CCGT plants help balance the market during price spikes: January saw the day-ahead baseload power price (for a 24-hour period) reach £100.0/MWh or higher on seven separate occasions including four consecutive days between 11 and 14 January, while imbalance prices reached a record high of £4,000.0/MWh.
During this time, the vast majority of offer volumes on the Balancing Mechanism (BM) came from older Combined Cycle Gas Turbine (CCGT) plant, with additional generation from Open Cycle Gas Turbine (OCGT) and pumped storage plant. Across the seven settlement periods where the Single Imbalance Price exceeded £1,000.0/MWh, accepted offer volumes from CCGT plant totalled 3.96/GWh, accounting for 93.5% of all accepted offer volumes.
Lee Drummee Analyst at Cornwall Insight, said:
“These price spikes were a result of tight supply margins from a combination of low wind output, with outages at CCGT, nuclear plant and interconnectors. In addition, cold weather led to demand exceeding National Grid Electricity System Operator’s (ESO) Winter Outlook forecast levels. This led to the ESO issuing Electricity Margin Notices (EMNs) for the evenings of 6, 8 and 13 January.
“CCGT plant also commanded the highest prices on the BM, with average accepted offer prices across the settlement periods where imbalance prices were £1,000.0/MWh or higher, ranging between £681.2/MWh and £3,166.7/MWh and a maximum accepted offer price of £4,000.0/MWh. Pumped storage plants were the second highest priced assets, with offers as high as £999.0/MWh accepted in period 39 on 8 January.
“Since these mid-month spikes, gas and power prices have fallen back to more normal levels in the last week as weather conditions have changed with increasing wind generation and temperatures reducing the need for gas-for-power and heating demand. In parallel, electricity supply margins are once again comfortable as a result of the pickup in renewable generation and the return of a number of generation plants from outages. In addition, the IFA2 interconnector between the UK and France entered operation on 22 January, providing an extra 1GW of interconnection capacity between the two countries.
“These price spikes serve as a reminder of the volatility of system conditions and wholesale markets. With the potential for such fluctuations in power prices to become more frequent in the near-future as older dispatchable generation assets retire and the share of weather-dependent renewable generation increases, whilst the flexibility and response markets – which will help to smooth out any issues – continue to develop in terms of scale and sophistication.”
CCGT plants help balance the market during price spikes