Electricity Balancing Significant Code Review

Under the current electricity market arrangements in Great Britain 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’ price, for the difference.

Electricity balancing arrangements, in particular the cash-out prices, provide incentives for generators and suppliers to invest in secure supplies to ‘balance’ positions and meet demand when the system is tight. They are therefore central to the delivery of a secure and competitive electricity market.

In August 2012, we launched the Electricity Balancing Significant Code Review (EBSCR). We launched the review to address long-standing concerns on electricity balancing arrangements raised in our 2010 Project Discovery report.

In particular, we expressed concerns that cash-out prices are not creating the correct signals for the market to balance, which could increase the risks to future electricity security of supply and undermine balancing efficiency, unnecessarily increasing costs.

In May 2014, we completed our review following extensive stakeholder engagement and published our conclusions and recommendations for reform, below.

Industry will now begin a process to modify the industry codes based on our conclusions, primarily the Balancing and Settlement Code. Once complete, the proposed modifications must be approved by the Authority for them to come into effect.

Publications and updates

  • Published: 15th Oct 2015
  • Decisions
  • 2 Associated documents
This letter presents Authority’s decision to approve changes to National Grid’s C16 statements.

  • Published: 15th Oct 2015
  • Decisions
  • 1 Associated documents
This letter presents Authority’s decision to approve the Loss of Load Probability (LoLP) Calculation Statement.

  • Published: 2nd Apr 2015
  • Decisions
  • 1 Associated documents
We have rejected this modification to the Balancing and Settlement Code (BSC).

  • Published: 2nd Apr 2015
  • Decisions
  • 1 Associated documents
We have approved this modification to the Balancing and Settlement Code.

  • Published: 28th Oct 2014
  • Decisions
  • 1 Associated documents
P304 and P314 sought to reduce the Price Average Reverence volume (PAR) in the imbalance price calculation for this winter. The Authority rejected both these modifications on 28 October 2014.

  • Published: 28th Oct 2014
  • Open letters and correspondence
  • 1 Associated documents
This letter reiterates our strong commitment to the full package of reforms resulting from the Electricity Balancing Significant Code Review (EBSCR), which is being progressed through Balancing and Settlement Code (BSC) modification P305.

  • Published: 15th May 2014
  • Decisions
  • 2 Associated documents
Direction to National Grid Electricity Transmission plc in relation to the Electricity Balancing Significant Code Review.

  • Published: 15th May 2014
  • Decisions
  • 6 Associated documents
This document sets out our Final Policy Decision on the Electricity Balancing Significant Code Review.

  • Published: 4th Oct 2013
  • Agendas, minutes and presentations
  • 4 Associated documents
Materials from Ofgem's Electricity Balancing Significant Code Review Stakeholder Workshop on 24 September 2013.

  • Published: 30th Jul 2013
  • Closed: 22nd Oct 2013
  • Consultations and responses
  • 36 Associated documents
This document sets out our Draft Policy Decision for the Electricity Balancing Significant Code Review. Responses to this consultation will inform our final policy decision.

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