The first Capacity Market Notice of Winter 22 indicates difficult times ahead

Just after 2:30 yesterday afternoon, National Grid ESO issued the first Capacity Market Notice (“CMN”) of the winter, predicting a spare generation margin of just 177 MW at 7pm – CMNs are issued automatically if the margin drops below 500 MW. Although the Notice was cancelled after just half an hour, thermal units were paid almost £1,500 /MWh in the Balancing Mechanism through the afternoon. The forecast Loss of Load Probability reached almost 28%.

The reason for the tightness was a significant reduction in wind output from almost 12 GW overnight to below 3 GW by mid-afternoon. There were also two of the ten remaining nuclear reactors offline – one on planned and the other on unplanned maintenance, and a couple of other reactors are operating with reduced output for operational reasons. There was also 1.6 GW of thermal generation offline on unplanned outages, as well as three 300 MW units at the Dinowig hydropower facility in Wales. As a result, coal units were ramped up and imports raised – including from France where there was a swing of 4.5 GW with Britain moving from exporting 3 GW the previous night to importing 1.5 GW yesterday afternoon.

Maximum demand over the past couple of days was around 43 GW, lower than the 40.1 GW expected at 7pm yesterday when the CMN was issued, and well below the Average Cold Spell demand of 58 GW outlined in NG ESO’s Winter Outlook. While the weather is colder than it has been in recent weeks, it is about average for the time of year, and well above the temperatures expected in the coldest parts of winter. While there was additional thermal capacity on the system – Unit 3 at Ratcliffe was accepted in the Balancing Mechanism at around half of its Maximum Export Limit, and not at all at 7pm during the period covered by the CMN, during colder weather that capacity could easily be taken up (and RATS-3 earned over £1.7 million in the Balancing Mechanism yesterday).

“CMN forecasts are issued automatically and are only based on information in the public domain. They do not take into account all the factors which our engineers are working on…This is the first tight day of the winter, but it is not super tight. It is a small appetiser of tightness, there will be much tighter days ahead,”
– Phil Hewitt, Director at EnAppSys

With temperatures potentially falling below 30-year norms in the next month, signs are not encouraging. And it should be remembered that with much higher use of electric heating, electricity demand, and therefore prices, rise much faster in France than in Britain when the weather turns cold…in a cold snap we may not be able to rely on the French to get us out of trouble, particularly if there are further delays to the planned re-starts of French reactors.

In any case less interconnector capacity will be available than expected. IFA 1 was due to return to full service in mid-December after a fire at the Sellindge substation last September disrupted operations. The plan was for capacity to rise from 1 GW to 1.5 GW on 17 November and then be restored to the full 2 GW capacity from 15 December.

However, last week the operators issued an updated REMIT notice warning that it would only return to full capacity on 18 January, with the increase to 1.5 GW being delayed until 20 December – this means the line will continue to run at half-capacity for another month. This may not be a bad thing – reduced export capacity may turn out to be helpful if the GB system faces tight conditions at the same time as France, although if both countries experience system stress at the same time, it’s unlikely that the interconnectors would flow in either direction to avoid a bidding war between the two markets.

A CMN this early in winter when it’s not particularly cold is worrying. Yesterday there was some spare capacity in the system to deal with it, but later in the winter when it turns colder, that may not be the case.