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National Grid Electricity System Operator has confirmed the balancing mechanism is now open to independent aggregators following the removal of the remaining barriers to entry.
They included a requirement for aggregators to be the registered supplier of the assets they are operating. They can instead now take on the new role of virtual lead party and create aggregated units – sometimes referred to as virtual power plants – without taking on liability for their balancing and transmission charges.
The minimum unit size has also been lowered from 100MW to 1MW.
“Our electricity system in Great Britain is changing; we’re making it smarter and more flexible as we shift away from traditional large thermal power generation to cleaner, decentralised power,” said ESO head of commercial Richard Smith.
“This transformation is central to the way we balance the system today, as we continue working towards being able to operate carbon free by 2025.
“Widening access to our balancing mechanism is an important step towards meeting that 2025 target and making sure our system is as flexible and secure as possible. It opens up opportunities for new providers and technologies to become part of the market and for that market to further diversify its energy mix as we bring embedded generation like solar and wind into the balancing mechanism.”
The role of virtual lead party was created through a modification to the Balancing and Settlement Code (BSC), for which Elexon is the administrator. Its chief executive Mark Bygraves said: “A more open and accessible balancing mechanism will be able to play a big part in the energy transition.
“It means, for example, that independent aggregators can help more consumers provide demand side response. Independent aggregators can also help to ensure that the benefits of increased diversity and decentralisation in electricity supply are maximised, both for businesses and consumers.”
Elexon said there are currently no organisations ready to trade as virtual lead parties, although several are undergoing qualification. It opened the registration process in March.
Two companies are already operating virtual power plants in the balancing mechanism – Limejump and Flexitricity. However, both are doing so as the registered suppliers for their portfolios.
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