National Grid paid some of the highest prices this winter for gas-generated power on Tuesday night as it scrambled to keep the lights on during one of the coldest weeks of the year.
Data from the electricity system’s administrator, Elexon, showed the Coryton power station in Essex had bids accepted to produce power at £1,950 per megawatt hour (MWh) on Tuesday evening.
The sums are well above average prices of between £200 and £400 per megawatt hour, although they remain below those paid on 12 December, when National Grid paid £27m in a single day to get power stations to crank up supply. In December, Rye House power station in Hertfordshire received a record £6,000 a MWh.
In total, the cost of balancing the system on Tuesday this week was estimated at between £5m and £10m.
One industry source said the price of sourcing power from gas peaking plants had “raised eyebrows”.
The cold, still weather reduced wind power and pushed up demand this week, while strikes at EDF’s nuclear plants in France also put a strain on the grid.
To counter this, National Grid called on coal plants that were put on standby for the winter into action for the first time, as well as sourcing power from Dinorwig, a vast, pumped hydroelectric power plant in north Wales nicknamed “Electric Mountain”, which is the fastest source of electricity in the UK.
Industry sources said Coryton, owned by InterGen, could have earned as much as £2m on Tuesday but failed to deliver all of the power originally offered up. InterGen was bought by Czech financier Pavel Hubáček’s Creditas investment group in January.
National Grid relies on offering the right prices to incentivise power plants to help balance supply and demand. Generators bid to provide power at a specified price.
The next highest accepted offers after Coryton were Uniper’s Connah’s Quay power station in north Wales – which received £999 per MWh and Rocksavage Power Station in near Liverpool, also owned by InterGen, which received £750 per MWh.
Rye House – owned by VPI, a subsidiary of the Swiss trading multinational Vitol – is understood to have bid £5,750 per MWh but its offer was not accepted.
The profits of gas-fired peaking plants – so-called because they tend to be fired up at peak consumption times when other contributors to the grid, such as windfarms, underperform – have been in the spotlight over the winter.
Their rates have jumped since the invasion of Ukraine, leading to calls for their profits to be capped. Despite increasing amounts of renewable electricity generation, Britain remains reliant on gas.
Ofgem is expected to soon publish proposals designed to prevent backup generators from receiving “excessive” profits as part of their licence conditions.
Peaking plant owners argue they provide a rapid source of electricity supplies, and only produce profits sporadically while detractors say they are owned by sophisticated traders maximising returns when the market is tight.
National Grid warned last October that Britain could suffer rolling blackouts this winter as Russian gas supplies were turned down after the war in Ukraine. However, mild weather and strong gas storage in Europe have eased those fears.
The Grid expects to pay between £220m and £420m to keep five coal units on standby this winter.
A spokesperson for InterGen said: “InterGen’s plants provide a crucial function in the energy system by keeping the lights on when demand is high and renewable generation is low.
“This flexibility reduces the need for many power stations to run continuously, reducing the overall cost and carbon intensity of the grid.”
National Grid and Uniper declined to comment.
