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 out-turn prices and the data used to derive the prices. The data is a combination of II and SF Settlement Runs.

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Highlights in the latest report

This month’s SPAR also contains an appendix on tagging of energy balancing volumes.

System Prices and Length

In this report, we distinguish between a ‘long’ and a ‘short’ market when analysing System Prices because the price calculation differs between two scenarios.

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 NIV Tagging
  • The impact of PAR Tagging
  • The impact of the Replacement Price
  • How these mechanisms affect which balancing actions feed into the price

Balancing Services

  • Short Term Operating Reserve (STOR) costs and volumes
  • De-Rated Margin, Loss of Load Probability and the Reserve Scarcity Price

P305 – Specific Analysis

This section compares live prices with two different pricing scenarios. First we consider what prices would look like with the pre-P305 price calculation to highlight the impact of P305. Before the implementation of P305, the price calculation had:

  • A PAR of 500MWh, and an RPAR of 100MWh
  • No non-BM STOR volumes or prices included in the price stack
  • No RSVP, and instead a Buy Price Adjuster (BPA) that recovers STOR availability fees
  • No Demand Control, Demand Side Balancing Reserve (DSBR), or Supplementary Balancing Reserve (SBR) actions priced at VoLL

We also consider the November 2018 Scenario, which captures the effect of changes to the Imbalance Price parameters that are due to come in on 1 November 2018.

These are:

  • A reduction in the PAR value to 1MWh (RPAR will remain at 1MWh)
  • The introduction of a ‘dynamic’ LoLP function3
  • An increase in the VoLL to £6,000MWh, which will apply to all instances of VoLL in arrangements, including the RSVP function

Appendix 1 – How Tagging Changes the System Price

In this section one of our Market Analysts, Emma Tribe, takes a detailed look at how tagging effects System Price calculation. By removing volumes from the top or bottom of the pricing stack the System Price decreases or increases.

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