The Loss of Load Probability (LoLP) for Britain’s grid is set to hit 99% over settlement period 37 this evening (22 November).
The LoLP is a measure of the scarcity in available surplus generation capacity that National Grid ESO has at its disposal. Between 18:00 and 18:30 today, the Derated Margin is now predicted to hit -3.3GW.
“A low wind forecast, combined with several assets staying out of the wholesale market in favour of the balancing market, has led to artificially tight margins, which triggered a high loss of load probability to be published, at 99%,” said Shivam Malhotra, consultant at LCP Delta.
“The market doesn’t seem to have factored this into prices, with the Day-Ahead EPEX market clearing at a reasonable £308/MWh. Since then, the IDA1, and IDA2 markets have peaked a little higher (£436/MWh, £461/MWh).
“In their eight-hour forecast, NGESO have published an updated probability for the hours prior to the peak, dropping from a 99% peak to 22% at 16:30. Importantly, there have been no warming instructions on the coal contingency units, or system notices being published, which suggests margins are actually healthier than they appear.”
The period of high LoLP coincides with the second test of National Grid ESO’s Demand Flexibility Service, which is set to run from 17:30-18:30. Within the first test of the new service on 15 November, the ESO looked to procure 200MW of flexibility to help keep the grid balanced.
A number of suppliers and optimisers have signed up to support the service, including Octopus Energy, which procured 108MW of grid flexibility during the first test through its Saving Sessions service.
The Demand Flexibility Service was one of a number of additional tools brought in by the operator for this winter in particular given the predicted tight margins and high prices created by the ongoing energy crisis throughout Europe. This includes contingency coal contacts – as referenced above – with three of the fossil-fueled power stations staying online over the winter as a backup source of generation.
To find out more about the driving factors of power price dynamics in Britain, make sure to read our Current± Price Watch series – powered by LCP Enact – which is published every Monday.
