The GB electricity wholesale market

Electricity is a unique product that cannot currently be stored in large amounts. Supply and demand for electricity must be matched, or balanced, at all times.

In Britain this is primarily done by suppliers, generators, traders and customers trading in the competitive wholesale electricity market.

Trading can take place bilaterally or on exchanges, and contracts for electricity can be struck over timescales ranging from several years ahead to on-the-day trading markets.

Electricity can also be imported or exported through interconnectors. Currently there are electricity interconnectors between Britain and France, the Netherlands and Ireland.

National Grid Electricity Transmission (NGET) has overall responsibility as ‘residual balancer’ of the electricity system, and takes actions to ensure that electricity supply and demand match on a second-by-second basis. NGET has a number of tools that it can use to do this, including the Balancing Mechanism.

The Balancing Mechanism allows NGET to accept offers of electricity (generation increases and demand reductions) and bids for electricity (generation reductions and demand increases) at very short notice.

If a market participant generates or consumes more or less electricity than they have contracted for, they are exposed to the imbalance price, or ‘cash-out’, for the difference. The cash-out price is the incentive on market participants to ensure electricity consumers’ demand is met, and the ‘residual balancing role’ of NGET it minimised. The cash-out price is based on NGET’s costs of balancing the system.

Publications and updates

  • Published: 13th Mar 2019
  • Decisions
  • 1 Associated documents
See our decision on conditions precedent prior to the partial transfer of NGET's electricity transmission licence from NGET to NGESO.

  • Published: 6th Feb 2019
  • Open letters and correspondence
  • 1 Associated documents
This letter is to inform interested parties of the additional licence modifications that are required as a consequence of the partial transfer of the electricity transmission licence from NGET to NGESO, that will take effect from 1 April 2019.

  • Published: 31st Jan 2019
  • Agendas, minutes and presentations
  • 1 Associated documents
Invitation to our Local Energy and the energy system transition event to discuss the emerging opportunities and challenges.

  • Published: 26th Nov 2018
  • Decisions
  • 2 Associated documents
This letter details the Authority’s final decision on the National Grid Electricity System Operator (NGESO) application for certification, under section 10D of the Electricity Act.

  • Published: 11th Oct 2018
  • Reports and plans
  • 3 Associated documents
In our second annual State of the Energy Market report, we assess how well energy markets are working for consumers.

  • Published: 1st Nov 2017
  • Main webpage
  • 0 Associated documents
Ofgem's Chief Economist, Joe Perkins, introduces the key findings of our State of the Energy Market 2017 report.

  • Published: 31st Oct 2017
  • Reports and plans
  • 2 Associated documents
Ofgem's evidence-based assessment of the issues affecting the GB energy markets and its performance for consumers in 2017.

  • Published: 17th May 2017
  • Decisions, Guidance
  • 1 Associated documents
This is the guidance to our approach to interpreting and enforcing the Transmission Constraint Licence Condition (SLC 20A).

  • Published: 17th May 2017
  • Consultations and responses, Decisions
  • 2 Associated documents
We are introducing the Transmission Constraint Licence Condition as a new permanent licence condition to the generation licence, as Standard Licence Condition 20A.

  • Published: 3rd Feb 2017
  • Closed: 6th Mar 2017
  • Consultations and responses, Guidance
  • 5 Associated documents
Consultation on the guidance to our approach to interpreting and enforcing the Transmission Constraint Licence Condition.