Power output from Britain’s coal fired power stations has continued to decline rapidly, reaching a record low during the July-September quarter.
According to EnAppSys' latest electricity market report, electricity production from coal, at 2.28TWh during the three month period, was the lowest of all power sources apart from hydro.
At this level coal’s contribution of only 3.3 per cent of all generation was the lowest ever recorded and represents a decline of 91 per cent in only three years since the Q3 2013 production of 26.29TWh (33.0 per cent).
This situation reflects a combination of factors, linking the growth of renewable power sources with a doubling of the UK Carbon Price Support and continuing low gas prices which have largely forced coal plants out of Britain’s conventional power supply market.
In fact, during the last three months, biomass production, including output from converted former coal plants, had a larger share of generation (at 4.68TWh) than traditional coal-fired stations.
The rapid decline in the levels of coal-fired generation are unprecedented for a market that has traditionally been dominated by coal power stations since its inception.
This drop in coal generation reflects how plants have struggled to justify adequate run hours and economic utilisation rates in the face of the disadvantages of the Carbon Price Support and continuing low gas prices.
With legislation continuing to act against coal-fired power stations, those that remain do so mainly to provide reserve to the system or for ‘black start’ contracts where they are used to restart the grid in case of a loss of supply.
During the quarter, generation from CGGT stations totalled 29.0TWh (42.1% of total generation), followed by nuclear at 25.4%, renewables at 22.4% and imports via the interconnector at 6.7%.
Although, the reduction in levels of coal burn and the increased generation from cleaner sources means that carbon emissions have been considerably reduced, the higher level of renewables output has seen much tighter supply margins during evening periods with low wind levels.
For example, during solar generation peaks in the middle of the day, the electricity system increasingly finds itself over supplied, before the situation is reversed going into the peak early evening demand period at sunset, resulting in considerable price volatility.
This was particularly evident at points in the past quarter, when planned outages at some thermal plants and low wind levels also exacerbated tight margins. As a result, on some days during September, balancing mechanism prices increased to the unusually high level of £1,250 per MWh, with day ahead prices approaching £1,000 per MWh on occasions.
In the longer term the Capacity Mechanism is designed to overcome such problems, but in the short term the Supplemental Balancing Reserve only becomes active from November to February, which may put some further pressure on the system in the shoulder months of October and March/April.
On the other hand, as another consequence of the high levels of renewables now available, Q3 also saw an increase in the frequency of negative system prices, particularly during the middle of the day and on some occasions even during peak hours when supply completely overwhelmed demand, in stark contrast to the historical trends of negative pricing overnight.
With the closure of many coal plants, until the Supplemental Balancing Reserve comes into effect, the problem for the system is that there are only low volumes of reserve capacity available for those periods when extra capacity is required.
This makes it very challenging for National Grid as there is little backup capacity at plants beyond those already active in the market. This can make for a for a very dynamic and volatile short term pricing market.
Overall, the increased reliance on renewable sources also highlights the increasing importance of flexible generation and energy storage solutions in solving future power supply problems.
A copy of the 3rd Quarter GB Electricity Market Summary is available at http://www.enappsys.com/news_and_rep/summary_reports.jsp
EnAppSys is an independent energy specialist company that provides electricity and energy market monitoring, data and consultancy services to parties with an interest in the UK energy market.