P371 Inclusion of non-BM Fast Reserve actions into the Imbalance Price calculation

Formal title: Levelling the playing field - Inclusion of Spin-Gen, Non-BM Fast Reserve and Non-Tendered Fast Reserve actions into the calculation of the Imbalance Price and extension of the cash-out price arrangements to Fast Reserve

Current Status

Submission
Initial Written Assessment
Assessment Procedure
Report Phase
With Authority
Awaiting Implementation
Implemented

Summary

Currently Spin-Gen, Non-BM and Non Tendered Fast Reserve actions are not included in the Imbalance Price calculations. The Proposer contends that in order to guarantee a correct calculation of the Imbalance Price, fair and harmonised treatment of all services, greater transparency and, ultimately, National Grid’s (NG’s) compliance with the Balancing Services Adjustment Data (BSAD) obligation; the aforementioned Fast Reserve actions should be included in the Imbalance Price calculation. The current calculation of the Imbalance Price is sending incorrect messages to the industry and distorting the market signal, this lack of transparency is potentially impacting the behaviour of market participants, affecting costs for end consumers. National Grid should, therefore, send the correct signal to the market to inform participants about the constraint and the required level of capacity.

The Proposer contends that there is no reason for a different treatment of Reserve products and Non BM Fast Reserve should have been captured already in the calculation of the Imbalance Price via the BSAD and via the Reserve Scarcity Price (RSP) methodology.  This Modification is about Non BM Fast Reserve, however, the implementation of this Modification will remove any potential ambiguity and make it clear to the Electricity System Operator, when developing future Balancing Services and associated systems that all Actions should flow through into the Imbalance Price calculation.

This Modification Proposal aims to include the price of Spin-Gen, Non-Balancing Mechanism (BM) Fast Reserve and Non-Tendered Fast Reserve actions into the calculation of the Imbalance Price. The aim is to correct the calculation of the Imbalance Price; guarantee fair and harmonised treatment of all services which cost should be included; provide greater transparency and, ultimately, ensure National Grid’s compliance with the Balancing Services Adjustment Data Methodology Statement (BSAD).

In order to align the Modification Proposal form with the Proposers views, which were conveyed to the Modification Secretary before the deadline for Panel submission, we have slightly amended the Modification Proposal to ensure that P371 remains technology neutral, thus aiding the development of a principal based solution; the revised version (2.0) can be found below.

Progression

P371 was raised by UK Power Reserve on 11 September 2018. The Initial Written Assessment was presented to the Panel at its meeting on 13 September 2018, where the Panel agreed to submit P371 into Assessment Procedure.

Next Events

The first Workgroup meeting is scheduled to be held on 24 October 2018. If you would like to join the P371 Workgroup, please contact bsc.chnage@elexon.co.uk

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