UK power prices deliver at new record high

Market: Electricity
06/09/21

The UK day-ahead power markets cleared at a record high for delivery today amid forecasts for low wind output and limited plant and interconnector availability, along with demand beginning to rise again following the end of the holiday period.

The UK N2EX was at £219.46/MWh for base load on Monday, surpassing the previous high of £198.79/MWh in January. Hourly prices hit a high of £722.94/MWh but were below the record of just less than £1,500/MWh at the start of this year.

Wind generation was forecast at below 1.5GW throughout the day, with lows of about 800MW expected. And realised wind power generation has been even lower than forecast, at 400-600MW for most of the morning.

Availability on the 2GW IFA interconnector with France is scheduled to be reduced to 1.5GW until 10 September and then to 1GW from 10-17 September.

Combined-cycle gas turbine (CCGT) availability has been low since the start of this month, although units have steadily come back on line in recent days, with more scheduled to end shutdowns today. The 810MW Seabank 1 plant and 1.4GW South Humber Bank facility both are scheduled to return to service this afternoon.

System prices have been up to £283.65/MWh so far today, with the potential to rise again in the evening as demand picks back up. Loss-of-load probability forecasts remain above zero for the evening peak-demand hours, with de-rated margins below 3GW, National Grid ESO data show.

Early this morning, units at EdF's West Burton A coal-fired plant were accepted into the balancing mechanism with offers of up to £3,950/MWh, while Uniper's Grain 6 combined-heat-and-power plant was accepted at £4,950/MWh.

West Burton A's start-up this morning has brought coal-fired generation to above 1.5GW for the first time since March.

Demand began to rise again at the start of September as the holiday period comes to an end. Transmission system demand was forecast to average 28.2GW and peak at 33.8GW today, compared with August when demand averaged 25.7GW and peaked at 33.2GW. Low output from embedded wind also supports demand in the transmission system.

Demand in August was up by just 0.8pc on the year, down from increases of 2.2pc in July and 12.3pc in the second quarter. The holiday period will have suppressed demand, while temperatures were also below the long-term average for most of that month. And increasing supply chain disruption in many industries may have also hit demand recovery in the past two months.

Higher wind and the return of some CCGT and nuclear units could keep price spikes lower during the rest of this week. But the system is expected to remain tight — if less so than today — and high gas and emissions prices will continue to provide support.

The 1.2GW Heysham 1 nuclear plant is scheduled to return from maintenance this week, although the plant's shutdown has been extended several times since it went off line in mid-July.

By Josh Evans

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