Balancing Market opened up to smaller power providers and technologies

The minimum threshold for taking part in helping balance the system has been lowered from 100MW to 1MW

The UK’s balancing mechanism (BM) has been widened to enable small and aggregated technologies and providers in regional networks to provide power to the grid.

National Grid Electricity System Operator (ESO) and ELEXON are lowering the minimum threshold for taking part in the BM from 100MW to 1MW, opening up the market to a wider range of technologies and providers.

The BM is one of the main tools used by the ESO to balance supply and demand on the electricity system in real-time, alongside balancing services like frequency response and reserve.

Providers can offer to increase or decrease their generation or demand to help balance the system through the BM.

Following the changes, they will be able to register in the BM as a ‘virtual lead party’ (VLP) – a new type of market participant that can provide balancing services without requiring a supply licence or pay ‘use of system’ costs – and create secondary BM units to offer flexibility to the grid.

Opening up the BM to VLPs provides the opportunity for “radical changes” to how electricity supply and demand can be met over the coming decades as well as helps unlock initiatives that will deliver against the UK’s net zero emissions target.

Richard Smith, Head of Commercial at National Grid ESO said: “Our electricity system in Great Britain is changing; we’re making it smarter and more flexible as we shift away from traditional large thermal power generation to cleaner, decentralised power. This transformation is central to the way we balance the system today, as we continue working towards being able to operate carbon free by 2025.

“Widening access to our balancing mechanism is an important step towards meeting that 2025 target and making sure our system is as flexible and secure as possible. It opens up opportunities for new providers and technologies to become part of the market and for that market to further diversify its energy mix as we bring embedded generation like solar and wind into the balancing mechanism. We’re looking forward to working with a new range of providers at this exciting time.”

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