Elexon, the company that manages the balancing and settlement code (BSC), will reduce the financial exposure faced by large energy storage facilities.
The BSC sets rules for trading electricity and ensuring stability of supply. It mandates that each balancing mechanism unit (BMU) must have either a Production or Consumption status to ensure accurate allocation of energy flows.
Production means a storage unit is exporting power and when it imports that is known as Consumption. When that status switches unexpectedly it can mean operators are unable to fulfil agreed electricity contracts, potentially impacting system balancing. Unexpected status changes also lead to unexpected imbalance charges.
This was originally intended prevent integrated energy companies from leveraging vertical integration.
Because flipping between the two can cause imbalances in energy accounts and incur fees, Elexon has implemented BSC Modification P475, ‘Allowing All Storage Sites to set and fix their own Production/Consumption Flags’, meaning storage BMU operators can set their Production and Consumption status themselves.
By nature, storage units can switch between importing and exporting power. Units under 50MW could be registered in the Supplier Volume Allocation market with a fixed status of ‘Consumption’ or registered in the Central Volume Allocation market as an individual BMU and flagged as licence exempt. This enabled them to fix their status as either ‘Consumption’ or ‘Production’, preventing the BMU ‘flipping’ between statuses and being charged.
Storage units with a capacity of greater than 50MW are normally licensed, meaning that until now they have not been permitted to set their Production or Consumption status in the way smaller units can. With this new change, they now can.
The change was first proposed in June this year and in September Ofgem approved it for implementation in February 2025. Since the approval, Elexon has worked with third-party technology suppliers to bring forward the implementation date, with the rule change applied from 10 December.
Ofgem approved the new implementation date on 6 December, meaning storage operators can benefit from the change earlier.
Elexon chief executive, Peter Stanley, said: “To reach the Clean Power 2030 target there will need to be a major increase in flexibility provision and that includes the development of more larger capacity storage facilities.
“There is an urgent need to deliver rule changes quickly, and Elexon working with the industry to implement P475 in around six months is an example of the speed at which we need to move to support participants.”
