In this week’s edition of our Current± Price Watch series – powered by LCP Enact – we take a look at the impact of strong wind generation and the premium winter prices.
Day Ahead: More stable prices with wind continuing to keep them low
Last week saw more stable power prices than the previous week due to calmer weather. Day Ahead prices hit a high of £ 299.5/MWh on 11 October and a low of £ 48/MWh today (17 October).
While calmer than last week, wind generation continued to make up a significant portion of the energy mix, helping to avoid particularly high prices.
“High wind kept prices low over the weekend,” said Tim Sparks, LCP Delta consultant.
“There was around 2GW of wind curtailment overnight on Sunday and into the morning. The system price went negative for a number of periods, reaching a low for the week of £-20.84/MWh for period 11, while the intraday (APX MID) price remained positive, finding a low for the week of £42.37/MWh for period 6.”
As the UK continues to transition to net zero, wind is a particularly key part of the mix. Last week, Scotland announced record amount of renewable energy generation, with onshore wind driving this.
Intraday: Planned interconnector maintenance sends bearish signal
Intraday prices were similarly steady over the last week with a high of £ 316.1/MWh on Friday 14 October, and a low of £ 42.37/MWh on Sunday 16 October.
“Friday morning saw intraday prices spike well above the day-ahead level, with the APX MID reaching a weekly high of £316.10/MWh for Friday period 16 as wind was out-turning at 4.4GW, over 1GW below the NGESO forecast,” said Sparks.
“Intraday prices softened after the morning peak as the solar peak and a recovery in wind output combined to push the system long. Intraday (APX MID) prices tracked below the day-ahead through the second half of the day. An extension to planned maintenance on the IFA1 interconnector provided another bearish signal, as it meant that exports to France were 1GW lower than scheduled for an hour in the run up to the evening demand peak.”
Overall throughout the last month, Britain has continued its trend of being a net electricity exporter. According to National Grid ESO it exported 2,686GWh across the month of September.
Imbalance: Winter baseloads prices still at a premium
The imbalance price hit a high of £456/MWh last week on Wednesday 12 October, and a low of -£20.84/MWh on Sunday 16 October.
Looking forwards to the winter, there remains concern over the volatility of baseload prices.
“Bearish near-term fundamentals continued to drive losses on the front month Nov-22 baseload contract, which was marked at £373.33/MWh at Friday’s close, down 25% week-on-week. This bearish sentiment also began to creep into the Dec-22 contract, which closed at £545.98/MWh on Friday,” said Sparks.
“The premium for this winter was further consolidated into Jan-23 and Feb-23, with these contracts both posting gains week-on-week. Wednesday’s session brought a particularly strong uptick in value, with Jan-23 baseload closing above £1,000/MWh, however some of the gains were rolled back over Thursday and Friday. The Jan-23 and Feb-23 baseload contracts ended the week at £887.29/MWh and £841.99/MWh respectively.”