New day-ahead electricity market service drives higher prices
STOR was re-introduced on April 1 and unlike its previous incarnation, which was tendered for season-long durations, the new replacement service is based on daily auctions – giving providers the flexibility to optimise on a daily basis between STOR and other market segments.
National Grid ESO began procuring STOR on a rolling daily basis from April 1, with a target requirement for 1,310MW holding capacity. The capacity is procured via a daily auction held before the day-ahead EPEX and Nordpool auctions in the wholesale energy market.
New data from energy market analyst EnAppSys show that in STOR’s first month of operation, holding (availability) prices ranging from £0.50/MW/h to £6.50/MW/h and averaging around £3.00/MW/h were paid. These prices were generally higher than those in the same period in both 2019 and 2020.
Paul Buckworth, principal consultant at EnAppSys, said: “The relaunch of STOR as a day-ahead service has provided opportunities for savvy operators to make money.
“Following the tight system and high prices seen in the energy market on 12 April, STOR prices rose in subsequent days as providers of capacity factored in the expected value of lost opportunity in the energy market. On that day, cash-out prices reached £1,971.59/MWh and STOR providers on subsequent days sought increased fees to cover the opportunity cost that resulted from not participating in the energy markets.
“Effectively, STOR’s return as a day-ahead service is part of National Grid’s plan to move procurement of grid services closer to real time. Participants in this service are able opt in and out of this segment of the market on a daily basis as the prevailing economics dictate, and can optimise against other revenues available in the wholesale markets and/or balancing mechanism.
“To succeed in this more dynamic market environment, participants will need tools and systems to actively monitor and forecast all market segments and to optimise between them on a daily basis.”At the beginning of April there was a high volume offered into the STOR market (2,918MW on April 1), before gradually decreasing to 1,220MW on April 15, lower than the target requirement. Offered volumes stabilised in the second half of the month at around 2,000MW. Accepted volumes have ranged between 1,127MW and 1,313MW (excluding April 8 when a system glitch saw no tenders accepted).
There were cases of companies tendering in different units at different prices to test bidding strategies. For example, Uniper priced Killingholme 2-1 low at around £0.50/MW/h on most days, while pricing Killingholme 2-2 at around £1.25/MW/h. As a result, 2-1 was usually accepted, while 2-2 was usually rejected, entering the balancing mechanism instead.
This story was originally published on Power Engineering International