New Balancing Mechanism entrants expected

New Balancing Mechanism entrants expected: National Grid ESO’s project Wider Access – a project to increase accessibility to the Balancing Mechanism (BM) – is scheduled to go-live on 11 December 2019. Cornwall Insight has reviewed the recent activity of aggregated units and batteries in the BM and what impact this project will have on new entrants.

The below graph shows the accepted volumes from aggregated units and batteries dispatched on the BM, also known as Balancing Mechanism Units (BMUs). 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 trend is set to continue with the launch of the Wider Access Project.

New Balancing Mechanism entrants expectedLee Drummee, Analyst at Cornwall Insight, said:

“The main objective of the Wider Access work stream is to allow non-traditional providers easier BM access. This is 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 new 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 present 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.”

New Balancing Mechanism entrants expected from Cornwall Insight

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