System Prices Analysis Report

The System Prices Analysis Report (SPAR) provides a monthly update on price calculations. It is published by the ELEXON Market Analysis Team to the Imbalance Settlement Group (ISG) and on the ELEXON Website ahead of the monthly ISG meeting.

This report provides data and analysis specific to System Prices and the Balancing Mechanism. It demonstrates the data used to derive the prices. The data is a combination of II and SF Settlement Runs.

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The report for December 2019 will be available sometime in February. 

Reporting on November 2019


1. System Prices and length

This report covers the month of November. Where available, data uses the latest Settlement Run (in most cases ‘II’ or ‘SF’). In this report, we distinguish between a ‘long’ and a ‘short’ market when analysing System Prices, because the price calculation differs between the two scenarios.

When the market is long, System Prices are based predominantly on the System Operator’s ‘sell’ actions such as accepted Bids. When the market is short, System Prices are based predominantly on the System Operator’s ‘buy’ actions. Table 1.1 gives a summary of System Prices for November, with values shown in £/MWh.

1.1 System Price summary by month (£/MWh)

System Length Min Max Median Mean Std.Dev
Long -25.00 46.31 27.30 24.19 10.74
Short 0.00 142.53 57.50 60.32 14.10

Source: ELEXON


Graph 1.2 shows the distribution of System Prices across Settlement Periods in November 2019 when the market was long and short. 80% of System Prices were between £16.00/MWh and £70.00/MWh regardless of system length. When the system was long, 80% of prices were between £6.00/MWh and £34.63/MWh. When the system was short, 80% of prices were between £48.60/MWh and £77.45/MWh.

System Prices were £100/MWh or more on 15 occasions in November 2019, compared to three times in October. The highest System Price of the month, £142.53/MWh, occurred in Settlement Periods 35, 36 and 37 on 6 November. This price was set by Offers from an OCGT BM Unit at a price of £123.00/MWh with a Buy Price Price Adjuster (BPA) of £19.53/MWh. The BPA is a reflection of the costs to the System Operator of regulating reserve and BM start-up.

There were two Settlement Periods where the System Price was less than £0/MWh in November, with the lowest System Price of -£25.00/MWh occurring in Settlement Period 2 on 11 November. This was set by 11 Bids from a single Pumped Storage BM Unit.

1.2 Frequency of System Prices over last month


Graph 1.3 displays the spread of System Prices in November 2019 as a box plot diagram, split between a short and long system. The middle line in each box represents the median System Price of the month, which is £57.50/MWh for short Settlement Periods and £27.30/MWh for long Settlement Periods. Each box edge represents the lower and upper quartiles (25th and 75th percentile respectively), with the Interquartile Range (difference between the Upper and Lower quartiles) being £14.50/MWh for short System Prices and £14.49/MWh for long System Prices.

1.3 System Price spread


Outliers are shown on the graph as circles, and have been defined as being greater than 1.5 times the Interquartile Range (IQR) away from the Upper and Lower quartiles. Under this definition, two long and 41 short System Prices in November were outliers. Of the two long outliers, both were less than the lower outlier boundary. The prices of Long outliers ranged from -£25.00/MWh (the lowest System Price of the month) to -£3.50/MWh. The highest System Price of the month, £142.53/MWh, was 2.48 times the median short System Price for the month.

Graph 1.4 shows daily average System Prices over the last month. In November, the average System Price was £24.19/MWh when the system was long and £60.32/MWh when the system was short. The highest daily average price when the system was short was £76.91/MWh, and occurred on 6 November; the system was short for 29 Settlement Periods on this day. The lowest daily average price when the system was long was £13.93/MWh on 11 November. The system was long for 21 Settlement Periods on this day.

1.4 Daily average System Price


Graph 1.5 shows the variation of average System Prices across the day. Short prices were highest in Settlement Period 35, with long prices lowest in Settlement Period 3. The lowest average System Price, regardless of market length, occurred during Settlement Period 6, when the System Price was £26.15/MWh.The daily average long Settlement Period System Prices ranged between £12.35/MWh and £34.02/MWh. Average short Settlement Period prices varied from £47.80/MWh to £80.08/MWh.

1.5 Average System Price by Settlement Period


Graph 1.6 shows system length by day, and Graph 1.7 shows system length by Settlement Period for November. The system was long for 45% of Settlement Periods in November.

1.6 Daily system length by day

1.7 System Length by Settlement Period


On 17 November, the system was short for 37 of 48 Settlement Periods. The long Settlement Periods on this day had an average NIV of -134MWh. The daily average NIV on this day was 133MWh.

Settlement Period 6 had the highest number of long Settlement Periods, with 70% of them being long this month.


2. Parameters

In this section, we consider a number of different parameters on the price. We consider:

  • The impact of Flagging balancing actions;
  • The impact of the Replacement Price;
  • The impact of NIV Tagging;
  • The impact of PAR Tagging;
  • The impact of DMAT and Arbitrage Tagging; and
  • How these mechanisms affect which balancing actions feed into the price.


The Imbalance Price calculation aims to distinguish between ‘energy’ and ‘system’ balancing actions. Energy balancing actions are those related to the overall energy imbalance on the system (the ‘Net Imbalance Volume’). It is these ‘energy’ balancing actions which the Imbalance Price should reflect. System balancing actions relate to non-energy, system management actions (e.g. locational constraints).

Some actions are ‘Flagged’. This means that they have been identified as potentially being ‘system related’, but rather than removing them completely from the price calculation (i.e. Tagging them) they may be re-priced, depending on their position in relation to the rest of the stack (a process called Classification). The System Operator (SO) flags actions when they are taken to resolve a locational constraint on the transmission network (SO-Flagging), or to correct short-term increases or decreases in generation/demand (CADL Flagging).

Graph 2.1 shows the volumes of Buy and Sell actions in November 2019 that have been Flagged by the SO as being constraint related. On 4 November, 77% of Sell volume was SO-Flagged.

2.1 Daily volume of SO-Flagged/non-Flagged actions


38% of Sell balancing action volume taken in November had an SO-Flag, compared with 57% last month. 46% of SO-Flagged Sell actions came from CCGT BMUs, 36% came from Balancing Service Adjustment Actions (BSAAs) and 14% from Wind BMUs. The average initial price (i.e. before any re-pricing) of a SO-Flagged Sell action was -£23.02/MWh.

36% of Buy balancing action volume taken in November had an SO-Flag, compared to 40% in October. 46% of SO-Flagged Buy actions came from CCGT BMUs and 54% from BSAAs. The average initial price of a SO-Flagged Buy action was £65.13/MWh.

Any actions with a total duration of less than the CADL are flagged. Since 1 April 2019, CADL has been set at 10 minutes (reduced from 15 minutes).

0.6% of Buy actions and 0.5% of Sell actions were CADL Flagged in November. The majority of CADL Flagged Buy actions (91%), and CADL Flagged Sell actions (81%) came from Pumped Storage BMUs, with CCGT BMUs accounting for a further 8% of CADL Flagged Sell Actions.

SO-Flagged and CADL Flagged actions are known as ‘First-Stage Flagged’. First-Stage Flagged actions may become ‘Second-Stage Flagged’ depending on their price in relation to other Unflagged actions. If a First-Stage Flagged balancing action has a more expensive price than the most expensive First-Staged Unflagged balancing action, it becomes Second-Stage Flagged. This means it is considered a system balancing action and becomes unpriced.

Graph 2.2 shows First and Second-Stage Flagged action volumes as a proportion of all actions taken on the system. Note these are all the accepted balancing actions – only a proportion of these will feed through to the final price calculation.

In November, an average of 35% of balancing actions received a First-Stage Flag with an average of 52% of this volume going on to receive a Second-Stage Flag. On the 23 November, 55% of balancing volume was flagged; with 52% of this volume receiving a Second Stage Flag.

2.2 Flagged Balancing Volumes


The Replacement Price

Any Second-Stage Flagged action volumes left in the NIV will be repriced using the Replacement Price. In total, 39% of Sell volume in November were Flagged. Of this Flagged Sell volume, 3% was assigned a Replacement Price.

The Replacement Price is either based on the Replacement Price Average Reference (RPAR currently based on the most expensive 1MWh of Unflagged actions), or if no Unflagged actions remain after NIV Tagging, the Market Index Price (MIP). In November, 45 (3%) Settlement Periods had a Replacement Price based on the RPAR and 31 (2%) Settlement Periods had a Replacement Price based on the MIP. However, the majority of Settlement Periods (95%) did not have a Replacement Price.

Graph 2.3 displays the count of Settlement Periods which had a Replacement Price applied, split by the system length and if the Replacement Price was based on RPAR or the MIP. Graph 2.4 displays the average original and Replacement Price of Second-Stage Flagged actions.

2.3 Number of Settlement Periods with Replacement Price by System Length

2.4 Average Price and Replacement Price by System Length

System Length Replacement Price Original Price
Long 24.33 6.46
Short 50.10 60.33

Source: ELEXON

Sell actions will typically have their prices revised upwards by the Replacement Price for the purposes of calculating the System Price. The average original price of a Second-Stage Flagged repriced Sell action was £6.46/MWh and the average Replacement Price for Sell actions (when the System was long) was £24.33/MWh.

37% of Buy volume were Flagged; of this Flagged Buy volume, 2% had the Replacement Price applied. Buy actions will typically have their prices revised downwards by the Replacement Price. The average original price of a Buy action with the Replacement Price applied was £60.33/MWh, and the average Replacement Price was £50.10/MWh.

If there are no Unflagged actions remaining in the NIV, the Replacement Price will default to the MIP. This occurred in 13 long and 18 short Settlement Periods in November, compared to 13 long and nine short Settlement Periods last month.

NIV and NIV Tagging

The Net Imbalance Volume (NIV) represents the direction of imbalance of the system – i.e. whether the system is long or short overall. Graph 2.5 shows the greatest and average NIV when the system was short, and Graph 2.6 shows the greatest and average NIVs when the system was long. Note short NIVs are depicted as positive volumes and long NIVs are depicted as negative volumes.

2.5 Short system NIV

2.6 Long system NIV


In almost all Settlement Periods, the System Operator will need to take balancing actions in both directions (Buys and Sells) to balance the system. However, for the purposes of calculating an Imbalance Price there can only be imbalance in one direction (the Net Imbalance). ‘NIV Tagging’ is the process which subtracts the smaller stack of balancing actions from the larger one to determine the Net Imbalance. The price is then derived from these remaining actions.

NIV Tagging has a significant impact in determining which actions feed through to prices. In November, 85% of volume was removed due to NIV tagging. The most expensive actions are NIV Tagged first; hence NIV Tagging has a dampening effect on prices when there are balancing actions in both directions.

The maximum short system NIV of the month (1,091MWh) was seen in Settlement Period 13 on 14 November, where the System Price was £55.52/MWh.

The minimum long system NIV of the month was -980MWh, in Settlement Period 1 on 11 November, where the System Price was £0.00/MWh.

Graph 2.7 displays a scatter graph of Net Imbalance Volume and System Prices. The dashed lines display a 0MWh NIV and a £0.00/MWh System Price. There were 655 long Settlement Periods in November, 37 of which occurred on 26 November. The average NIV on this day was -141MWh, with the lowest NIV (-590MWh) occurring in Settlement Period 2.The three most expensive Settlement Periods were priced at £142.53/MWh. All these Settlement Periods had small short NIVs of 33MWh, 83MWh and 42MWh compared to the average monthly NIV for short Settlement Periods of 210MWh.

2.7 Net Imbalance Volume and System Price


PAR Tagging

PAR Tagging is the final step of the Imbalance Price calculation. It takes a volume-weighted average of the most expensive 1MWh of actions left in the stack. The value of PAR decreased from 50MWh to 1MWh on 1 November 2018 as part of BSC Modification P305.

Following the change of PAR, PAR Tagging is active in almost all Settlement Periods. The only periods not affected by the new parameter have a NIV of less than 1MWh.

During November, there were four Settlement Periods where PAR Tagging was inactive. The average NIV in these Settlement Periods was 0.03MWh. Settlement Period 39 on 25 November had the lowest absolute NIV (-0.02MWh), and therefore was the most balanced Settlement Period of the month.

DMAT and Arbitrage Tagged Volumes

Some actions are always removed from the price calculation (before NIV Tagging). These are actions which are less than the De Minimis Acceptance Threshold (DMAT) Tagging or Buy actions which are either the same price or lower than the price of Sell actions (Arbitrage Tagging).

On 1 April 2019, DMAT reduced from 1MWh to 0.1MWh, resulting in less actions being DMAT tagged compared to previous months.

Graph 2.8 shows the volumes of actions removed due to DMAT Tagging. 0.0015% of total Buy and Sell volume was removed by DMAT Tagging in November, compared to 0.0013% last month. 63% of the DMAT Tagged volume came from CCGT BMUs, 11% from BSAAs and 10% from other BMUs.

2.8 Daily percentage of DMAT Tagged volume


Graph 2.9 shows the volumes of actions that were removed due to Arbitrage Tagging. 0.7% of total Buy and Sell volume was removed by Arbitrage Tagging in November. 48% of the Arbitrage Tagged came from BSAAs, 35% from CCGT BMUs and 14% from Coal BMUs.

2.9 Daily percentage of Arbitrage Tagged volume


In November, the average initial price of an Arbitrage Tagged Buy action was £24.38/MWh, and for a Sell action was £39.80/MWh. The maximum initial price of an Arbitrage Tagged Sell action was £314.75/MWh, and the lowest priced Arbitrage Tagged Buy action was £0.00/MWh.

On 14 November, 14 November, 14 November, 14 November, 3,193MWh of actions were Arbitrage Tagged, representing 5% of the daily volume of balancing actions. The average price of an Arbitrage Tagged Buy action was £58.77/MWh, and for a Sell action was £241.56/MWh on this day. 54% of the Abitrage Tagged Volume came from BSAAs, 45% from Coal BMUs and 1% from CCGT BMUs.

3. Balancing Services

Short Term Operating Reserve (STOR) costs and volumes

This section covers the balancing services that the System Operator (SO) takes outside the Balancing Mechanism that can affect the price.

In addition to Bids and Offers available in the Balancing Mechanism, the SO can enter into contracts with providers of balancing capacity to deliver when called upon. These additional sources of power are referred to as reserve, and most of the reserve that the SO procures is called Short Term Operating Reserve (STOR).

Under STOR contracts, availability payments are made to the balancing service provider in return for capacity being made available to the SO during specific times (STOR Availability Windows). When STOR is called upon, the SO pays for it at a pre-agreed price (its Utilisation Price). Some STOR is dispatched in the Balancing Mechanism (BM STOR) while some is dispatched separately (Non-BM STOR).

Graph 3.1 gives STOR volumes that were called upon during the month – split into BM STOR and non-BM STOR. 91% of the total STOR volume utilised in November came from outside of the Balancing Mechanism.

3.1 Daily STOR vs Non-BM STOR volume


Graph 3.2 shows the utilisation costs of this capacity. The average Utilisation Price for STOR capacity in November was £37.00/MWh (£124.25/MWh for BM STOR and £28.36/MWh for non-BM STOR).

3.2 Daily STOR vs Non-BM STOR utilisation costs


On 13 November the largest amount was spent on STOR volume for the month (£63,495), of which 9% of the cost was BM STOR and 91% was non-BM STOR. The utilised BM STOR volume on this day was 45MWh, compared to the average of 22MWh across the month.

De-Rated Margin, Loss of Load Probability and the Reserve Scarcity Price

There are times when the Utilisation Prices of STOR plants are uplifted using the Reserve Scarcity Price (RSVP) in order to calculate System Prices. The RSVP is designed to respond to capacity margins, so rises as the system gets tighter (the gap between available and required generation narrows). It is a function of De-Rated Margin (DRM) at Gate Closure, the likelihood that this will be insufficient to meet demand (the Loss of Load Probability, LoLP) and the Value of Lost Load (VoLL, set at £6,000/MWh from 1 November 2018).

Graph 3.3 shows the daily minimum and average Gate Closure DRMs for November 2019.

3.3 Minimum and average DRMs


The System Operator has determined a dynamic relationship between each DRM and the LoLP, which will determine the RSVP.

The minimum DRM in November was 1,988MW on 6 November in Settlement Period 36, (compared to 2,731MW in October). This DRM corresponded to a LoLP of 0.0059 and RSVP of £35.37/MWh (see Table 3.4).

The RSVP re-prices STOR actions in the Imbalance Price calculation if it is higher than the original Utilisation Price. In total there were no actions repriced with the RSVP during November.

3.4 Top 5 LoLPs and RSVPs

Settlement Date Settlement Period DRM (MW) LoLP RSVP (£/MWh) RSVP Used System Price (£/MWh) System Length
06/11/2019 36 1,988 0.0058946 35.37 No 142.53 Short
06/11/2019 35 2,248 0.0023675 14.20 No 142.53 Short
06/11/2019 37 2,537 0.0010100 6.06 No 142.53 Short
13/11/2019 36 2,579 0.0015453 9.27 No 28.00 Long
16/11/2019 35 2,670 0.0002331 1.40 No 95.00 Short


Report structure

The information below will give you a more comprehensive understanding of the report and further details about each of the sections.

On 1 November 2018, the second part of Modification P305 went live. This reduced the Price Average Reference (PAR) volume to 1MWh, introduced a ‘dynamic’ LoLP function and increased the Value of Lost Load (VoLL) to £6,000/MWh.

System Prices and Length

In this section we summarise trends in System Prices over the previous month. We distinguish between a ‘long’ and a ‘short’ market when analysing System Prices because the price calculation differs between two scenarios.

When the market is long, System Prices are based predominantly on the System Operator’s ‘sell’ actions such as accepted Bids.

When the market is short, System Prices are based predominantly on the System Operator’s ‘buy’ actions.


In this section, we consider the impact of a number of different parameters on the price. We consider:

  • Flagging balancing actions
  • Replacement Price
  • NIV (Net Imbalance Volume) Tagging
  • PAR (Price Average Reference) Tagging
  • DMAT (De Minimis Acceptance Threshold) and Arbitrage Tagging
  • How these mechanisms affect which balancing actions feed into the price

Balancing Services

This section looks at how balancing actions from Short Term Operating Reserve providers impact the System Price. The impact of Reserve Scarcity Pricing is also analysed in this section.

P305 – Specific Analysis

This section compares live prices with a PAR 50 pricing scenario. From 1 November 2018, the System Price calculation parameters changed as part of BSC Modification P305. The changes were:

  • A reduction in the PAR value from 50MWh to 1MWh
  • The introduction of a ‘dynamic’ LoLP function
  • An increase in the VoLL from £3,000/MWh to £6,000MWh.
  • The PAR 50 scenario uses a VoLL of £3,000/MWh in the RSVP function

SPAR archive

Access previous System Price Analysis Reports or request previous copies.



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