P447 ‘Avoiding impact of Winter Contingency actions on cash-out prices’
Formal title: Avoiding impact of Winter Contingency actions on cash-out prices
This Modification would prevent negative impacts to the cash-out price if NGESO’s Winter Contingency service is used.
Due to the ongoing war in Ukraine and the potential for scarcity over the winter period the Electricity System Operator (ESO) has entered into additional bi-lateral contracts with coal generators that would otherwise not have been generating over the winter period.
As per the agreed contract this service must be dispatched at £0/MW to minimise the impact on cashout and restrict payments to the providers of the service which would create unnecessary cash flows between parties and cause perverse incentives for Parties not to make generation available to the market leading to market price volatility and uncertainty.
The proposed solution would require changes to BSC Sections T and X to allow Offers from certain BM Units (“Winter Contingency BM Units”) to be treated (for purposes of calculating Imbalance Prices only) as having a very high price (£99,999/MWh).