Cold snap pushes UK prices on the power market to new highs

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National Grid issues an urgent call for utilities to produce additional power capacity of 524MW

Falling temperatures and a decline in wind turbine power production have driven prices to a new high in the UK electricity market, leading the National Grid to issue an urgent call for extra capacity to be generated by utilities.

The control room of the National Grid cautioned that this week’s backup power supplies would be “tight” and formally called on the country’s power generators on Tuesday to provide an extra 524 megawatts of electricity capacity within 24 hours.

Electricity market rates have risen tenfold in a day, hitting a new record high of 1,000 pounds per megawatt-hour, as warmer temperatures and lower electricity production have put a dent in the power supply of Britain.

This winter, the cold snap is expected to drive the country’s energy demand to its highest level, although wind turbines are practically at a standstill just weeks after setting a record for a new generation. As supplies from many conventional power plants remain out of operation, pushing up wholesale electricity prices, the combination of high demand and low wind speeds has arrived.

While a warning “can sound pretty serious,” the power grid operator, an arm of National Grid, said that it is “a routine way” to encourage generators to generate more power and does not mean that the power supply is “at risk.”

A series of informal and official alerts have been given by the National Grid control center this winter as it expects this winter to be one of the tightest winters for electricity in the last four years. On consecutive days in November, there were two official warnings, and another in December.

The U.K. said that Hartree Solutions, a commodity trading firm, This winter has a “much greater risk of power cuts this winter than the National Grid has forecast,” which is reflected in market prices.

On Wednesday, the wholesale price for electricity to meet peak demand, which is in the hour starting at 4 p.m., increased to 1,000 pounds per megawatt on one of the key power auction platforms in the United Kingdom, the highest price since the auction started in 2014 and 10 times the price on Tuesday for the same hour.

Hartree said the declining power supply margins mean the control room of the National Grid “will have to issue warnings and alerts on Wednesday and use many – if not all – of its balancing tools to keep the lights on.”

“In the short term, we would like to see a larger safety cushion (margin) between electricity demand and available supply,” the official warning from the electric grid operator says.

This does not suggest that there are imminent blackouts or that there is inadequate generation to satisfy current demand.

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