Independent aggregators invited into balancing mechanism

Independent aggregators will soon gain direct access to the balancing mechanism after Elexon opened the process for them to register as a new type of signatory to the Balancing and Settlement Code (BSC) known as a “virtual lead party”.

A virtual lead party will be able to create aggregated balancing market units (BMUs) without becoming the registered supplier for the sites they are aggregating. As such, they will not be subject to the same charges and obligations as other BSC parties.

The new role was created by the BSC code modification P344, which implemented the common settlement arrangements that will be used by countries participating in the Trans-European Replacement Reserves Exchange (TERRE).

The modification was approved by Ofgem in August and took effect on Thursday (28 February). Elexon expects the registration process to take three to four months.

Organisations wishing to create an aggregated BMU have previously been required to take responsibility for balancing the sites that make up the unit by becoming their registered supplier. The rule has proved a barrier to entry, with only a few aggregators following this so-called “supplier route” and only relatively recently.

Limejump became the first to do so in August after being granted a derogation by Ofgem from a Grid Code requirement stipulating that BMU data submitted to the electricity system operator must be aggregated at the grid supply point (GSP) level.

A Grid Code modification called GC0097 allowing BMU data to be aggregated across the whole of a GSP group was also approved by Ofgem alongside P344. It too was introduced in preparation for Britain’s entry into TERRE, which is currently scheduled for December 2019. A GSP group covers all GSPs within a distribution network licence area, of which there are 14 across Great Britain.

TERRE is being developed by the European Network of Transmission System Operators for Electricity (ENTSO-E). The platform will allow the trading of “replacement reserves” – the slowest responding of three categories of reserves set out in the European Commission’s 2017 guidelines for transmission system operation.

Replacement reserves are used to maintain the frequency of the power grid once a deviation from the correct level has already been contained and reversed by faster responding reserves.

Not all transmission system operators in the EU use or will use replacement reserves, but as one of the ones that does, National Grid is legally required to participate in TERRE under EU regulations that came into effect in December 2017.