Ofgem has approved an amendment to the Connection and Use of System Code (CUSC) that clears the way for independent aggregators to participate in the balancing mechanism on a routine basis.
National Grid Electricity System Operator (ESO) has confirmed they will be able to begin trading from 11 December.
Last year, Ofgem approved a modification to the Balancing and Settlement Code (BSC) that created the new role of “virtual lead party” as part of the preparations for a pan-European balancing platform called TERRE (Trans-European Replacement Reserves Exchange).
The role will give independent aggregators direct access to the balancing market by allowing them to create aggregated units – often referred to as virtual power plants – without becoming the registered supplier for the assets they are combining.
CMP295, which will take effect on 6 December, incorporates virtual lead parties and the accompanying contractual arrangements into the CUSC – the code governing the use of the transmission network.
Elexon said there are currently three organisations actively undergoing qualification to become a virtual lead party, all of which are new signatories to the BSC. Two existing signatories are also seeking to obtain the status.
Nevertheless, the code administrator said none will be ready to operate on this basis from the go-live date on 11 December.
Two companies are already operating virtual power plants in the balancing mechanism – Limejump and Flexitricity – but both are doing so as the registered suppliers for their portfolios.
Ofgem recently permitted the ESO to delay its entry to TERRE after its French equivalent RTE requested a similar derogation but said the accompanying reforms to the balancing mechanism should continue to be implemented in December as planned.