On behalf of its 80 members, the Electricity Storage Network (ESN) has penned an open letter to National Grid ESO expressing concerns over the Balancing Mechanism (BM) highlighting an average skip rate of 80% for batteries between November 2022 and May 2023.
The BM is used to balance supply and demand on each half-hour trading period of the day. As referenced in ESN’s open letter to National Grid ESO, investment decisions on UK storage projects “depend on efficient dispatch of electricity storage assets in the BM as a crucial segment of the revenue stack”.
ESN said that current dispatch issues are putting “billions of pounds” of investment at risk, with the skip rate having resulted in a cost to the consumer of around £150 million.
Because of this, the letter stated that the organisation “greatly welcomes” the work being undertaken by the ESO to improve the BM. This includes a number of reforms such as a new battery zone in the BM as of May 2023, the development of the Open Balancing Platform set to launch in December 2023 and the establishment of the Balancing Programme Storage Stakeholder Group.
Responding to the letter, ESO said that the changes it has made have seen the “volumes being dispatched showing an average month on month increase of 174% over the past year”.
There are, however, still concerns, which the ESN highlighted; these include National Grid ESO’s approach to operating a zero carbon electricity system for periods by 2025.
This has resulted in the ESN calling for “greater urgency” from ESO to ensure low carbon, flexible assets are effectively dispatched in the BM.
The trade association also highlighted that clear and accurate data must be published from the ESO on the dispatch of batteries in comparison to other technologies. ESN asked that this includes metrics such as Accepted MWh vs Available MWh for bids and offers in addition to the percentage of BM dispatch volume per technology.
Additionally, ESN called for a meeting between its members, the ESO Balancing Transformation team, control representatives and market development teams to discuss the current BM dispatch issues, dispatch transparency dataset and reason codes to lead to collaborative work on solutions.
Responding to the ESN’s open letter, the ESO said: “We are committed to running the power system with zero carbon emissions by 2025 and recognise the importance of low carbon technologies in achieving this goal.
“Achieving this level of ambition at pace inevitably presents a number of operational challenges which we are solving through our Markets Roadmap and as part of a suite of reforms across the ESO. These changes have already seen the use of battery storage change dramatically in the BM, with the volumes being dispatched significantly increasing over the past year.
“We agree that we need to continue to do more to ensure both that we receive accurate and timely information about these assets and that we are able to use the assets to their full potential. We greatly value the engagement with the ESN and its members and will continue to work collaboratively with them and the wider power sector to deliver this critical ambition.”