In the first edition of Current± Price Watch – powered by LCP Enact – for 2023, we take a look at the record-low Day Ahead prices as all metrics again dip below zero amid record renewable generation.
Day Ahead: December finishes with record-low prices
Over the last week, the Day Ahead price in Britain hit a high of £248/MWh and a low of £0/MWh.
This follows a record-low period for the metric over the Christmas period, hitting £-50.1/MWh on 29 December at for 04:00 GMT.
Not only did prices drop to such a low, but they remained negative for eight hours, from 23:00 on 28 December till 7am on 29 December. Importantly, this passed the six-hour Contracts for Difference (CfD) rule, leaving assets without support.
“This rule stated that any generators awarded CfD contracts (by the Low Carbon Contracts Company) for certain auctions (AR2 and AR3 in this case) would not be compensated for any power generated if Day Ahead prices drop below 0 for six hours or more. This matched European law at the time, which prohibited support under similar circumstances,” wrote Shivam Malhotra, consultant at LCP Delta.
“During the negatives, on the morning of the 29th Dec, wind fleets turned off and expected generation dropped to a low of 11.98GW (28/12/22 23:30 GMT) – down almost 20% from four hours earlier! This is over 3GW of wasted wind power in half an hour alone, based on where it was expected to be. This 30 minutes would have been enough to power ~1.5 million homes for a whole day.
“To heighten matters, National Grid ESO then turned down a further ~2.5GW of wind for energy reasons, which led to actual outputs down to a minimum of 9.5GW (29/12/22 00:00) – almost a 40% drop on where wind speeds would have allowed it to be! Half an hour of energy that could have powered ~2.7m homes for an entire day.”
The new record capped a dramatic December, which also saw the highest ever Day Ahead prices, which hit £2,585.8/MWh on 12 December.
Intraday: Renewables start 2023 with record generation
APX Mid Intraday prices hit a high of £215.98/MWh over the past week, and a low of £ -49.75/MWh.
Generation has been more favourable in Britain in recent weeks, helping to lower power prices overall. For example, wind generation hit a new record high of 20.918GW on 30 December.
Just days after, the UK’s energy mix hit 87.6% of zero carbon electricity generated onto the grid – a new record.
Elsewhere, France’s nuclear fleet was back in operation, helping meet demand on the continent and expanding the potential interconnector capacity available to Britain.
Imbalance: A return to negative pricing
The Imbalance price hit a high of £300/MWh over the last week, and a low of £-95.71/MWh, with numerous periods of negative pricing over six days out of the week.
With generation from renewables high and warm temperatures minimising demand, the imbalance price has been fairly stable over recent weeks. Although battery energy storage and other flexible assets have still worked to maintain this, for example responding to a frequency event on Christmas Day.
“It looks as though it was the BritNed interconnector that caused the frequency event on Christmas Day,” explained LCP Delta’s Tim Sparks.
“NGESO were running the system with quite a low level of inertia at the time – at around 140GVA.s – which would have exacerbated the impact of the interconnector deviation on the system frequency.”
However, as it was Christmas Day and therefore peak demand hit earlier than normal – around 1pm – as well as the system imbalance out-turning at the time, there was no discernible impact on prices, according to Sparks.