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Chart of the Week

2020

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Charging in: New BM entrants and Wider Access

Lee Drummee
Lee Drummee

While National Grid ESO has been granted a derogation until 30 June 2020 to implement project TERRE; Wider Access, its project to increase accessibility to the Balancing Mechanism (BM), is still scheduled to go-live on 11 December 2019. In this Chart of the Week we analyse recent activity of aggregated units and batteries in the BM and take a view on what new entry might mean.

Plants dispatched on the BM are known as Balancing Mechanism Units (BMUs). A BMU represents either a generation plant or smaller groupings of individual units in a plant that can be independently controlled. Since June 2019 the volume of accepted actions on the BM from aggregated and battery BMUs has risen considerably. In June, just over 2GWh of volume was accepted. By August, this had reached 9.1GWh and accepted volumes have not fallen below 5GWh since.

This increase has coincided with a rise in active aggregated units and batteries. In January, just five units from three parties had volumes accepted. By the end of November, a total of 22 unique BMUs from 9 separate parties had been active in the BM over 2019.

The Wider Access workstream has objectives to allow non-traditional providers easier BM access with this being facilitated by measures such as allowing BMUs to submit data at an aggregated level and through introducing Virtual Lead Parties that will be able to register BMUs from 1MW.

In late November, Elexon announced that three parties are actively going through the qualification process to become a Virtual Lead Party.

It is expected that additional parties will take advantage of the changes made and increase the number of aggregated and smaller units active in the BM. Many of these players will be looking to add the BM to their existing business cases in the hope of upside in what can be a volatile pricing environment.

Like the Capacity Market and Balancing Services markets before it, the competitive landscape of the Balancing Mechanism is likely to change with the entry of smaller aggregated units.

This analysis is taken from our BM reporting service which tracks competitive dynamics, pricing and Wider BM Access. If you would like more information about this service, please get in touch.

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