The UK’s National Energy System Operator (NESO) control room issued an Electricity Margin Notice (EMN) in the evening of 7 January for the period between 4PM and 7PM on 8 January.
NESO had forecasted a system margin shortfall of 1700MW and a contingency requirement of 900MW. Margins were forecast to be too low as the result of a combination of low wind generation, outages and the cold weather. It also issued, then cancelled, a CMN and the EMN has now been cancelled, too.
To balance supply and demand on the electricity grid, NESO issued the EMN when its control room became aware that there would be less spare capacity than usual. It it signalled that it would need the market to be ready to provide additional capacity.
Under usual circumstances, an automated Capacity Market Notice (CMN) is issued when there is a forecasted generation shortfall. An EMN is a stronger signal to the market, reflecting an increased concern from NESO.
A spokesperson for the operator noted that both types of notice are part of NESO’s operational toolkit and are routine tools used most winters. They “do not mean that electricity supplies are at risk or that there is not enough electricity to meet demand”.
During the energy crisis, such measures were far more common: on 8 January 2021, the operator issued its second EMN in a week and the fifth for that winter. At the time, the system was managed by National Grid ESO.
According to Shivam Malhotra, head of power trading at LCP Delta, NESO’s options for balancing yesterday were “relatively limited”.
“Where it would normally look to import additional generation from European neighbours, the potential is somewhat restricted as we are already importing around 5GW from interconnectors,” Malhotra said.
Previously, the system operator might also call on back up coal plants in the face of forecasted low safety margins. In this case, one option would have been returning some interconnection from outage.
Interconnectors step in to increase electricity margins
In a LinkedIn post, director of commercial, customer & regulation for National Grid, which owns and develops the high-voltage electricity transmission network in England and Wales, Rob Rome, explained that the Viking Link Interconnector was able to do exactly that.
Rome wrote: “Our Interconnectors were already scheduled to import at their available capacity, supplying 5.6 GW to the UK grid. However, following NESO’s notice, our UK and Danish teams worked hard to bring Viking Link back from a planned outage early, adding a further 0.7 GW to support the GB system.”
NESO also procured around 184MW of demand flexibility through its demand flexibility service (DFS).
Day-ahead markets remained relatively low in the aftermath of the notice, with LCP Delta putting them at £300-£400/MWh but noting that intraday markets saw trades taken above £200/MWh before the tightest projected period had been reached – “likely a response to the high acceptances in the Balancing Mechanism”.
NESO accepted offers from Rye House and Connah’s Quay Power Stations in the Balancing Mechanism (BM) around midday, contributing to high system prices which saw buy/sell prices spike at £2900/MWh for 3PM delivery onwards. Such leaps have not been seen in the UK since 2022, during the energy crisis.
This was also felt by consumers as dynamic tariffs jumped up to represent the lack of electricity availability. Octopus Agile, for example, jumped up to £1/kWh.
