UK power system balancing costs fall 14% in June

UK power system balancing costs of GBP112.78 million ($144.55 million) in June were 14% lower than in May and 197% down year on year, National Grid ESO data showed.

A slight increase in wholesale electricity prices between May and June was offset by a decrease in constraint and other costs, the system operator said.

June 2022's GBP333.52 million balancing cost coincided with month-ahead wholesale prices ranging between GBP150-210/MWh, according to Platts assessments. Platts is part of S&P Global Commodity Insights.

UK month-ahead prices in June 2023 ranged between GBP69-103/MWh. They were last assessed at GBP72.85/MWh July 27.

Forecast costs for August of GBP158.2 million, meanwhile, have been revised up by GBP8 million by National Grid ESO, reflecting expected higher positive reserve costs.

Data in a July 26 transparency forum update from the system operator showed daily ESO actions costing close to GBP7 million a day in the 30 days to July 24, with a spike in costs on Sunday, July 23 when national demand fell to 15 GW (overnight minimum).

Falling demand prompted a hike in interventions to manage system inertia, voltage and thermal constraints, the data showed.

"Periods of low demand typically represent the more challenging operational events during summer," the ESO said in its Summer Outlook report in April.

The report had assessed weather corrected minimum demand to be 15.6 GW.

Demand is forecast to fall to 16.8 GW in the afternoon of Sunday, July 30, and to 15.5 GW overnight July 31.

In an answer to a forum question on inaccurate wind forecasts, the ESO noted increased self-curtailment by wind power producers on Contracts for Difference during periods of low demand, "triggered by forecast or out turning negative prices."

"Our current forecasts do not take account of predicted commercial behaviour," National Grid ESO said, adding it would look at options to address this.