National Grid ESO has published the results of the latest monthly Firm Frequency Response tender - for delivery across June 2023.
What are the headlines?
- ⏳ Expected retirement of monthly Firm Frequency Response: 4 months.
- 📈 Reference price rises 16% to £6.59/MW/hour, the first increase since September 2022. The median price across all bids in this month’s auction was £9/MW/hour.
- 🚀 Bid volumes hit an all-time high, with total volume entering the auction surpassing 2 GW for EFA blocks 3, 4 and 6.
Firm Frequency Response volumes
Despite the record low price in last month’s tender round, this month’s auction saw more volume than ever enter the market. Over 2 GW of capacity was bid in for multiple EFA blocks.
- There was an average 2,001 MW bid across the six EFA blocks - the highest ever in the service.
- This completely filled the 250 MW requirement for the service.
- This also means there was the highest level of rejected volume - an average 1,751 MW.
What is the size of June’s Firm Frequency Response contracts?
So, how big (or small) were the contracts that did get awarded - and how does this compare to bid sizes?
- The median volume of all bids in the auction was 19 MW.
- The median volume of accepted bids was 5.5 MW - 71% smaller than the median bid volume.
- 43% of contracts awarded in EFA blocks 1 and 2 were for bids of 2 MW or less.
- Less capacity was awarded to 24-hour contracts this month - 109 MW, compared to 176 MW in May.
Firm Frequency Response prices
How did accepted prices differ according to EFA block?
- The reference price for this month’s Tender Round was £6.59/MW/h - 16% higher than May 2023’s delivery reference price of £5.69/MW/h.
- The highest-priced contract was awarded in EFA blocks 3 and 4 - Levelise’s 1 MW bid was accepted at £10.90/MW/h.
- Higher prices in Dynamic Containment throughout May led operators to seek higher prices in Firm Frequency Response.
- The median price across all bids in this month’s auction was £9/MW/hour. In last month’s auction, the median price across all bids was £8.44/MW/hour.
- This higher pricing gives an indication of fleet expectations for revenue in June.
Month-on-month prices increase for the first time since September
Prices in Firm Frequency Response have been falling since September 2022. This month’s auction saw the first price increase in eight months.
What do the prices and volumes look like for all the bids?
- 31 bids for volumes of 1 MW entered this month’s auction. In last month’s auction, this number was 29.
- This month’s auction saw bids for 1 MW contracts reaching £22/MW/hour (the highest across all the bids). For May delivery, the highest price bid among 1 MW contracts was just £11.14/MW/hour.
What happens next?
2022 saw record-high prices in Firm Frequency Response. Prices are now at a level more similar to those seen in 2020 and 2021.
With the phase-out of the service underway, prices are unlikely to return to what they were in 2022. But could we start to see prices start to climb again in the next few months?
The winners
So, who got the highest prices this time around?
- DSF stands for Demand-Side Flexibility - and is understood to include behind-the-meter battery storage.
- Levelise secured the highest value contract - at £10.90/MW/hour.
- BESS HOLDCO secured the highest price for a 24-hour contract at £7.50/MW/hour, for 24 MW - one of the highest accepted volumes we’ve seen in recent months.