With the significant growth in levels of renewable energy installed capacity in recent years, the UK power market has started to see an increased frequency of ‘extreme’ events. This is indicated when prices move outside of their normal operating ranges to be particularly negative or positive.

That’s an emerging trend in the UK power generation market, according to energy data analyst EnAppSys.   

In the thirteen-year period spanning from 2002 through to the end of 2014, the minimum daily clearing price (system price) – at which parties generating or sourcing too much power could sell power to the system – breached minus £40/MWh on only five occasions. This means that on these five days, market parties were charged more than £40/MWh for delivering too much power to the system (with this charge coming on top of any generating costs).

However, these levels were breached three times in June 2017 alone.

By contrast, the two-and-a-half-year period from the start of 2015 has seen these levels breached on 28 separate occasions – an increase of almost 3,000 per cent.
Wind energy
According to Rob Lalor, senior analyst at EnAppSys, “This shows that levels of extreme oversupply in the system are becoming increasingly common. This has occurred primarily due to the increased supply of power on windy nights, with it commonly being the case that large volumes of this renewable power go to waste.”

“At the other end of the scale, maximum daily clearing prices (system prices) – at which parties generating or sourcing too little power could buy power off the system – climbed above £500/MWh 1.4 times per year on average until 2016. There were ten occasions when this happened last year and just one occasion so far in 2017.”

However, 2016 was an exceptional year in which supply margins were tightened as numerous plants were placed into reserve services where they could not participate in the main market. Whilst the Capacity Mechanism will offer relief with respect to periods of under-supply, periods of over-supply are only expected to become more frequent going forwards (at least until levels of storage operating in the market starts to absorb these excesses and then feed the volumes back into the market).

“So far, levels of demand have remained largely immovable in the face of plentiful overnight power supply,” Lalor told Power Engineering International. “But this might also start to change if the connection between how demand is used and how demand is supplied by renewables can be strengthened going forwards, particularly if suppliers can move to reduce the cost to customers during high renewable conditions.”