The UK power market is set for a remarkable late-summer resilience test on Tuesday and Wednesday amid a demand-boosting heat-wave after the day-ahead price on the over-the-counter market spiked to a three-and-a-half year high on Monday.
And elsewhere in the centralwest Europe region, for example in Belgium, a coming together of tight supply and demand fundamentals will test the power systems in what would typically be a relatively quiet shoulder season between the mid-summer and onset of winter.
Early indications were that the UK system is set for the sternest test, with day-ahead baseload assessed by ICIS at £59.00/MWh (€70.00/MWh) for Tuesday delivery, with Wednesday not far off at £55.00/MWh (see UK power market comment).
And transactions were seen on the peaks product for Tuesday at £64.50/MWh, with Wednesday peaks almost flat to this at £64.00/MWh, suggesting a testing 48 hours could be ahead for system operator National Grid.
According to exchange data, the two-hour window from 19:00-21:00 on Tuesday is a time to watch. Hourly prices at the N2EX and APX day-ahead platforms for those periods reached close to £200.00/MWh on Monday.
“Someone’s got a hefty start-up cost and is charging through the nose for something,” one UK trader commented, in reference to the high price and the apparent need for some rarely-used, inefficient power plants to run.
The UK spike came despite the day-ahead price at the NBP gas hub, usually a very firm indicator of UK power price direction, hitting a seven-year low. This reflects the depth of the market’s apparent concern over power supply margins
Unsurprisingly, the UK’s 2GW link to France and 1GW cable to the Netherlands are scheduled to import into the country at - or close to - maximum capacity for the majority of the day, meaning there will be little left in the way of supply flexibility from mainland Europe.
The situation was compounded for traders by a lack of access to fundamental data because the publicly available balancing mechanism reports site, used by UK power traders across the industry, was on an unfortunately-timed planned outage which started at 14:00 London time on Monday and was scheduled to last until 09:15 on Tuesday.
This would not have affected day-ahead bids and offers for Tuesday delivery, although it will complicate matters for prompt traders on Tuesday morning.
Market data suggested a tight system was on the cards in Belgium as well, where the hourly day-ahead price hit €100.00/MWh for hour 17. firstname.lastname@example.org