An Arctic blast of snow, sleet and hail has driven UK temperatures to -12.5°C, the coldest recorded this winter, sharply increasing electricity demand and placing stress on the GB power system. With Storm Goretti forecast to bring heavy snowfall on Thursday, experts warn that elevated demand and high prices could persist into mid-January.
Reacting to the news, Jake Thompson, GB Market Expert at market intelligence firm Montel Analytics said:
“National electricity demand surged during peak hours as temperatures plunged. Morning peak demand reached 44GW today, with Montel EnAppSys forecasts suggesting demand could rise to around 46GW during the evening peak. On Monday, GB recorded its highest demand since March 2018 at 47.3GW.
“As a result, 23% of demand was met by renewables on 5th January, the day of the demand peak, leaving the system heavily reliant on the conventional gas-fired generation fleet during peak periods. To alleviate pressure on domestic generators, NESO, the GB system operator, intervened in interconnector markets.
“Ahead of the day-ahead auction, interconnectors linking GB with Belgium (Nemo Link), the Netherlands (BritNed) and Denmark (Viking Link) were scheduled to export power from GB from 5:00am through to the evening peak. However, from 5:00am this morning, NESO reduced these flows by purchasing volumes via competitive auctions, paying prices of up to £1,040/MWh. The highest prices were recorded around 13:00 and were more than ten times the weighted day-ahead price for the same hour.
“The decision to buy back exports had material knock-on effects across neighbouring markets, particularly in the Netherlands. Severe winter weather reduced renewable output across the region, forcing fossil fuel generation to meet the bulk of demand. Dutch generators were already exporting to Germany and Belgium, with further flows reaching France, while relying on imports from Denmark and GB. When GB reduced exports, Dutch imbalance prices surged above €4,000/MWh on Monday 5 January.
“The cold snap could last until at least 11 January, maintaining elevated demand levels. High prices are expected to persist due to the system’s reliance on gas-fired generation, especially during periods of low wind. Forecasts indicate wind output could fall to as little as 2GW on 8 January, further limiting renewable supply and increasing upward pressure on wholesale prices”.
