System Prices Analysis Report

The System Prices Analysis Report (SPAR) provides a monthly update on price calculations. It is published by the ELEXON Market Analysis Team to the Imbalance Settlement Group (ISG) and on the ELEXON Website ahead of the monthly ISG meeting.

This report provides data and analysis specific to System Prices and the Balancing Mechanism. It demonstrates the data used to derive the prices. The data is a combination of II and SF Settlement Runs.

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Highlights in the report

Some of the highlight’s of August’s System Price Analsis Report include:

  • All the negative System Prices occurred on the last two days of the month, where the price reached a minimum of -£65.93/MWh during Settlement Period 35 on 31 August 2019.
  • System Prices were £100/MWh or more on one occasion in August 2019, compared to zero times in July.
  • The prices of Long outliers ranged from -£65.93/MWh (the lowest System Price of the month) to -£2.91/MWh. The highest System Price of the month, £110.00/MWh, was more than double the median short System Price for the month.

This month’s SPAR also contains an Appendix detailing the inclusion of the Demand Control Event in the System Price calculation and how the System Price is recalculated for the Settlement Periods affected by the event.

Report structure

The information below will give you a more comprehensive understanding of the report and further details about each of the sections. 

System Prices and Length

In this section we summarise trends in System Prices over the previous month. We distinguish between a ‘long’ and a ‘short’ market when analysing System Prices because the price calculation differs between two scenarios.

When the market is long, System Prices are based predominantly on the System Operator’s ‘sell’ actions such as accepted Bids.

When the market is short, System Prices are based predominantly on the System Operator’s ‘buy’ actions.

Parameters

In this section, we consider the impact of a number of different parameters on the price. We consider:

  • Flagging balancing actions
  • Replacement Price
  • NIV (Net Imbalance Volume) Tagging
  • PAR  (Price Average Reference) Tagging
  • DMAT (De Minimis Acceptance Threshold) and Arbitrage Tagging
  • How these mechanisms affect which balancing actions feed into the price

Balancing Services

This section looks at how balancing actions from Short Term Operating Reserve providers impact the System Price. The impact of Reserve Scarcity Pricing is also analysed in this section.

P305 – Specific Analysis

This section compares live prices with a PAR 50 pricing scenario. From 1 November 2018, the System Price
calculation parameters changed as part of BSC Modification P305. The changes were:

  •  A reduction in the PAR value from 50MWh to 1MWh
  • The introduction of a ‘dynamic’ LoLP function
  • An increase in the VoLL from £3,000/MWh to £6,000MWh. The PAR 50 scenario uses a VoLL of £3,000/MWh
    in the RSVP function

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