National Grid ESO’s (ESO) new Balancing Reserve (BR) service introduces day-ahead procurement for energy reserves, set to save consumers £639 million over four years.
At present, the ESO purchases energy to correct imbalances in the GB power system in real-time using optional bids and offers in the Balancing Mechanism (BM) to create what is known as the ‘Regulation Reserve’.
The cost of bids and offers, however has risen significantly, leading energy reserve procurement to prove extremely expensive, especially in periods of scarcity, revealed the ESO.
To this end, the new BR service, recently approved by energy regulator Ofgem, will allow the ESO to procure Regulating Reserve on a “firm basis” at day-ahead, with daily auctions running on its Enduring Auction Capability (EAC) platform with a minimum contract size of 1MW.
Energy procured the day before will be used to meet system demand and be cheaper than buying energy ‘on-demand’, therefore reducing costs whilst also improving system security as reserve capacity is guaranteed for the ESO Control Room to access when required.
According to a cost benefit analysis commissioned by the ESO in August 2023, the new BR service will deliver £639 million in consumer savings in its base case over four years, rising to £821 million in its high case.
The new service’s approval follows an announcement made by the ESO last week in which it revealed changes to allow 300MW of flexible assets (such as electric vehicle (EV) chargers and electric heating systems) to be introduced to the BM.