Balancing costs are forecast to fall by almost £100 million this summer, the latest figures from the Electricity System Operator (ESO) have revealed.
In its Summer Outlook report for 2024, the ESO sets out its operational expectations for the national electricity network over the coming months.
Last year total balancing costs were more than £1.4 billion. This year however, the ESO is forecasting balancing costs of just over £1.3 billion.
The ESO said it anticipates an increase in the volume of balancing actions this summer, but that the cost of these will be offset by a combination of falling wholesale prices and the cost saving measures it undertakes.
It explained: “Electricity prices impact the cost of the balancing actions the ESO carries out to operate the network reliably and efficiently. Forecasted summer 2024 electricity prices have dropped significantly compared to 2022 and 2023 prices, and are now more in line with prices ahead of summer 2021, which were around £55/MWh.
“The fall in electricity prices reflects reduced pressure on global gas supplies and high French nuclear availability.”
The report also revealed the ESO expects minimum transmission system demand to be marginally higher than last summer’s weather corrected outturn, at 16.2GW compared to 15.8GW.
The observed minimum demand could be as low as 13.5GW under a 1 in 10-year weather pattern, while normal high peak demand is expected to be 29.2GW.
Source: ESO
Writing in the foreword to the report, the ESO’s chief operating officer Kayte O’Neill said: “In recent years, our Summer Outlook reports have sought to highlight our response to significant unfolding events, including the record-low demands resulting from unprecedented societal changes during the Covid-19 pandemic and the dramatic reshaping of global energy supply caused by Russia’s illegal invasion of Ukraine.
“For summer 2024, energy markets show signs of finding a new equilibrium. Wholesale prices have fallen significantly, reflecting high scheduled French nuclear availability, and robust European gas storage. While volatility in the energy markets shows signs of subsiding, the electricity system continues to change at pace.”