Cold Snap Forces UK Electricity Market Prices To New High

5 January 2021

National Grid issues urgent call for suppliers to generate extra 524MW of electricity capacity.

Plunging temperatures and a drop in wind turbine power generation have pushed UK electricity market prices to a new high and prompted the National Grid to put out an urgent call for suppliers to provide extra capacity.

The National Grid control room warned that its spare electricity supplies would be “tight” this week, and on Tuesday issued an official call for generators to bring forward an extra 524 megawatts of electricity capacity within 24 hours.

Electricity market prices have surged tenfold in a day to reach a new record high of £1,000 per megawatt hour, as colder than normal temperatures and lower electricity generation left a dent in Great Britain’s power supplies.

The cold snap is forecast to drive energy demand to its highest level for this winter, while wind turbines come to a virtual standstill only weeks after setting a new generation record. The combination of high demand and low wind speeds has emerged as supplies from many traditional power plants remain out of action, causing electricity prices on the wholesale market to soar.

The electricity system operator, a branch of National Grid, said that although a warning notice can “sound quite serious”, it is “a routine way” to encourage generators to produce more electricity, and does not mean electricity supply is “at risk”.

The National Grid control centre has issued a flurry of informal and official warnings this winter, which it expected to be one of the tightest winters for electricity supplies in the last four years. There were two official warnings on consecutive days in November, and another in December.

Hartree Solutions, a merchant commodities trading business, said that the UK is “at much greater risk of blackouts this winter than the National Grid has forecast”, which is reflected in market prices.

The wholesale price of electricity to meet Wednesday’s peak demand, which will be in the hour from 4pm, climbed to £1,000 per megawatt on one of the UK’s most important electricity auction platforms, the highest price since the auction began in 2014 and 10 times the price for the same hour on Tuesday.

Hartree said the shrinking electricity supply margins mean the National Grid control room “will need to be issuing alerts, warnings and utilising many – if not all – of their balancing tools on Wednesday to keep the lights on”.

The official warning from the electricity system operator said: “In the short-term, we would like a greater safety cushion (margin) between power demand and available supply. It does not signal that blackouts are imminent or that there is not enough generation to meet current demand.”

Source: The Guardian
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