This June will mark a further step forward in helping smaller electricity asset owners to play a bigger role in providing balancing services.
Elexon, which manages the Balancing and Settlement Code (BSC), is implementing Modification P375 – a rule change which will allow the actual activity of asset owners located ‘behind the Boundary Point’ to be recognised in the electricity Settlement. Settlement is a process where Elexon compares contracts to buy and sell electricity in the wholesale market with actual volumes. We make sure everyone is paid accurately for any differences.
The Boundary Point is where sites, including complex multi-use ones, connect to an electricity distribution network. These sites are found across GB and they include places where small-scale solar, or other low carbon generators are co-located for example, with battery storage or other units which can provide demand-side response (DSR).
The problem that smaller units face is that the readings from their meters are not recognised in Settlement, as only aggregated data on electricity flows from the Boundary Point can be used. Elexon and other market participants therefore do not see the actual activity of these units. This needs to change, because if the energy sector is to meet Net Zero, then we must find more ways to encourage DSR.
P375 will allow owners of units behind the Boundary Point to use ‘asset meters’ which will record exactly how much electricity they are producing, or using. These meters need to go through compliance testing with Elexon before use in Settlement, this also includes validating that a data collector can collect and submit the data. They will need to fit these meters themselves, and from 30 June, data from them can be submitted into Settlement.
It will not be obligatory for the owners to participate in the reforms, or use asset meters, but there will be clear advantages if they do. For example, currently if a distribution network owner (DNO) needs to resolve a supply and demand constraint on its network, it can make a judgement as to how much DSR in megawatts may be available from units at a site behind the Boundary Point.
However, as this information is aggregated across the site up to the Boundary Point, the DNO does not see information proving the actual capability of each unit. This means that the owners of the units may not receive payments which recognise the true value of the DSR they provide. It also means that the DNO cannot always make the most efficient decisions when resolving constraints, because it does not have granular information on how individual assets perform.
P375 is one of several changes that provide new revenue opportunities for DSR providers. In December 2019, alongside National Grid ESO we opened up the Balancing Mechanism so that independent aggregators (that are not affiliated with licensed suppliers) can compete in it. P375 was proposed by Flexitricity, an independent aggregator, which demonstrates the interest in the industry in making these changes, and we are pleased to have supported the development of the reforms.
If you are an asset owner that is not currently active in the market and you would like to benefit from P375, the first step would be to submit an ‘expression of interest’ to enter the market. Elexon’s market entry team would then meet with you to discuss your needs.
You would then need to accede to the BSC (signing up to meeting the BSC rules) and register as an Asset Metering Virtual Lead Party (AMVLP), a new market role introduced by P375, using the Elexon Kinnect Customer Solution a new cloud platform which provides market entry services).
Once you are qualified in this role, you can register your unit (or units). If you are already active in the market, you would only need to register and qualify as an AMVLP and then have your units accredited for participating in Settlement.
Half Hourly Data Collectors (HHDCs) and Supplier Volume Allocation Half Hourly Meter Operator Agents (HHMOAs) already perform services that are essential to Settlement. P375 will introduce new activities for them which they can choose to deliver, if they wish. They will not need to undergo any further qualification under the BSC to do this. In addition to the new AMVLP role there are going to be Asset Metering specific roles for P375. These are the Asset Metering Half-Hourly Data Collector (AMHHDC) and the Asset Metering Half Hourly Meter Operator Agent (AMMOA). These new roles will require qualification under the BSC and anyone interested should follow the market entry process.
To implement P375, Elexon is making extensive changes to the BSC Central Systems which manage Settlement. We need to test these changes before the reforms go live to check that data from asset meters can be captured, verified and processed.
Companies wanting to benefit from the reforms (including AMVLPs and those carrying out the other roles mentioned above) will also need to test that they can use the software (a Salesforce platform) required to submit metering data.
The industry testing is scheduled to take place between 6 June and 17 June. If you are interested in participating please get in touch with us by emailing Releases@elexon.co.uk. Once you have registered for testing, we will get in touch with you to coordinate next steps.
P375 could make an important contribution to Net Zero. It is one of a number of changes to the BSC that are being developed to help create a more level playing field for smaller asset owners and larger, more established energy companies. We look forward to helping companies benefit from asset metering so that they can be more involved in making electricity system balancing more efficient.
In 2021, Current± hosted a webinar on the P375 modification, talking to Iain Nicoll’s about the importance of allowing individual asset meters to be used for settlement purposes, and the challenges of implementing such a modification.
It was the first in our Briefings series, with the next session Current± Briefings: Assessing the opportunities and ambition of the British Energy Security Strategy taking place on 20 April at 10am BST. To register for the session, click here.