We are pleased to present our GB monthly, wholesale, balancing & asset value report for January 2021.
Key highlights from the report include:
- Wholesale and Balancing prices continued to increase in January 2021, reaching the highest in a year as the market decoupled from EU post Brexit. Relative to December 2020, baseload prices increased by 32% to an average of £71/MWh, while average short and long prices increased by 18% (to £169.3/MWh) and 63% (to £34.7/MWh) respectively. Notably, prices rose to peaks of £4,000/MWh in balancing market and £1,065/MWh in the wholesale market.
- Demand increased to its highest level since before the first COVID-19 lockdown in March 2020 due to colder weather. Coupled with periods of low wind generation, National Grid issued an Electricity Margin Notice (EMN) on 6th January and a Capacity Market Notice (CMN) on 8th January. The wind generation decreased by 13% compared to December 2020, pushing prices up to the highest in the last thirteen months.
- The 1 GW IFA2 Interconnector started operating on 22nd January.
- Total offer and bid volumes were down to their lowest levels this year, both down 35% from December 2020. CCGTs received accepted offer prices above pumped storage’s accepted offer prices for the first time this year as gas costs increased this month by 29% and CCGT were providing 80% of the offer volumes.
- Arenko’s Bloxwich battery has resumed trading in the Balancing Mechanism (BM), having only participated in the Dynamic Containment (DC) auctions for November and December 2020. On 27th January, National Grid allowed participants in DC to stack revenues by submitting bids to charge in the BM while providing DC. Bloxwich capitalised on this on 29th January and 2nd Feb, charging in the BM at negative prices while providing DC to respond to IFA2 tripping. As well, Bloxwich opted out of two Dynamic Containment auctions this month as it expected high prices in the Wholesale Market and Balancing Mechanism.
- Due to the high prices in both the wholesale and balancing markets, both the 1hr/2hr duration batteries saw significant increases in their margins. The total monthly margins increased by 19% to £9.6k/MW for the 1hr duration battery and by 43% to £12.5k/MW for the 2hr duration battery.
- Reciprocating engines also saw a significant increase in their margins as wholesale captured prices increased by almost £100/MWh and their monthly margins increased by £10.3k/MW to £14.4k/MW. Despite this, running hours only increased slightly by 5% compared to December 2020.
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