Heat undermines solar and gas performance

Britain’s second heatwave of the year is pushing wholesale power prices higher, as soaring temperatures reduce the power output of both solar and gas-fired power generation according to new analysis from energy market intelligence firm Montel.

Temperatures across GB are currently around 8-10 degrees Celsius above seasonal norms, driving prices during the evening peak (19:00 – 20:00) for today (Tuesday 23rd June) up to GBP 248.39/MWh, an increase of more than 75% on the GBP 139.13/MWh observed for evening peak last Tuesday. 

GB Power Market Expert at Montel, Noemie Baud said: “Great Britain’s power demand is forecasted to peak at around 34 GW later today, higher than any day recorded during the previous month. It is also higher than the demand levels recorded during May’s record-breaking heat event.

“Higher demand for air conditioning and cooling systems is contributing to the increase, while lower outputs from solar and gas generation means more conventional generation is required to meet demand, pushing up prices.”

While sunny weather has boosted renewable generation, extremely high temperatures are simultaneously reducing the efficiency of solar panels and gas-fired power stations.

Solar panel efficiency typically drops by 0.3% to 0.5% for every 1°C the panel temperature rises above 25°C.

Combined-cycle gas turbine (CCGT) plants also become less efficient during hot weather, losing between 0.5% and 0.9% of power output for each 1°C increase above its baseline.

Baud added “CCGT output is temperature dependent. Air is less dense at higher temperatures, so you get less air, and therefore less fuel into the unit, meaning that the power output declines. This can lead to fossil-fuel generators generating up to 15% less power than their baseline”.

The situation has been compounded by relatively low wind generation across both GB and continental Europe.

With less wind available, electricity systems have become increasingly reliant on thermal generation during peak demand periods, placing additional upward pressure on wholesale prices.

Market conditions are also changing how conventional generators operate.

With strong solar generation suppressing daytime prices, many gas-fired plants are only becoming profitable during the evening peak. This shortens their operating windows and forces operators to recover the costs associated with starting up CCGT units over fewer hours, increasing the overall price required for their generation.

Interconnectors reversing as Europe demands more power

High temperatures across Europe have also pushed up power prices on the continent.

French nuclear output has faced operational restrictions linked to elevated river temperatures, while stronger demand for cooling has increased electricity consumption across several European markets.

As a result, electricity is becoming more expensive in neighbouring countries, reducing the help that GB usually gets from the continent for the evening peak.

Interconnectors that would normally have exported to GB during evening periods are currently flowing electricity out to European markets willing to pay higher prices to meet demand.

Baud said, “British interconnectors will likely be partially reversed by NESO later today (23rd June) and tomorrow (24th June) at prices around European Day ahead levels or higher. Interconnectors are set to send power out of the UK from 5pm, with the exception of France which is still fully exporting to the UK. This is due to its nuclear fleet, with the exception of France which is still fully exporting to GB, thank to its Nuclear fleet keeping prices lower in France than GB.”

Montel provides real-time news, data, analysis, forecasts and insights to power and gas market participants across Europe