ELEXON Insight: Sub-zero electricity prices in December

Too much electricity generation in Great Britain pushed prices sub-zero for 13 hours. Occurring on the night of 7 December and morning of 8 December, BSC Parties were paid to consume energy. In this ELEXON Insight our Market Advisor, Emma Tribe, uses ELEXON’s open data to explain why the prices were negative.

Negative Imbalance Prices on 7 and 8 December

From 23:00 on 7 December until 10:00 on 8 December the Energy Market was being paid to use electricity or reduce electricity generation. There were 26 half hour Settlement Periods with negative Imbalance Prices on these two days. The most negative Imbalance Price over the weekend was -£88/MWh which occurred between 4:00 and 5:00 in Settlement Periods 9 and 10.

The 11 straight hours where the Imbalance Price was negative was the longest continuous period of negative Imbalance Prices. This stretch of negative Imbalance Prices beat the 6.5 hour stretch of negative Imbalance Prices in March this year.

Net Imbalance Volume and Imbalance Prices on 7 and 8 December

 

The graph above shows the Net Imbalance Volumes and Imbalance Prices between 15:00 on 7 December and 20:00 on 8 December. The Net Imbalance Volume was negative between 22:00 on 7 December and 12:30 on 8 December.

A negative Net Imbalance Volume occurs when the system is long and National Grid were taking more balancing actions to reduce an excess of electricity on the system. The greatest Net Imbalance Volume was -2,283MWh between 4:30 and 5:00 on 8 December (Settlement Period 10). This was also the most negative Net Imbalance Volume in a Settlement Period in a year.

ELEXON uses the Prices that National Grid pays for balancing services to calculate the Imbalance Price. The Imbalance Price, also referred to as System Price or cash-out, is used to settle Imbalance Volumes for BSC Parties.

National Grid pay balancing service providers for Offer volume to increase the level of energy on the system and are paid by balancing services providers for Bid volume to reduce the level of energy on the System. As National Grid are paid for Bid volume, a negative bid price is where National Grid are paying out for that balancing volume rather than being paid.

Energy balancing volumes by price on 7 and 8 December

The graph above shows the Bid volume (coloured volume) and Offer volume (grey volume) that were purchased to balance the system between 15:00 on 7 December and 20:00 on 8 December. The Bid volume has been coloured to show the volume that was positively priced, negatively priced and priced at zero.

Between 21:00 on 7 December and 14:30 on 8 December more than 90% of Bid volume that was bought by National Grid was either negatively priced or priced at zero. The Imbalance Price is calculated to reflect the marginal price of balancing energy in the direction of the Net Imbalance Volume.

Most of the Bid volume (76.8%) provided on 7 December and 8 December was taken to resolve a system constraint. Of the Bid volume that was negatively priced 90% was taken to resolve a system constraint.

Curtailment of Wind Balancing Mechanism Units represented 82% of negatively priced Bid volume on 7 December and 8 December. The graph below compares the volume of curtailed wind to the volume of wind generation for the same period as the two graphs above.

Wind curtailment on 7 and 8 December

Peak wind curtailment in a Settlement Period was 2,342MWh between 4:00 and 4:30 (Settlement Period 9). This curtailment was 33.6% of the potential generation which is the sum of curtailed volume and wind generation.

Trends in negatively priced bid volume since 2014

Balancing services providers choose how to price the balancing volume they submit into the Balancing Mechanism for National Grid to accept. However, balancing services providers can be constrained on how to price their balancing volume if their assets are in part of the electricity system where a network constraint exists.

Percentage of bid volume that is negatively priced

Since 2014 the volume of accepted bids that were priced negatively has increased from 9.9% in 2014 to 25.2% in 2019. This is shown in the graph above. Over the same period the total accepted Bid volume in a year has remained between 10.6GWh and 8.5GWh.

In 2016 the average price of negatively priced bid volume was -£66.14/MWh.

The majority (57%) of negatively priced bid volume has been delivered by Balancing Mechanism Units in Southern Scotland. Followed by bid volume from units in Northern Scotland (30.1%).

The relative volumes of negatively priced bids is shown in the colour map and bar chart below. The date slider on the right hand side can be used to adjust the date range shown in the graphs.

Negatively Priced Bid volume

In southern Scotland, 95% of the negatively priced bid volume was from wind Balancing Mechanism Units. In northern Scotland 87.3% of negatively priced bid volume was also from wind Balancing Mechanism Units.

Explore Imbalance Prices Data further

ELEXON publishes the latest Imbalance Prices and the volumes and prices of actions used to balance the GB electricity system on the Balancing Mechanism Reporting Service

 

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