U.K. Power Prices Jump After National Grid Warns of Supply Risks
U.K. Power Prices Jump After National Grid Warns of Supply Risks
(Bloomberg) -- U.K. power prices rose to a four-year high after the U.K. grid operator warned that its safety buffer of supplies is almost eroded for Sunday night.
National Grid Plc said it’s “monitoring the situation closely” in a warning published on Twitter. The network operator stopped short of issuing an official alert called an Electricity Margin Notice, last triggered on Thursday, which is published when the normal safety margin for operating the system shrinks below the level permitted by the government.
It’s unusual for there to be problems meeting demand on a weekend when consumption is typically lower as offices and industry shut. That shows how close to the edge Britain’s power system is this winter. National Grid has been expecting more supply warnings this year, Chief Executive Officer John Pettigrew said in an interview with Bloomberg last month. The margin between power supply and demand is the narrowest the U.K. has seen in about four years, he said.
Read more of the interview with National Grid’s CEO here
Power for delivery on Sunday evening traded as high as 350 pounds ($470) a megawatt-hour in an auction on Saturday on Epex Spot SE. That’s the highest for the 5-6 pm period since November 2016. The peakload contract jumped to 96.29 pounds a megawatt-hour, the highest since 2018, the data show.
National Grid is struggling to keep the system balanced as demand rises with colder weather and wind generation is forecast to be low. The forecasts show the situation continuing next week. National Grid identified next week as one of the crunch points in its winter outlook.
Britain gets about 8% of its power supply from huge cables connected to Europe. One of these so-called interconnectors runs to France. The low electricity supply situation could be compounded by a planned strike by Electricite de France SA workers on Dec. 10. If the strike impacts nuclear output and France can’t export any power to Britain, National Grid could face an even tougher challenge to keep the lights on.
When supplies are low first National Grid will ask all available coal and gas plants to run. If there’s still not enough, it can ask some large consumers to turn down their demand to try to balance the system that way. After that the network operator will ask local grids to start temporarily cutting off power to consumers.
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