National Grid cancels Capacity Margin Notice

National Grid Electricity System Operator (ESO) has cancelled a Capacity Margin Notice for 6.30pm this evening (8 January), as well as withdrawing the Electricity Margin Notice it sent out yesterday.

The Capacity Margin Notice was issued at 2.04pm and withdrawn less that half an hour later at 2.35pm.

A Capacity Margin Notice is intended to remind holders of relevant Capacity Market contracts to pay closer attention to any further notices or instructions from the ESO.

Unlike Electricity Margin Notices, which are issued at the ESO’s discretion, Capacity Margin Notices are automatically triggered four hours in advance when the ESO’s safety margin falls below a certain level. However, the ESO said they are similar in that both notices are “routine” and do not mean Britain is at risk of blackouts.

National Grid said it has now filled the expected shortfall which prompted the ESO to issue an Electricity Margin Notice at 8pm yesterday for between 4pm and 7pm this evening. The shortfall initially stood at 1,157MW – the largest figure across the five such notices it has now issued and withdrawn over this winter – but was lowered to 239MW in an update sent out at 11am this morning. The Capacity Margin Notice was the second to be triggered so far this season.

As with the Electricity Margin Notice issued earlier this week for Wednesday’s evening peak in demand, National Grid attributed the shortfall to cold temperatures, low renewable output and the unavailability of generators.

Speaking to Utility Week this morning whilst the latest Electricity Margin Notice was still in place, ICIS power editor Jamie Stewart said an outage on the BritNed interconnector had contributed to the tightness: “That would usually give us an extra gigawatt of supply… We’re now short by around 250MW for the period so the link to the Netherlands is certainly feeding in. If that were available, we wouldn’t be short at the moment.”

The emergence of a deficit led to price spikes on power markets yesterday, with day-ahead auction prices reaching up to £670/MWh on Nord Pool’s N2EX exchange and £525/MWh on EPEX Spot.

Even higher prices were seen earlier this week when they spiked at £1000/MWh and £737/MWh respectively in the day-ahead auctions for Wednesday.

The imbalance price – the amount paid by balancing mechanism participants if their position is not in equilibrium – reached as high as £1000/MWh on Wednesday, with the EDF’s West Burton B gas plant being paid £3000/MWh by the ESO to turn up generation. It subsequently hit £1400/MWh for one period on Thursday although no alerts were issued by National Grid for that evening.