Commenting on the Electricity Margin Notice (EMN) issued by the NESO control room for 16:00-19:00 GMT today Shivam Malhotra, Head of Power Trading at LCP Delta, says:
“NESO’s decision to manually issue an Electricity Margin Notice (EMN) at 20:29 yesterday for today, instead of the more familiar automated Capacity Market Notice (CMN), reflects the UK grid operator’s concern about a potential generation shortfall, as high energy demand clashes with periods of dwindling low wind output. A CMN has also been triggered at 12:04 today, and cancelled at 12:32pm. However the EMN remains, and is a stronger signal to the market.
“Wind power is forecast to drop to just 1.6-2.6GW late afternoon and early evening, while demand is expected to peak at 46.5GW. This leaves the NESO with a thin margin of only 510MW at 17:00, with a current loss of load probability of 29%, which is the chance of power shortages or “load shedding,” where electricity supply may need to be restricted in certain areas. This is very unlikely to happen, and this number will likely drop later in the day as the market reacts to the notice.
“However, NESO’s options are relatively limited. Where it would normally look to import additional generation from European neighbours, the potential is somewhat restricted as we are already importing around 5 GW from interconnectors. One option here could be returning some interconnection from outage, such as the 1GW ElecLink GB-France interconnector. The majority of the UK’s thermal power plants are running at full capacity already so cannot add further support, with some being accepted to remain on for £3,400/MWh in the Balancing Mechanism to ensure they can deliver power during this tight period.
“While the day-ahead GB markets remained fairly low at £300-400/MWh, the intraday markets are starting to trade up. Some trades have been taken above £2000/MWh already, without us yet being in the tightest time of day. This is likely a response to the high acceptances in the Balancing Mechanism
“It is important to note that the EMN does not mean that there is a high risk of blackouts, but just reflects concern by the Control Room Engineers at NESO and a call to action for the market to respond.”
