System Price Analysis Report for June 2019 is published
ELEXON’s latest System Price Analysis Report (SPAR) for June 2019 shows that electricity imbalance prices reached £375/MWh (megawatt hour) on June 24, the highest Imbalance Price since March 2018.
Imbalance pricing on June 24
ELEXON publishes the SPAR report each month to increase industry understanding of electricity Imbalance Pricing. The June report shows that Imbalance Prices reached £375/MWh for three consecutive half hour Settlement Periods on June 24.
This was nearly seven times the typical Imbalance Price of £54/MWh for when the electricity system was ‘short’ in June (meaning that National Grid ESO had to call for more generation to meet demand).
The Imbalance Prices of £375/MWh were the highest Imbalance Prices since £990/MWh on 1 March 2018, when cold weather due to the ‘Beast from the East’ affected the GB electricity market.
Why is the Imbalance Price important?
Imbalance Prices are used to settle the difference between contracted generation or consumption and the amount that was actually generated or consumed in each half hour trading period for electricity.
Why was the Imbalance Price so high?
Imbalance Prices are influenced by a number of factors including demand, available generation capacity, and the type of generator.
It is likely that the increased price on June 24 was due to more than 50 per cent of the offers accepted by National Grid ESO to balance the system being from coal-fired power stations.
The cost of coal generation is generally much higher than other fuel types (such as gas fired power) that National Grid ESO can call on to provide balancing power.
The scarcity of the cheaper fuel sources meant National Grid called coal generation onto the system. These actions were included in the Price Average Reference (PAR) volume which sets System Prices.
What does the SPAR cover?
Each report gives an overview and analysis of the previous month’s prices and pricing parameters since the implementation of BSC Modification P305 ‘Electricity Balancing Significant Code Review developments’.
The changes for this have been implemented in two stages since 5 November 2015. P305 was implemented to progress the outcomes of the Electricity Balancing Significant Code Review (EBSCR).
- P305 ‘Electricity Balancing Significant Code Review developments’
- Electricity Balancing Significant Code Review (EBSCR)
The SPAR includes analysis on the different factors that impact Imbalance Prices, such as National Grid ESO’s use of Short Term Operating Reserve (STOR) providers .