This document reviews the impact of the changes to the imbalance pricing calculation introduced by the Electricity Balancing Significant Code Review (EBSCR). EBSCR’s aim was to ensure that the cash-out price provides the correct incentive to invest in suppliers to ‘balance’ their positions and meet demand when tight. The changes implemented through EBSCR had three core policy objectives:
- Incentivise an efficient level of security of supply
- Increase the efficiency of efficient balancing
- Ensure balancing arrangements are compliant with the European Target Model (EU TM) and complement the government’s Electricity Market Reform (EMR) Capacity Market (CM).
This modification introduced substantial changes to the imbalance pricing calculation, with further changes to be implemented on 1 November 2018. The document focuses on the three high level objectives of the EBSCR and how well the first phase of the modification has been in achieving those objectives. We use key metrics to identify whether trends in electricity balancing pricing and behaviour are in line with the outcomes we expected.