Peak-load power on the UK's N2EX day-ahead spot market has cleared at its widest discount to the base load this month, driven by rising solar generation and falling national demand.
The N2EX has cleared at £75.92/MWh ($85.66/MWh) for base load so far this month, while peak-load hours have delivered at £70.23/MWh. This is on track to be the widest peak-base discount on record in the UK, surpassing the peak discount of £4.40/MWh in August last year — which came amid record low peak demand for the month and unseasonably strong wind output.
UK solar generation has averaged 7GW in peak hours so far this month, up from 6.2GW last month and 4.7GW in May last year. In these hours, solar has accounted for around 22.5pc of domestic generation, the highest share for any month on record.
Embedded solar output during peak hours for the remainder of the month is currently forecast at 6.1-10.4GW, peaking on 23 May and bottoming out on 24 May. And national demand is forecast to range 16.0-22.4GW over the same period, with peak demand ranging 14.1-23.9GW.
Solar output is on track to generate more power than gas-fired units during peak-load hours for the second time on record after August last year. Gas-fired generation has been 6.2GW in peak-load hours so far this month, around 800MW below solar. In comparison, peak-load gas burn was just 50MW below solar in August last year.
The rise in solar generation has also continued to weigh heavily on the UK's net imports in the hours around midday. Net imports during base-load hours have stood at 3.9GW so far this month, down from 4.3GW in April and well below 4.8GW in May last year. Imports have only been around 4.6GW in settlement periods 27-28, between 13:00-14:00 local time, below 5.9GW during the same interval last year and 5.1GW in 2023.
A decline in peak-load demand compared with previous years has also weighed on power prices in these hours. UK national demand has been 22GW so far in May, the lowest for the month aside from May 2020. But demand in peak hours has been around 200MW lower than in May 2020 at 21.7GW, while late-night and early morning demand has been 1GW above 2020 levels.
This has largely been driven by a rapid increase in embedded solar for self-consumption in recent years, which could accelerate further with the recently passed Great British Energy Act, allocating £200mn for rooftop solar and other renewable energy schemes in 7,000 schools, hospitals and community buildings. The bulk of solar installations in the UK are between 0-4kW, totalling 1.4mn as of March and equivalent to 4.2GW, or 23pc of the UK's total solar capacity, government data shows. Some 73pc of the new solar installations in March were on residential buildings, adding a total of 68MW.
And 3.3GW between transmission and distribution-connected solar projects won contracts for difference in the last allocation round held last year. Almost 1.1GW of this is due on line in 2026-27 and 2.2GW in 2027-28.
