The Balancing Mechanism – the flexibility market used by National Grid Electricity System Operator (ESO) to correct imbalances between supply and demand – saw a large influx of smaller participants over 2020, both in terms of the number and capacity of active units, analysis from Cornwall Insight has revealed.
The greatest growth came from aggregated units, which more than doubled in number from 20 to 45 as their combined active capacity rose by more than 87 per cent to around 1.7GW.
Cornwall Insight said there was a similar trend for gas reciprocating engines, with the number of active units in the Balancing Mechanism (BM) rising from 9 in January 2020 to 19 a year later. Their active capacity swelled by more than 143 per cent to a total of 455MW. Meanwhile, the number of active battery storage units increased from 3 to 7.
Source: Elexon / Cornwall Insight
“This trend of new entry is likely to continue throughout 2021, as new units, often with Capacity Market contracts, commission,” said Cornwall Insight analyst Joe Camish.
“Added to this, a greater number of parties that trade the power from flexible assets are enabling themselves to be active in the BM, often using the ESO’s wider access mechanisms to aid entry.
“One of the most recent measures implemented to aid entry was the launch of the wider access application programming interface (API), which launched back in September 2020.
“This web-based route provides an alternative to fixed-line connections, aiming to be simpler and more cost-effective. Tesla Motors were the first party to opt for the API route to market for its Holes Bay battery unit in September 2020.”
Camish said the growth has also been assisted by the creation of the new role Virtual Lead Party (VLP), which allows parties to trade aggregated units without becoming the registered supplier for the assets they are combining. He said six participants have now registered as VLPs, including Flexitricity, Habitat Energy, Cenergise, Adela Energy, Erova and Gazprom.
“While not all of these parties have had volumes accepted in the BM yet, it represents an intention to compete and enter new assets into this market,” he added.