Balancing Markets

Image credit: Clarke Energy

Balancing Markets and Balancing Mechanism (BM)

New Stream provide clients direct and transparent access to Balancing Markets and the BM.

Benefit from:

  • New Stream’s multi year experience in participating in National Grid “auction markets”.
  • Removal of “smoke and mirrors” and opaque % pass-throughs.
  • Visibility on strategy and delivered price.
  • Contract directly with National Grid with New Stream taking on the operational and administrative burden.

Firm Frequency Response (FFR)

  • Dynamic Frequency Response (DFR) is a continuously provided service used to manage the normal second-by-second changes on the system.
  • Secondary Static Response (FFR) provided within 30 seconds of an event, which can be sustained for a further 30 minutes.

Fast Reserve

  • Active power delivery must start within 2 minutes of the dispatch instruction.
  • A delivery rate in excess of 25MW/minute.
  • Sustainable for a minimum of 15 minutes.
  • Must be able to deliver minimum of 50MW.

STOR (Short Term Operating Reserve)

  • Minimum of 3 MW of generation or steady demand reduction. New Stream can aggregated from more than one site.
  • Sustain this response for a minimum of two hours.
  • 20 minutes response preferable but up to a maximum of 240 minutes.

Balancing Mechanism (BM) Participation

The Balancing Mechanism is National Grid’s dedicated market for last-minute balancing needs. Operators commit to offering their available flexibility to National Grid through the Balancing Mechanism with a corresponding pricing structure. National Grid then instruct the assets they need to balance national supply and demand or create headroom / footroom for system service provision, and these lucky assets receive their submitted price (“pay-as-bid”) for carrying out such instructions. The BM offers no guarantees of utilisation, and assets may be dispatched for reasons which are not all obvious to the commercial market participant. Smaller assets may therefore become tempted to make themselves available in the BM for 24 hours each day (“you’ve got to be in it to win it”), and some business cases may describe wonderful profits in return. Done wrong though, BM participation may grossly underwhelm asset owners.

If you are thinking about the BM for your assets, and you don’t yet have clear answers to the below, please contact simon.gillett@newstreamrenewables.com

  • What flexibility is your asset able to offer in the BM? Are there currently BM growth prospects for the role your asset is best suited to play?
  • Utilisation (i.e. hours of instruction per year) is the most important input to the BM gross margin calculation. How many run hours can your asset currently expect from the BM? How sensitive is your BM business case to asset utilisation?
  • Price (i.e. your bid or offer value) also drives BM gross margin. Prices can soar for some assets, but not all. Which assets will be your main competitors and how will your pricing compare to theirs?
  • Participating in the BM may mean giving up other opportunities. What could the commitments you make on signing up to participate cost you? And how might you unwind them if ever you wish to?

 

Analysis of BM activity to help you define and value your asset participation strategies