17 Aug 2022
Alex Done

FFR: September 2022 monthly auction results analysis

National Grid Electricity System Operator (NG ESO) has published the results of their latest monthly FFR tender, for delivery across September. In this article, we’ll take a look at the following:

  • A summary of accepted volumes (and how they stack up against procurement targets).
  • Which technologies secured contracts.
  • The prices secured in the tender.
  • And a look at the most lucrative bids.

FFR Volumes

Figure 1 (below) shows the accepted and rejected dynamic FFR volumes in addition to procurement targets for August and September delivery.

Figure 1 - Accepted, rejected and targeted monthly dynamic FFR volumes for tender rounds 151 (August delivery) and 152 (September delivery). Rejected volumes exclude bids rejected under rejection code 4 (i.e. bids where multiple tenders were received for the same unit).
  • Procurement levels for September remained constant relative to August, with an average procurement of 324 MW across the day (0% change on August).
  • On average, the ESO procured just 7 MW more than its requirement, per EFA block, with no under-procurement in any blocks.
  • Rejected volumes saw a significant uptick since the previous tender round, increasing 37% to ~660 MW. This is likely driven by a falling requirement in Dynamic Containment as we move out of the summer months, with providers looking to secure monthly contracts and avoid saturated day-ahead markets come 1st September.

Figure 2 (below) shows September’s contracted dynamic FFR volume by technology type.

Figure 2 - Accepted dynamic FFR volumes for tender round 152 (September delivery), split by technology type.
  • Battery energy storage systems (BESS) continue to dominate the technology mix for dynamic FFR (90% of accepted bid volume).
  • The remaining volume was filled by DSR and mixed-fuel-type units.

FFR Prices

Figure 3 (below) shows the range of accepted bid prices and the volume-weighted average accepted bid price, for August - September.

Figure 3 - Reference price (volume-weighted average accepted bid price per EFA block) and price range for dynamic FFR, in 151 (August delivery) and 152 (September delivery).
  • Despite increasing volumes tendering for the service with no increases to requirement, September prices have risen to £21.83/MW/h (+17% on August).
  • September pricing represents a new all-time high avg. price over the last two years, with prices up 103% on the same time last year (see figure 4 below).
  • EFAs 5/6 continue to clear at almost twice the value of EFAs 1/2. Moreover, a more pronounced price differential has developed between EFAs 1/2 and 3/4.
  • Social Energy secured the highest-priced contract for an individual EFA block - a 1 MW bid, accepted for EFA 5 at a price of £40.34/MW/h. See table 1 (below) for further details across the rest of the EFA day.
Table 1 - Highest accepted dynamic FFR bid price (£/MW/h) per EFA block for September delivery. Note this considers only bids made for weekdays (excl. weekends/bank holidays).
Figure 4 - Avg. accepted bid price and procured volume history in dynamic FFR from January 2020 - September 2022.

Things to watch

September saw FFR prices reach new all-time highs, with accepted volumes remaining constant on last month. Rejected volumes rose, most likely caused by falling DC requirements and a desire to offset the risk of lower prices in a saturated day-ahead response market.

As we move into the shoulder months with a tough winter ahead, wholesale market opportunity is set to increase dramatically which could force prices higher still by the end of the year.

With significant changes to the GB frequency response markets and December baseload power trading above £700/MWh, this winter is set to be a challenging but lucrative time for BESS. To stay up to date with the market changes, be sure to keep an eye on Phase by Modo, check in with the Modo Leaderboard to see who comes out on top and get in touch to discuss our brand new forecasting product Signal to see our view on this winter and beyond!