The beginning of 2022 has been marked by record high power prices on the back of high gas prices, which were further strained by Russia’s invasion of Ukraine. Gas prices have reached over ten times their normal level, adding significant volatility to the energy market.
In this, the first in Current±’s new Price Watch series – powered by LCP Enact – we take a look at how the Day Ahead, Intraday and Imbalance prices have faired over the past week. Each Monday, we’ll track these key metrics, providing insight into what is driving power prices.
Between 23-30 May, power prices in Britain have been much lower than over the last couple of months, due to falling demand as the weather continues to get warm and gas prices coming down materially.
This drop was bolstered by surging wind generation, which set a new record as the system continues to adapt to the variable renewable energy source, and the go-live of the new Eleclink interconnector.
Day Ahead: Renewables driving lower prices
EPEX day ahead prices for the UK hit a high of £193.1/MWh on Monday 23 May last week (pictured above) before reaching £232/MWh on 30 May, surging past last Monday's high.
“The start of [last] week saw prices rise compared to the previous week, as very low wind on Monday caused prices to spike to nearly £200/MWh,” said Rajiv Gogna, partner at LCP.
“However, over the week a rise in wind generation and increasing solar output have caused prices to fall to lows of £72/MWh.”
Nordpool prices broadly followed the same trends, hitting a maximum price of £194/MWh on Monday 23 May, and a minimum of £72.3/MWh on 27 May.
Both dropped away during the week before surging over the weekend, with prices for Monday 30 May already exceeding last week, with EPEX hitting £232/MWh and Nordpool hitting £224.76/MWh in period three.
Intraday: Britain’s interconnection grows
Similarly, intraday prices remained relatively low over the past week in comparison to earlier this year. APX prices hit a maximum of £204.54/MWh on 23 May, and a minimum of £33.26/MWh on 27 May. For period three today (30 May), the maximum has already exceeded last week's, hitting £212.6/MWh.
Energy trading with Europe was boosted last week, with the HVDC 1000MW Eleclink electricity interconnector going live, further connecting France and Britain via the Channel Tunnel.
“Prices continue to remain lower than in France, and GB continues to act as a net exporter,” said Gogna. “This included the go-live of Eleclink, which came online on Wednesday and immediately began exporting a further 800MW from GB to France.”
In April, Britain became a net exporter of electricity to Europe for the first time in over four years, with net exports of 50GWh. This was largely due to the energy crisis in France, which was exacerbated by outages at a number of nuclear power plants.
Imbalance: Record breaking wind generation highlights need for flexibility
The imbalance or system price hit a high of £310/MWh on 29 May last week, and a low of just £0.3/MWh on 27 May.
A new generation record was set last week, as wind surged to 19.916GW on 25 May. National Grid ESO issued a Localised Negative Reserve Active Power Margin (NRAPM) notice a little after 4pm to request additional flexibility in the West of Scotland to manage the surge. This was withdrawn at 8:30pm when normal operating conditions returned.
Writing on LinkedIn, renewable management software company Limejump highlighted that wind speeds were actually lower than at previous points in the year. For example, during Storm Malik – when the record was previously set as generation hit 19.5GW – wind speeds hit more than 90mph.
By comparison, last Wednesday 25 May saw wind speeds of ~30mph, but this is a more optimal wind speed, straining the system less and leading to less need to curtail generation.
Well blow us away! We have now validated the data and the wind record from Wednesday 25 May is even higher than expected - confirmed at 19.916GW. Whoosh! 🎐🌬️🌪️🍃— National Grid ESO (@NationalGridESO) May 27, 2022
“This is a great milestone for the renewable revolution taking place in the UK as the optimal wind has allowed renewables to provide over 50% of yesterday's peak energy demand, but it also highlighted that we still have a long way to go,” wrote Limejump.
“Wind farms were having to be ‘bid off’ as a result of transmission constraints caused by this high wind generation. The need for flexibility to balance the growing renewable output is essential to continue the UK's drive to reach Net Zero as soon as possible.”
The generation record came just the day after a data outage by Elexon, which meant there was no published wind transmission figures for some of 24 May.