up connections for 95GW of energy storage projects currently in the pipeline, reviewing contracts to ensure that parties hoping to get a connection in the next two to three years are on track.
“It’s brilliant to see this announcement as we’ve long suggested quick practical steps like queue-jumping to help deal with huge delays in connecting projects. It’s great that National Grid ESO is also finally opening up competition in this space,” said Zoisa North-Bond, CEO of Octopus Energy Generation.
“While it’s a positive step in the right direction, the devil is in the detail. We’re past the point of polite processes. What we need is fresh thinking beyond the concept of ‘a queue’, like concrete dates to implement steps, a firmer stance on prioritising renewables over fossil fuels, and better use of data to show where projects can connect quicker. This will end the gridlock, unlock Britain’s colossal renewables potential and bring down bills for good.”
A development in the National Grid’s ‘Great Grid Upgrade’ will also help make new, cheaper renewable energy more accessible to consumers.
Last Friday (2 June), National Grid invited communities in East Riding of Yorkshire, North Lincolnshire, and Bassetlaw in Nottinghamshire to submit their views on a new electricity powerline between the substations at Creyke Beck and High Marnham.
The proposed powerline will be approximately 90km long carrying 400,000 volts.
This is hoped to support the increased power flow from renewable electricity generators between the North and the Midlands.
Imbalance: 700MW Northern Ireland-Scotland interconnector proposed
Imbalance market prices saw a max price of £160/MWh on the 4 June and a low minimum price of £-155.2/MWh.
On 20 May, a new 700MW interconnector was proposed between Northern Ireland and Scotland.
The £700 million project, dubbed the LirlC Interconnector, aims to connect the two countries by the end of the decade allowing renewable energy to be transmitted between the two. It is being explored by Transmission Investment – an independent transmission company.
Central to the project’s development are two convertor stations: one situated in Northern Ireland and another in Scotland. A 130km cable will then be used to link the two stations depending on the final route, the firm said.
Transmission Investment added that “potential routes and locations are being studied in detail and will be selected to minimise disturbance to the environment and local communities”.
“The application for a Transmission Licence is an early milestone in a long process, but its significant in that it moves us one stage closer towards delivering this very exciting project,” said Keith Morrison, LirIC project director at Transmission Investment.
“LirlC will increase the opportunities for home-grown renewables to export power to other markets, reduce the curtailment of wind generators, lower the wholesale power price in wholesale markets, which on average is forecast to be higher in Northern Ireland, as well as deliver social economic welfare benefits.
“This interconnector will help balance out the system so that power can be imported or exported according to market requirements. There’s a long way to go in the process, but we are pleased that we have reached this milestone.”
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