Pricing
25 Nov 2022
Wendel Hortop

Weekly Review: 25th November 2022

A roundup of all you need to know from the markets most relevant to battery energy storage this week.

Wendel discusses the main factors at play for battery storage this week.

Wholesale trading

Tuesday 22nd November saw the highest day-ahead price since September, with day-ahead auctions clearing above 300 £/MWh. This was driven by a drop in wind generation over peak alongside high forecast demand.

A Capacity Market Notice (CMN) was issued ahead of the peak as generation margins remained low into the day, although this was rescinded soon after. Imports across the interconnectors ultimately meant margins were comfortable across the peak.

National Grid ESO have confirmed that margin and loss of load probability calculations are not currently properly accounting for interconnector positions. This is was the same issue observed in the weekly of July 18th, where multiple CMNs were issued.

Hourly prices and daily price spreads from N2EX day-ahead price data.
  • Day-ahead prices for the week rose 18% to hit an average of 133 £/MWh.
  • Day-ahead price spreads for the week rose 15% and reached an average of 121 £/MWh.

Frequency response

Prices available in Dynamic Containment remain low as the market remains saturated and wholesale volatility stays low.

Dynamic Moderation and Regulation continue to see requirements capped at 100MW. Dynamic Regulation Low saw the highest prices of the week, however the high cycling of the service means this cannot be fully achieved by 1 hour systems.

  • Dynamic Containment Low prices for the week rose 24% to an average of 6.38 £/MW/hr.
  • Dynamic Regulation Low prices increased 28% to 21 £/MW/hr. The high service saw prices drop 48% to 5.30 £/MW/hr.
  • Dynamic Moderation prices remain low but stable.
Bid volumes for each dynamic frequency service. The total volumes accepted across the three markets are overlayed.
  • Bid volumes across the new suite of dynamic frequency response services sat between 1 and 1.2GW for the week.
  • Over half the market withdrew from the service across EFA blocks 5 and 6 on Tuesday 22nd November, in response to the high prices observed on that day.

Battery energy storage revenues

The low volatility in wholesale markets and low dynamic frequency response prices mean battery energy storage systems with a monthly FFR contract are currently capturing the highest value.

Aside from FFR, 2-hour batteries see enhanced earning potential over 1-hour systems, especially with Dynamic Containment prices remaining low.

Potential revenues for each main revenue stream, estimated from available prices. Trading value has been calculated using Modo’s algorithmic dispatch model on N2EX day-ahead prices.

Next week

Generation surplus is forecast to drop on Monday 28th and remain low into the start of December. This is on the back of a forecast increase in demand and reduction in wind generation.

The high wind generation across October and November has been a key factor in keeping wholesale prices low, so a fall in wind generation could see more wholesale trading opportunities as margins get tighter.

Generation surplus forecast for next week. Data from National Grid ESO 2 to 14-day Surplus Forecast.

Chart of the week

With the World Cup kicking off this week, National Grid ESO highlighted the demand pick-up evident at half-time of the England vs. Iran game. An increase of 819MW was observed as the nation reached for their kettles as the half-time whistle blew (it had to wait following 14 minutes of stoppage time...).

This chart and more can be seen in National Grid ESO’s weekly operational forum.

Half-time demand pickup during the England Iran world cup game. From National Grid ESO’s weekly operational forum.