System Prices spike on 7 and 9 September 2021

On Tuesday 7 September, System Prices peaked at £3,403.70/MWh and remained above £2,900/MWh for an hour and a half. Wholesale gas and electricity balancing volumes prices have been increasing this summer due to colder summer weather, low wind generation and reported shortages of gas.

The continuation of rising demand and low wind generation has led to further System Price spikes. On Thursday 9 September, System Prices reached £3,999/MWh in Settlement Periods 33 and 34. Prices exceeded £1,000/MWh for 13 Settlement Periods and prices were above £100/MWh for all but five Settlement Periods.

On 9 September 2021, the prolonged spike in System Prices led to a record high daily average System Price of £957.77/MWh. The next highest daily average System Price was on 7 September 2021 (£356.32/MWh) followed by 8 January 2021 (£304.41/MWh).


Why did a System Price spike occur?

The first full week of September generally represents increased electricity demand patterns following the end of the August summer holidays. The time the System Price spike lasted, 17:30 to 19:00, was during peak electricity demand for the day. During this time, there was a deficit of electricity, low wind generation and exports on the new interconnector to Norway.

Coal and gas fired power stations were able to provide additional electricity to balance out the electricity deficit. However, this additional balancing electricity was priced high. The prices for balancing energy feed into the System Price Calculation which is why these high prices were reflected in system prices for these settlement periods.

This price spike is the largest one since 8 January, when the System Price reached £4,000/MWh in Settlement Period 39 and 40.

What are System Prices?

System Prices (£/MWh), also known as Imbalance Prices, are applied to the energy imbalance volumes of BSC Trading Parties (MWh). The System Price determines a Party’s Account Energy Imbalance Charge; these are payments by Trading Parties for negative energy imbalance volumes (i.e. top-up), and payments to Trading Parties for positive energy imbalance volumes (i.e. spill).

How does this affect me?

BSC Trading Parties with positive energy imbalance volumes (a surplus of energy) during this period will benefit from the high prices. As they are paid for this volume at the System Price.

BSC Trading Parties with negative energy imbalance volumes (a deficit of energy) during this period pay for this volume at the System Price. These Parties will experience more costly trading charges in the Settlement Periods with high System Prices.

The high System Prices will impact Credit Cover requirements. BSC Trading Charges from the II Settlement Run will enter the Credit Cover Calculations on 15 September 2021. Some BSC Parties may need to lodge additional Credit Cover if their Trading Charges are higher than expected as a result of this price spike.

The BSC Financial Administration Agent (FAA) will issue the initial invoice for this Settlement Date on 5 October 2021.

Where can I find out more?

Elexon publishes System Prices within 15 minutes of the end of a Settlement Period on the  BMRS System Buy and Sell Prices report.

We also publish a monthly System Prices Analysis Report, which provides data, and analysis specific to System Prices and the Balancing Mechanism. It demonstrates the data used to derive the prices.


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