Power prices surge to record high as cold snap hits

Power prices have surged to a record high as the cold snap and a lack of wind prompts a scramble for electricity among suppliers.

Day ahead UK power prices jumped to an all-time high of £675 a megawatt hour on Epex Spot Exchange on Sunday as snow and sub-zero temperatures swept across Britain. The cost of power at the peak hours of 5pm-6pm soared to a record £2,586 a megawatt-hour.

The eye watering wholesale power prices are being caused by rocketing demand at a time when low wind speeds are reducing the amount of electricity generated from renewable energy.

While most houses use gas for central heating, cold weather drives demand by prompting more people to stay indoors with the lights on watching TV. Heating systems also use electricity.

National Grid data suggests that power consumption is set to peak at almost 46,700 megawatts at 5pm on Monday, up from Sunday’s high of just under 43,000.

At the same time as demand is peaking, grey and still “Dunkelflaute” weather conditions are depressing wind power.

Wind was generating around 5pc of Britain’s electricity on Sunday, compared to 28.5pc over the past year. Gas is being used to prop up the system and meet demand.

Record prices reflect the amount being paid by UK energy suppliers for power from electricity generators. Higher prices are paid to attract more generators to market and ensure there is enough electricity available to meet forecasts for demand.

The crunch is expected to begin to ease from Monday evening as the wind is forecast to pick up.

National Grid warned last week that supplies of electricity would tighten as the weather reduces the amount of power generated from wind and solar.

It said it may be forced to use “enhanced actions” to keep the lights on, including its new scheme where households can sign up to be paid to reduce their electricity consumption when supplies are squeezed. The consumption-cutting tool was almost needed in late November but its use was narrowly averted.

The Grid is set to run another test of the so-called demand flexibility service between 5pm and 7pm on Monday.

Temperatures, wind speeds and how much power the UK can import from Europe are key to keeping the lights on this winter. Britain is expected to avoid blackouts but could have to contend with reduced supplies from France because of maintenance at EDF’s nuclear fleet.

Europe benefited from a mild November, which has left gas storage levels almost full as the region headed into the coldest months of the year. However, the sub-zero temperatures in the UK are expected to remain for several days before milder weather returns in the run-up to Christmas.

National Grid chief John Pettigrew has warned of the risk of rolling blackouts on “those deepest darkest evenings in January and February”.