December UK grid balancing costs up 48% on month

London — Balancing costs on the UK power grid in December were up 48% on the month and 33% on the year as constraint payments to gas and wind plants increased, National Grid data showed.

Monthly balancing costs of GBP132.6 million ($172.5 million) in December included constraint payments of GBP75 million – comprised mainly of rebalancing payments to gas plants (GBP50 million) and constraint management payments to wind farms (GBP18.5 million).

Constraint payments relate to instructions by the grid to reduce or increase generation, usually to balance locational constraints. Most wind power is generated in the north while demand is in the south. This causes grid bottlenecks north to south, forcing National Grid to turn down wind generation and turn on flexible plants closer to load centers.

This was clearly the case in December, with the grid handling record wind generation peaks up to 13 GW.

Asset manager Limejump noted strong wind generation leading into December 9 dropped heavily, leaving National Grid's system forecast 1 GW out. This saw it using a mix of generator types including combined cycle and open cycle gas plants as well as pumped storage to restore frequency balance.

The aggregator meanwhile noted firm frequency response prices released in December showed prices clearing 20% higher relative to October and 50% relative to November.

"FFR prices have jumped this winter as parties are bidding in over triad periods. Triad payments have been reduced this year, and market participants (including Limejump) put in higher bids over these triad periods to counteract the lost revenue," it said.

Full year 2019 UK balancing costs amounted to GBP1.199 billion, grid records show -- about GBP100 million up on full-year 2018.