October 2023’s Firm Frequency Response auction results are in. With no changes in National Grid ESO’s plan to phase out the service after November, what were the results of the second-to-last auction?
Despite the lowest accepted volume since 2021, October’s price remains steady
What did volumes and prices look like in the latest Tender Round (for October delivery)?
⬇️ Requirements in this month's Tender Round dropped by 50 MW to 150 MW as part of the service’s phase-out.
📊 This resulted in an average of 151 MW being accepted in the auction.
⚖️ The price of accepted contracts for October delivery was reasonably unaffected at £5.38/MW/h. The average price in the six months since May has been £5.70/MW/h.
⚡️ The average price of all bids into the auction was £8.55/MW/h - back to the levels seen in the auction for August delivery.
Stabilization of prices shows how the market values the flexibility of shorter-duration contracts
The lack of changes in price despite every reducing volume suggests the market has hit a ‘floor’ in how low it's willing to go. This price is the equivalent of around £50k/MW/year, higher than some recent month’s fleet revenues.
This shows how operators continue to value the potential upside in revenues from not being locked into a month-long contract, despite Dynamic Containment showing it fall lower.
Bigger volumes are back in play
In recent auctions, the highest prices have often been for contracts for smaller volumes from providers offering Demand-Side Flexibility. However, grid-scale battery energy storage systems have collected the top prices for October.
Next month’s auction will be the last for Monthly Firm Frequency Response
There have been no changes in National Grid ESO’s timeline for the retirement of Monthly FFR. This means next month’s auction will be the service’s last, for delivery in November.
Want to see what happened in previous auctions?
