With temperatures dipping, the last week has presented the first real challenges of the winter period to National Grid ESO. In the latest in our Current± Price Watch series – powered by LCP Enact – we take a look at the first Capacity Market Notification (CMN) of the season, as well as how the World Cup is causing demand pickups.
Day Ahead: High LoLP leads prices to rise
Low wind forecasts this evening along with reduced interconnector availability as the French nuclear fleet remains constrained has led to the first significant spikes in Day Ahead pricing of the winter. EPEX has hit £850/MWh, while N2EX hit £1,000.01/MWh for this evening (28 November).
There is a high Loss of Load Probability (LoLP), at 87% for 5pm as wind is forecast to drop below 500MW.
At 1:33pm National Grid ESO issued a CMN for 6pm today, given the Transmission Demand and Operating Margin was expected to be 38,338MW, and the Aggregate Capacity of BM Units expected 38,784MW. This was then cancelled at 2:04pm after additional capacity was secured.
Today’s tight capacity follows LoLP hitting 99% between 18:00 and 18:30 on 22 November, with the Derated Margin at -3.3GW. This also led to a CMN being issued and then cancelled, the first of this winter.
The second test of the Demand Flexibility Service (DFS) ran on 22 November, helping to support the grid through this period of strained capacity margins.
“Although the Loss of Load Probability is automated and not indicative of how tight system is, it provides a signal to the market on scarcity in available surplus generation capacity that National Grid ESO has at its disposal. To deal with the low margin, we saw many actions being taken to try and resolve this issue. The interconnectors were net importing Tuesday evening, for only the second time in two weeks,” said Seamus King, market optimisation manager at GridBeyond, which took part in DFS.
“As the evening peak approached, National Grid ESO issued an Electricity Capacity Market Notice to firm up supplies ahead of the evening peak. However, this was cancelled 25mins later as (at least in part) the period of high Loss of Load Probability coincided with the second test of National Grid ESO’s Demand Flexibility Service, as part of the monthly testing requirements. This allowed National Grid to call on 113MW between 17:30 – 18:30.”
Last Tuesday saw high prices being accepted in the Balancing Mechanism, with £1494/MWh for a number of assets.
Intraday: Pickup effect seen as nation tunes in for the football
The APX (Mid) intraday prices were fairly stable over the last week, with a high of £289.59/MWh on 22 November, and a low of £42.72/MWh on 27 November.
One of the range of factors National Grid ESO monitors is demands due to significant television events, including the 2022 FIFA World Cup.
Already we have seen pickups for certain matches, including a 819MW pickup at half time during the England vs Iran match on Monday 21 November.
Imbalance: Second Demand Flexibility Service test helps keep grid balanced
Imbalance prices hit a high of £299.3/MWh over the last week today, and a low of £-18.15/MWh on 25 November.
The second test of DFS helped keep the grid balanced during last week’s stress event. With similar conditions today, National Grid ESO did at 10am this morning issuing a notice saying it would use the service over the evening of 29 November.
“With an 87% Loss of Load probability in GB again today for the evening peak, as temperatures and wind speeds are forecast to drop considerably, we have seen National Grid ESO publish a DFS Anticipated Requirement Notice that a DFS Service Requirement could be published today at 14:30 for delivery tomorrow evening, as low wind generation forecast (~300MW), coupled with high demand >42GW means we will continue to see high power prices and likely market events,” said King.
This would have been the first, non-test use of the service, however the operator cancelled it this afternoon.
During the second test, Octopus Energy’s customers saved 112MW of demand, an increase on the 108MW seen during the first. National Grid ESO is set to run a maximum of 12 of these test periods over the winter.