This week we talked to Limejump and Arenko about surging wind generation and nuclear outages for the latest in our Current± Price Watch series – powered by LCP Enact.
Day Ahead: EDF lowers French nuclear output estimates
Day Ahead prices dipped to a low of £35.3/MWh for the last week today (7 November), and hit a high of £216.6/MWh on 4 November.
Over the last two quarters, Britain has – for the first time – been a net exporter of electricity. This has been driven by a number of things, including nuclear outages in France increasing demand on the continent.
In September, French state-owned EDF announced it plans to restart all of its nuclear reactors this winter. At the time, 32 of the company’s 56 reactors in France were shut to allow for maintenance and testing after stress corrosion was detected at a number of sites.
However, the company updated its output estimates on 3 November, lowering them from 280-300TWh to 275-285TWh.
This is due to the impact of maintenance schedules of strike movements in autumn, and outage extensions at four nuclear reactors that have been involved in the programme of inspections and repairs related to the stress corrosion phenomenon.
As demand starts to increase in Britain and across Europe, France’s generation capacity being hampered could put further strain on energy systems.
Intraday: Wind generation smashes record for second week in a row
Last week, wind generation hit a new record high, beating off the record set just the week before. On 2 November, wind generated 20,896MW in the 12:30 settlement period, which amounts to 53% of all the UK’s electricity. This beat the UK wind generation record of 19.936GW set on 26 October.
The APX (MID) price hit a low for last week of £-30.92/MWh on 2 November, and a high of £174.04/MWh on 4 November.
“The strong weather experienced last week created the conditions to break the UK’s wind generation record for the third time this year and following the previous record set last month,” said Tom Putney, COO of Limejump.
“Domestic onshore and offshore wind generated approximately 20.9GW on 2nd November around 12:00, providing over 50% of UK demand as confirmed by the National Grid ESO after the event. The high winds also led to the creation of negative system prices, which dropped to as low as -£59.2/MWh [for imbalance prices] in the early morning.”
After a particularly warm October – which contributed to energy demand being around 8% lower year-on-year – power prices are starting to pick up.
“Temperatures have slightly dropped over the past few days and are expected to fall further towards their seasonal norms. If this transpires, demand for both power and gas will increase, making the current windy weather most welcome and needed – long may it continue,” finished Putney.
A growing energy storage sector is enabling this new, high level of wind penetration, said Roger Hollies, chief technology officer at Arenko, pointing in particular to the three new ‘Dynamic’ frequency response services launched over the past two years.
These have been dominated by battery energy storage, and are helping to keep the grid stable by managing the low inertia that comes with high renewable penetration.
“Last week’s Current± Price Watch article highlighted how lower demand combined with high winds helped stabilise energy market pricing,” continued Hollies.
“This is set to continue as the wind continues to blow. We have seen the return of £0/MW or even negative system prices directly attributable to high wind generation. This is exciting news for batteries that can maximise revenue by charging into these prices and use that energy to trade or provide ancillary services for a price way below other generation technologies as the marginal cost of energy in the battery is very low. The beauty of this situation is the energy being stored in the batteries during these price events is predominantly wind generation that would otherwise be curtailed = more low carbon energy in the system.”
“As this period of high wind continues, we have another benefit that is de-risking future price volatility over the winter: Every MWh of wind generation on the system (either directly or indirectly via storage) means less gas derived electricity required, means more gas into storage. More gas stored reduces the risk of future gas shortages and associated price spikes.”
Imbalance: National Grid ESO’s ‘world first’ Demand Flexibility Service launched
With surging wind generation, imbalance prices were more volatile over the last week, dipping well into minus figures. It hit a low for the week of £-59.17/MWh on 2 November – the day of the new wind generation record – and a high of £467.83/MWh on 3 November.
Keeping the system balanced is likely to be one of the biggest challenges over the coming winter, in an effort to expand its range of tools to do this, National Grid ESO has launched a new, Demand Flexibility Service.
Officially approved by Ofgem on 4 November, the service will initially offer a guaranteed acceptance price of £3,000/MWh (£3/KWh) for providers of flexibility.
On 15 November, LCP Delta together with ESO are running a joint webinar exploring the new flexibility service and how it will run further. Find out more and sign up here.
The launch of tools such as the Demand Flexibility Service, together with the relatively stabile power prices through October, may help ease concern of system stability for winter. But the energy crisis is still gripping the country, driven by high gas prices.
“More energy storage on the system means more renewable energy on the system means less reliance on gas means more stable pricing,” added Hollies.
“There is much more work to be done to further reduce our reliance on gas but there is no denying that the combination of wind and storage is providing a much needed pressure relief valve for the European energy system.”