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EDF made over £7.5m in one day in January as it reacted to tight margins

Image: Getty.

Image: Getty.

In January, EDF was paid more in three days than in Q3 2020, as low winds and cold temperatures pushing National Grid ESO’s ability to balance the system.

With demand high and generation low, in January 2021 the operator paid EDF nine times more than it did during the same month in 2020, with the average sales hitting £473/MWh compared to £53/MWh according to new analysis from Hartree Solutions.

Other generators also benefitted from the high prices, with EPH’s average sales up to £387/MWh and Drax’s £303/MWh.

Estimated generator revenues. Image: Hartree Solutions.
Estimated generator revenues. Image: Hartree Solutions.

In particular, National Grid ESO procuring power from EDF’s West Burton B in the Balancing Market at the record breaking £4,000/MWh on Friday 8 January contributed to the companies significant takeaway. This was some 70 times greater than the average price paid over 2020.

As such, West Burton B achieved the highest daily revenue from the Balancing Mechanism, receiving over £7.5 million in a single day, which contributed to it also achieving the highest monthly value across January as well .

Although the EDF owned plant did not produce large volumes of power in January, its ability to react to demand meant that it made over £20 million. This was about 21% of National Grid ESO’s total spend of £100 million on securing margins.

Throughout January, it put out six Electricity Market Notices (EMN) in an effort to manage the volatility.

National Grid power procurement costs and volumes. Image: Hartree Solutions.
National Grid power procurement costs and volumes. Image: Hartree Solutions.

Temperatures dropped to 4°C below normal in January, whilst wind generation was just 3.5GW on average. Demand was higher than last year as well, surpassing the 2019/20 high by nearly 1GW on 7 January 2021 to hit 46.3GW.

Other generators like EPH – whose subsidiary EP UK Investments Ltd operates its UK assets – also saw revenues jump as the tight period continued, achieving the highest average sales price for any day in the Balancing Mechanism of over £3,600/MWh on 13 January.

But with the majority of generators having played into the day ahead markets to capitalise on the high prices, there were few left to react when National Grid ESO issued EMNs for example. Those that were able to exploit the margins included SSE-owned Keadby, the EPH-owned Langage, the EDF-owned West Burton units, the Uniper-owned Connahs Quay units and the Drax-owned Rye House and Drax-5 coal unit.

EDF declined to comment on the analysis.

For more information, see Hartree’s full analysis here.

System Balancing volumes as a % of total generation. Image: Hartree Solutions.
System Balancing volumes as a % of total generation. Image: Hartree Solutions.

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