Q1 2021: Cold weather and tight margins

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Dr Iain Staffell, Professor Richard Green, Professor Tim Green and Dr Malte Jansen — Imperial College London

The Texas blackout dominated the newspaper headlines in February.  

An ‘arctic outbreak’ plunged south from Canada, sending temperatures down to as low as –22°C, more than forty degrees below typical February temperatures.  Electricity demand surged as people tried to stay warm, but at the same time as gas and wind power stations shut down because of the extreme conditions.  Blackouts affected 4.3 million Texans, with some lasting for 3 days, and at least 31 lives were lost.  Power prices spiked to $8,800 per MWh on February 17th in Dallas and Fort Worth – almost 200 times their normal level.  Some households on variable rate tariffs were hit with bills over ten thousand dollars, and three utility companies have already declared bankruptcy.

Closer to home, Europe was hit by its own polar vortex, creatively dubbed ‘The Beast from the East 2’.  After seeing the coldest January since 2010, temperatures in February fell to a low of –23°C in Braemar (Aberdeenshire).  This pushed electricity demand up by 15% compared to the surrounding weeks due to increased heating load.  Demand pushed above 48 GW for the first time since 2019, despite the country still being under full lockdown.

This increased demand came at an inconvenient time, as nuclear outages were prolonged through winter, and the Dutch interconnector (which normally supplies a steady 1 GW to Britain) was also offline.  This left the market ‘tight’, meaning short of capacity.  National Grid ESO (electricity system operator) issued three Electricity Margin Notices (EMN) in January alone, making six in total for this winter.  The last such notice was issued back in 2016, highlighting the extended stress the system was under.  

These EMNs communicate to the market that electricity is in short supply and the grid running into its security buffers.  On the 6th January there was a predicted shortfall of 0.6 GW capacity, rising to 1.2 GW on both the 8th and 13th of January.  This is the largest ever shortfall in supply – equivalent to one of Britain’s largest power stations going missing.  The ESO also issued an Electricity Capacity Market Notice (ECMN) on the 8thfor only the third time in its history.  In the end, these notices achieved their aim of bringing more capacity online or persuading flexible consumers (such as industry) to reduce their demand.

Daily average and maximum electricity prices on the day-ahead market in Q1 2021
The highest wholesale power price seen in each month since the British electricity market began

The shortfalls did not lead to any blackouts, but did cause the highest power prices of this century.  Day-ahead market prices rose to £1,063 per MWh on January 13th, their highest since 1995 (when they were driven up by capacity payments that were abolished in 2001).  While this is 25 times higher than the average price over the past year, extreme prices are not passed on to households directly as they are in Texas.

Britain’s power system did not suffer the same catastrophic failure as in Texas for many reasons.  While they share some similarities (high shares of wind power, limited connection to neighbouring power systems), the UK suffered much less severe weather, and is more accustomed to winter storms and so is better prepared for them.  Wind turbines are weatherised so they can continue operation when temperatures fall below freezing, and gas supplies come from the North Sea pipelines and via ships which are unaffected by cold weather, compared to on-land gas rigs in Texas which froze over. 

However, the Texan experience helps to remind us about the interdependency of energy services.  Going forward with our decarbonisation we must ensure that the resilience of the energy system to extreme weather events is designed into the transition to net zero.  This might provide an argument for decarbonising household heating systems with a mix of hydrogen and electric heat pumps, as the ‘all‑electric’ future provides a single point of failure.

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