In this week’s edition of Current± Price Watch – powered by Enact – we take a forward look at potentially tight margins as the relative stability of recent weeks is savoured, as well as check in with SMS about demand reduction and Open Energi about the growing role of batteries in the Balancing Mechanism.
Day Ahead: Sector eyes potential cold snap as wind generation remains low
Over the past week, day ahead prices hit a high of £249.6/MWh on 7 February and a low of £115/MWh on 10 February.
Wind generation was broadly low, with gas being the main source of electricity in Britain everyday apart from Friday – when the lower prices were seen – when wind produced 41.7% of British electricity followed by gas on 28.9%.
Despite this, low demand meant prices remained low and steady, a trend we can expect to continue into next week
“Over the weekend and the start of this week we’re looking at low wind levels. Despite this, milder weather has resulted in healthy supply margins,” said Matthew Deitz, consultant at LCP Delta.
“Looking further out, despite some reports in the media of particularly cold weather in the coming weeks, weather models are typically showing around average to mild temperatures, but some risk of low windspeeds week commencing 20 February. So although demand would be bearish from milder weather, wind availability potentially being low could decrease supply margins and market prices may respond as such. This could change as we get closer to real time and forecasts improve.
“French nuclear availability remains suppressed in comparison to previous years, and out to the end of February we’re expecting a delta of around -1.6GW of French nuclear availability change. With National Grid ESO taking actions based on uncertainty of interconnector imports, this does pose some downside risk.”
Intraday: Latest DFS test announced as providers dub it ‘great success’
APX Mid intraday prices over the past week were similarly stable, hitting a high of £264.65/MWh on 7 February and a low of £78.25/MWh on 11 February.
National Grid ESO is again running a test of its Demand Flexibility Service (DFS) this evening (13 Feb), which will run from 17:30-18:30. This is the 13th DFS test this winter, with douzens of companies signing up to become providers of the innovative new service.
“As an approved provider of National Grid ESO’s Demand Flexibility Service, we can confidently say that the DFS scheme has been a great success across the initial series of test and ‘live’ events held so far,” said Eamonn Bell, senior flexibility specialist at SMS, which acts an aggregator in partnership with both energy suppliers and non-suppliers.
The company together with its DFS clients have reduced demand by up to 8MWh during events, a volume it expects to continue to grow as it builds out the number of partnerships it has.
“What we have seen over the course of this initial test period is that not only are domestic customers willing to respond to a request to reduce their demand, but that they are becoming more engaged as the DFS scheme evolves, meaning the average demand reduction per household is increasing with every event. We’ve also notably seen more response than usual during the ‘live’ events, where higher price signals encouraged greater participation,” continued Bell.
“In our role as an aggregator for non-supplier approved providers in particular, such as the free smart meter apps Loop.homes and Hugo Energy, we are particularly proud to have been able to widen access to these services. For instance, during the event on 24th January we saw an 8.73MWh demand reduction, which is the equivalent energy needed over the same period to power 26,300 average homes. Without our aggregator services, many of these consumers who took part may otherwise not have enjoyed access to the scheme via their energy supplier.”
Imbalance: Batteries role in balancing grid continues to grow
The system price last week hit a high of £289/MWh on Monday 6 February, and a low of £0/MWh on 9, 10 and 11 February.
Batteries continue to play an ever growing role in the balancing of the system in Britain, boosted by the record high 800MWh of new utility energy storage capacity added last year.
“It’s encouraging to see increased use of smaller, flexible assets by the control room already this year, as batteries begin to make up a small, but increasing proportion of Balancing Mechanism activity,” said Carter Bouley, data scientist at Open Energi.
“We expect this only to grow going forward, and we look forward to releasing the control room’s ‘bulk dispatch’ system. These developments should make better, more economical use of assets available to the control room and provide further opportunity for intelligent optimisers to help stabilize the system as we increasingly rely on renewable generation.”
Last week, National Grid ran its quarterly balancing update where it invited key stakeholders from the sector to find out more about updates being made in the sector and provide feedback, helping to shape the balancing system of the future.
“The most exciting near term changes are the bulk dispatch system, which uses an optimiser to assign multiple bids and offers across the available small BMU stack automatically, for one settlement period. These are then reviewed by an engineer before being dispatched. This will reduce the level of manual work, freeing up time, and should in theory make more use of smaller, and quick response assets,” wrote Bouley in a blog post on the topic on LinkedIn.
“Overall, skip rates have been central to the discussion, and several engineers there agreed that in order to make the most optimal use of assets on the system (and reduce these), they require the right tools and visibility to make those decisions when they are time critical.”
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