In this weeks Current± Price Watch series – powered by LCP Enact – we take a look at how Britain is eyeing power prices over winter and how the imbalance price has fared over the first half of 2022.
Day-ahead: Prices steady as wind drops
Day-ahead prices remained relatively stable over the last week, hitting a high of £245.8/MWh on 16 June, and a low of £104.1/MWh on 19 June. This was higher than last week, when surging wind led to prices dipping down to just £0.44/MWh on Saturday 11 June.
With winds calmer over the past week, gas produced the greatest share of the electricity mix every day apart from Friday and Sunday, when wind represented 34.1% and 32.1% of GB electricity respectively.
As the weather continues to become sunnier, solar is increasingly boosting the low-carbon content of the mix, hitting a high for last week of 8.7% on Wednesday 15 June according to National Grid ESO.
Intraday: Britain eyes potential volatility over winter amid relative stability
Intraday prices were similarly steady between 13 and 20 June, hitting a high of £280.35/MWh for APX MID. This is a jump from last week’s high of £193.59/MWh, again due to less wind energy in the mix.
It hit a low of £78.01/MWh, avoiding dipping into negative figures as it did on 11 June.
The UK is continuing to assert its readiness for power price volatility over the winter, with concern remaining over the impact of Russia’s invasion of Ukraine and the international wholesale gas market despite the current period of relative calm.
Discussions with two other plants are ongoing.— Kwasi Kwarteng (@KwasiKwarteng) June 14, 2022
If we have available back-up power, let's keep it online just in case. I'm not taking chances.
For our long-term energy security, we're accelerating renewables and nuclear - while maximising North Sea oil and gas production.
In response to this, the government called on a number of coal-fired power plants to remain online over the winter. On 14 June, EDF announced that it had agreed to keep West Burton A online for a further six months to provide support to the wider system.
Should gas prices remain high and volatile through winter, the coal-plant may be called on to help the system remain stable.
Imbalance: Significant opportunity remains for optimisers
The imbalance power price last week hit a lot of -£48.76/MWh and a high of £324/MWh, remaining fairly stable in comparison to much of 2022.
“UK Imbalance prices have been highly volatile due to the extreme market conditions over the six months of the year. As UK supply margins have been stressed and global economic factors have impacted the UK economy,” said Chris Smith, asset development director at GridBeyond.
“In 2022 ‘system sell price’ (SP) has turned negative in 141 settlement periods with the lowest value being -£90.32/MWh. Conversely, the highest SSP value has been £4,031/MWh on 24 January 2022. During a sustained time frame from 15:30 to 18:30 where SSP values exceeded £3,000/MWh in all settlement periods.”
Smith pointed to yesterday (19 June) as an example of the opportunities and challenge of the UK imbalance market for optimisers currently. Day-ahead prices were consistent between 3:00 and 6:00 at £153 to £165 per MWh, whilst over the same period system prices moved down in four consecutive half hours by over £200 per MWh.
“Increased renewable builds via the existing and planned CfD commitments will only continue to increase the volatility", finished Smith, stressing the importance of storage assets coupled with optimisers who can use AI and trading capabilities to extract long-term value.