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UK sees longest period of negative power prices

7 Jun 2017, 3.28 pm GMT

UK sees longest period of negative power prices

London, 7 June (Argus) — System prices in the power balancing market traded negative for five consecutive hours this morning, the longest sustained period of negative system prices in the UK market since records began, as the grid was oversupplied owing to high wind generation during off-peak hours of low demand.

System prices averaged minus £19.25/MWh ($24.95/MWh) during settlement periods 3-12 (01:00-06:00 BST) this morning, reaching a low of minus £24.06/MWh. This was the longest consecutive period of negative prices in the UK power market. On 27 March 2016 there were two separate four-hour periods of negative prices, the highest frequency of negative system prices in one day so far in the UK market. The first negative price in the UK market since system operator National Grid's records for imbalance prices begin in 2001 was on 17 May 2015, for one half-hour interval when prices fell to minus £2.59/MWh.

Demand averaged 20.9GW and metered wind generation averaged 5.9GW in 01:00-06:00 BST this morning. Nuclear output was over 8GW for most of that time while combined-cycle gas turbine (CCGT) output fell as low as 3.6GW, but coal-fired generation was not totally squeezed out of the mix as coal plants generated around 500MW for most of that time.

Imbalance cash-out prices were even lower last night when the system dipped to minus £69.10/MWh during settlement period 46, 22:30-23:00 BST, the lowest average half-hourly system price since 28 May. At that time metered wind farms were generating 6,730MW of power compared with a historic high of 8,207MW and an average of 3,399MW so far this year. Transmission-system demand was 26,226MW during settlement period 46 last night, while nuclear generation was 8.2GW, CCGT generation was down to just 5.6GW and coal plants were generating 253MW.

The last time system prices fell below £0/MWh was during the height of the day on 28 May, a weekend summer day, which typically sees low demand, when solar generation was particularly high. On 28 May the system was averaging between minus £67.55/MWh and minus £73.13/MWh over three consecutive settlement periods at 08:00-09:30 BST. During those settlement periods embedded solar generation averaged 2.6GW and metered wind generation averaged 2.7GW. The cause of the sudden and sharp drop in system prices appears to be the quick ramp-up of renewable generation, particularly solar.

Previously in 2017 system prices dipped below £0/MWh on three days between 31 March and 6 April, mostly around 15:00 BST when solar was relatively high, demand low but also corresponding to high wind generation. The lowest imbalance price for any individual settlement period was minus £59.75/MWh.

But despite the rising frequency of negative system prices, the N2EX UK day-ahead market has not seen an hourly day-ahead contract settle below £0/MWh since Nord Pool Spot data begins in 2013. This morning's lowest hourly N2EX price was £1.57/MWh for 03:00-04:00 BST, when the system averaged a price of minus £18.42/MWh. But as renewable generation capacity rises and demand continues to fall it seems likely N2EX hourly prices may begin to settle in negative territory. High levels of renewable generation are forecast for this weekend, which may present opportunities for traders to test negative day-ahead prices.

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UK N2EX hourly day-ahead settlement vs system price £/MWh

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