Does real-world power price volatility follow a regular daily pattern (suited to batteries), incur periodic and protracted price spikes (suited to gas back-ups), or fluctuate somewhat randomly in real time (suited to DSR, batteries and gas generation?). This 9-page report evaluates data from the UK grid in 2024, to disaggregate the prevalence of these three power price volatility patterns.
The three charts above represent highly simplified power pricing regimes, with the exact same mean averages of $67/MWH, and the exact same standard deviations of $60/MWH. In all three charts, power prices run at $40/MWH for 83% of the time, then spike to $200/MWH for the other 17% of the time. What differs is timing.
The importance of these three different types of volatility is explained on page 2. But in short, the left-hand chart with a daily volatility pattern would be particularly well-suited to grid-scale batteries.
The middle chart with periodic yet protracted price spikes would be suited to gas peaker plants, and other forms of flexible gas generation.
And the right-hand chart, with somewhat random but very frequent fluctuations, could be particularly well-suited to demand-side response measures (aka load-shifting), as covered in our outlook for smart energy.
The rise of renewables is also increasing the volatility of power grids. And so, it is interesting to understand what types of volatility are prevalent.
Time of day explains a much lower share of the variance in UK power pricing in 2024 than we had expected, as discussed on pages 4-5. Underlying data are here.
Renewables volatility explains a larger share of the variance in UK power pricing in 2024, and the single largest dunkelflaute, which occurred in December-2024, explained a surprisingly high share of the variance, as discussed on pages 6-7.
Somewhat random, short-term volatility explains the highest share of variance in UK power pricing in 2024. We quantify the numbers, and the implications of these power price volatility patterns on pages 8-9.