Elexon has implemented a change in the Balancing Mechanism rules that will make it easier to use flexibility to balance supply and demand, instead of taking more expensive options.
Independent aggregators play an important role in enabling flexible energy use, by coordinating customers of various suppliers to adjust their consumption at short notice. However, under previous rules, when an aggregator adjusted customer energy volumes, the change was not reflected in the original supplier’s data. This could mean the supplier incurred ‘out of balance’ costs they were unable to recover. That financial uncertainty acted as a barrier to the growth of flexibility services.
Modification P444 introduced a new compensation mechanism for suppliers when flexibility actions are taken.
It follows Modification P415, implemented last November, which allowed aggregators to compete directly with suppliers. It meant owners of flexible assets, including batteries, EV chargers, generators and heat pumps, could appoint a separate company, instead of their energy supplier, to trade their flexibility in the wholesale electricity market.
Elexon Chief Executive, Peter Stanley, said: “As the energy system evolves, flexibility will play a critical role in balancing supply and demand, as we move towards a cleaner, more decarbonised power system. Elexon has a responsibility to ensure that all participants in the Balancing Mechanism operate on a level playing field while supporting competition.
“This step is essential to unlocking the full potential of flexibility services, which will be vital to achieving the Clean Power 2030 targets and delivering a secure, efficient, and low carbon energy system for all consumers.”
Claire Addison, Head of Regulation at Flexitricity, said: “We proposed P444 to make delivering flexibility in the Balancing Mechanism fairer and more competitive.
“We are delighted that from today there will be more accurate incentives for flexible assets, including battery energy storage and consumer-led flexibility, to turn up their demand and put green energy to work.”