Thursday 31 August 2023

ESO revamps Balancing Reserve: Green light for smaller units

The Electricity System Operator (ESO) has altered its approach to the proposed Balancing Reserve (BR) service contracts, ensuring a wider array of providers, including smaller units, can participate.

This change comes after concerns were raised during the consultation on the initial proposals.

In March, Ofgem rejected the proposal put forth by the National Grid ESO.

Ofgem said: “We are firm in our view that this should not mean a direct discrimination of units based on their size, especially where this limits the ESO’s access to potentially cheaper providers without breaching the maximum number of units that the ESO can dispatch efficiently."

The BR service, set to launch by the end of the first quarter of 2024, aims to optimise costs compared to existing reserve-securing methods.

The new design includes reducing the minimum unit size from 50MW to 1MW.

According to the ESO, the revised approach is expected to benefit consumers by £639 million over four years, as it mitigates scarcity premiums and involves a broader pool of providers.