On Monday 28 November, National Grid ESO issued the second Capacity Market Notice (“CMN”) of the winter, again on a day with low wind output. Although the Notice was cancelled after around half an hour, it is certainly a sign of trouble as temperatures begin to fall. There are also concerns for Tuesday as the weather in France is also expected to be cold, meaning imports may be unavailable, leading ESO to consider activating its Demand Flexibility Service (“DFS”) for the first time.

Monday’s CMN was issued just after 1:30pm when the capacity margin was expected to be just 446 MW at 6pm. It was cancelled just after 2pm. At 2:30pm NG ESO confirmed that it would not call on the DFS for Tuesday having previously announced it was under consideration. Prices in the Balancing Mechanism again exceeded £1,000 /MWh with Connagh’s Quay CCGT being accepted at £1,240 /MWh and Coryton CCGT receiving £1,500 /MWh.

Capacity Market Notice 28 November 2022

“Even though wind is coming back for tomorrow evening’s peak, slow return of nukes in France plus lower temperatures may mean that there is a reduction in available imports across the interconnectors,”
– EnergyAppSys

Wind output on Monday was even lower than during last week’s CMN when output fell below 3 GW, dropping to just 249 MW – less than 1% of the installed capacity. In my analysis of the Winter Outlook, I pointed out that utilisations below 1% were possible in winter and such conditions can coincide with cold temperatures. Luckily temperatures are not currently that low, although they are falling, but during a cold snap if wind fell to these levels and demand rose, imports would not be enough to meet demand – NG ESO would be forced to activate the coal backup and constrain demand.

GB generation mix 28 November 2022

Monday’s Loss of Load Probability (“LOLP”) peaked at just under 30% but Tuesday is looking even tighter. As I write this at 2:20am on Tuesday 29 November, the LOLP for later today stands at 83% at 4:30pm, 88% at 5:00pm, 82% at 5:30 pm and 85% at 6:00pm. During these times the de-rated margin is expected to be: -1,103 MW, -1,312 MW, -981 MW and -1,050 MW. If these levels do not improve in the coming hours, further CMNs will be issued. NG ESO decided not to activate the Demand Flexibility Service for this evening which may end up being a mistake, although the system operator may be calculating that a combination of imports, reserve and the coal backup might be enough to meet demand.

French generation mix 28 November 2022

As temperatures fall, French demand will rise faster than GB demand due to the higher prevalence of electric heating south of the Channel, which may limit the ability of France to provide exports. The expectation for Tuesday is that both countries will experience colder weather than on Monday, and will both need imports, so the evening peak could be difficult. GB wind output is expected to be only around 1 GW during – higher than on Monday, but just a third of that during last week’s CMN. Prices for Tuesday evening reached over £1,200 in the Day-Ahead auction on N2EX.

Winter has barely begun and we have already had two Capacity Market Notices, and possible activation of the Demand Flexibility Service – this does not bode well for the rest of the season. It is to be hoped that this serves as a wake-up call to NG ESO and that it re-visits its capacity margin calculations. Over-estimating the contribution from wind is not helpful, and assuming imports will be available from counties which themselves may be experiencing market tightness is not a recipe for energy security.

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