UK electricity balancing costs surge to GBP200 million in November

London — UK system balancing costs rose 33% on month in November as constraint costs ballooned, National Grid data showed Dec. 15.

At GBP200.4 million ($265 million), the monthly costs were easily the highest in 2020, in a year of spiraling balancing costs.

The outturn "was significantly higher than forecast," National Grid said. "This was driven by both increased balancing costs and decreased demand."

Constraint costs of GBP138 million were largely incurred managing the B7 boundary (Upper North of England, south of Teesside), reflecting the bottleneck between supply-rich Scotland and power-hungry load centers further south.

A capacity reduction of over 2 GW on the boundary coupled with high wind generation, some 19% higher than in November, 2019, the electricity system operator said.

UK balancing costs now amount to GBP1.607 billion for 11-months 2020, versus GBP1.064 billion for the same period last year.

For this latest month the costs translate into an average balancing charge on bills of GBP5.48/MWh, compared to a year-ahead forecast for the month of GBP2.94/MWh.

UK balancing costs have risen dramatically this year due to various factors, most notably the impact on demand of the initial lockdown, followed by the surprise collapse of Calon Energy in August, taking three large gas plants out of the market at short notice.