Over the Easter holidays, the UK bathed in warm sunshine and as a result, the GB wholesale power market experienced a series of notable events, some that would have once been rare.
High levels of embedded solar generation reduced the need for grid-connected energy production, causing the minimum daytime demand to drop below the nighttime minimum twice over the Easter weekend. Over the course of the weekend, GB also broke its record for consecutive no-coal hours, setting a new record of 90 consecutive no-coal hours, as low demand levels and high renewables output negated the need for the fossil fuel technology.
The GB market also experienced the phenomenon of wholesale price cannibalisation* in action, particularly on Easter Sunday, where wholesale prices underwent notable reductions. Cornwall Insight’s long-term power market modelling predicts many of these trends, under specific scenarios, will to occur more frequently in future, as more renewable generation comes online.
Tim Dixon, Wholesale Team Lead at Cornwall Insight, said:
“The Easter weekend has given us a glimpse into the future, as we move into a world with higher levels of embedded and intermittent sources of generation. With a large volume of wind farms set to commission under the Contracts for Difference Scheme, we will see a higher requirement on the system for gas to act flexibly rather than generate baseload. Furthermore, greater penetration of intermittent renewables will lead to more cannibalisation and volatility in wholesale prices.
“A repercussion of these trends is that National Grid will increasingly need to instruct generators to turn down during the day. This could potentially result in negative system prices – a trend which is also becoming more prevalent.
“Flexible energy providers, particularly storage assets, may find some positives from this trend. Increased volatility and more significant price differentials between periods of low and high demand will produce arbitrage opportunities.
“This is something that will be welcomed by storage operators and flexible generation looking for revenues beyond National Grid procured services such as frequency response, STOR and the Balancing Mechanism.”
–Ends
Notes to Editors
* Price cannibalisation is the depressive influence on the wholesale electricity price at times of high output from intermittent, weather-driven generation such as solar and on and offshore wind.
