Monday, 1 November 2010

50,000 Megawatts and electricity prices.

Today Britain's electricity demand reached its highest point of the year so far! At 17:00 today our electricity demand peaked at 50,685 MW.

As usual around 44% of the demand was met with combined-cycle gas power stations (or plants for our American friends), 32% by coal followed up with 16% nuclear and finally 4.6% imported from France. France of course with it's numerous nuclear reactors has abundant cheap electricity to sell to us!

The small remainder was met with a mixture of wind, pumped storage hydro and standard hydro.

During the period of peak demand electricity prices peaked at £77.90 p/MWh. This is quite a contrast to a more usual price of around £45.00 p/MWh or even earlier lows in the day of £34 p/MWh.

Why is this?

In Britain (and many other countries) electricity is traded in an open market as a commodity. Like most commodities when demand is high and supply is low prices rise. The reverse is true when supply is plentiful and demand is low.

When demand increases gas plants increase their output and generally a number of large coal plants also begin generating.

Britain's existing nuclear power stations run at (or close to) maximum output when they are online and do not alter their output in response to short term power demands. It's just not what the existing plants were designed to do.

The EPR and AP1000 reactor designs that are highly likely to constructed here are designed for load following operations. This is something that French nuclear reactors routinely do. The more demand that can be met by nuclear the more stable electricity prices will be.

Natural gas is as cheap as it's been for many years however it cannot stay that way forever and when it does start to increase due to reduced supply electricity prices will inevitably rise.

Although the new nuclear builds cannot now assist with stabilizing British electricity prices they will when they come on-line.