National Grid ESO has published the results of the latest monthly Firm Frequency Response tender - for delivery across December. In this article, we look at:
- Accepted volumes (and how they stack up against procurement targets).
- The prices secured in the tender.
- And the most lucrative bids.
Firm Frequency Response volumes
Figure 1 (below) shows the accepted and rejected dynamic Firm Frequency Response volumes. It also shows procurement targets for November and December delivery.
- Procurement levels for December were similar to November’s - an average of 316 MW across the day (-2% change on November).
- EFA block 6 saw 20 MW of over-procurement. However, the ESO fell 28 MW short of its EFA 5 requirement.
- Continuing the ongoing trend this quarter, rejected volumes in Firm Frequency Response increased, up 9% from November to ~900 MW. This is likely driven by falling requirements in Dynamic Containment as we move out of the summer months. Therefore, providers are looking to secure monthly contracts and avoid saturated day-ahead response markets.
Firm Frequency Response prices
Figure 2 (below) shows the range of accepted bid prices and the volume-weighted average accepted bid price for November and December.
- Prices fell 11% from November, with an average contract value across the day of £19.00/MW/h. This represents the first price drop over the last three months, due to increased oversupply.
- EFAs 5-6 cleared at ~2x the value of EFAs 1-2, with high-value acceptances across the overnight blocks.
- Prices falling as we move into December bucks the usual trend of high Firm Frequency Response prices in winter due to the opportunity costs associated with Triads.
- This is likely driven by the lower volumes of Dynamic Containment in the winter months, leading to higher market saturation levels across all response products.
Top bids
Table 1 (below) shows the highest accepted Firm Frequency Response bids in each EFA block.
- Arenko secured the highest-priced contract for an individual EFA block - a 39 MW bid, accepted across EFA blocks 5 and 6 at a price of £36.50/MW/h.
- One of Anesco’s recently signed sites secured the highest price Firm Frequency Response contract across EFA blocks 3-4, a 7 MW bid priced at £18.13/MW/h
Final thoughts
The latest tender round (for delivery in December) saw prices drop below the £20/MW/h level for the first time this quarter, with saturation the key driver in falling prices.
Accepted volumes remained constant from last month, with rejected volume rising to ~900MW; Following a milder-than-expected October, lower wholesale value led to Firm Frequency Response being the dominant strategy last month. However, with a tight winter ahead and falling prices in Firm Frequency Response, we could see traded revenues increase substantially this December.
Will providers feel shortchanged by their Firm Frequency Response contracts in the face of winter market volatility? Or is this winter set to be milder than first expected? 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 BESS revenue projection Signal to see our view on this winter and beyond!