Balancing Mechanism costs soared to £967 million over last three full calendar months – nearly the triple the £337 million total for the same period last year – according to analysis by LCP.
The consultancy said Balancing Services Use of System (BSUoS) charges for the three months from 1 September are expected to reach £1.25 billion – more than double the £524 million bill for the same period in 2021.
All of the top ten most expensive days in the Balancing Mechanism occurred during the period, with 13 power stations having offers to increase generation accepted at prices in excess of £3000/MWh. The latest record came on 24 November when costs totalled £63.2 million – an £18.6 million increase over the previous high of £44.7 million on 2 November.
November was a particularly expensive month, with daily costs averaging £16.4 million. This is nearly triple the daily average of £5.6 million in November 2020 and more than eight times daily average of £1.92 million in November 2019.
BSUoS charges for the month are expected to be around £600 million, up from £203 million in November 2020.
LCP Energy Analytics partner Rajiv Gogna said: “We have seen the perfect storm of low renewable generation and an increase in global demand for gas which has put the UK’s limited capacity on the edge, forcing prices to repeatedly break new ground. Across a number of days, we also saw energy from the GB market being exported to Europe to overcome some of the generation issues faced there, compounding our own problems.
“This has resulted in record high balancing costs, which will feed through to suppliers via BSUoS charges at the worst time. With no mechanism to pass the increased cost onto customers, suppliers have had to tackle this huge cost increase from their already stretched balance sheets.
“Coming down the line, we expect to see further instances of high pricing to balance the system. With proposed changes of moving BSUoS entirely onto suppliers in 2023, unexpected hikes in prices could add further pressure to their balance sheets.”