Message from Mark Bygraves, CEO, on digitising ELEXON’s technology platform

The electricity industry is undergoing an unprecedented amount of change driven by new regulations, new technologies, new business models and new service offerings.  At ELEXON, as the organisation responsible for managing and operating the Balancing and Settlement Code (BSC), we need to ensure we are responding to the industry’s needs by not only continuing to deliver services to our historically high standards, but also adapting those services and the underlying technology platforms to meet the future needs of our customers.  I am determined that we at ELEXON do what is necessary to support industry through this period of change.

That is why in 2017/18, we embarked on a new strategy, putting our stakeholders’ needs first, so that our stated aim is: ‘With the support of our stakeholders and partners, simplify and consolidate complex and fragmented services, develop new market solutions and actively facilitate innovation for the benefit of GB energy markets and the UK economy’.

In a market where flexibility will increasingly be key to economic whole system balancing, we will need technology platforms that are capable of integrating with smart-connected devices and distributed flexibility assets; that are agile and open; that enable new and possibly innovative products and services; and that can be stood up quickly as the market evolves.

We also believe that data silos in our sector and the desire of some to monetise the insight that comes from access to that data can be barriers to an open electricity market. At ELEXON, we are going to create a data platform that is open and accessible (subject to the appropriate controls around privacy) and be open to collaborating with others to bring about consolidation of market data.

That is why ELEXON has already embarked on our Foundation Programme to re-architect our central systems to deliver a flexible, scalable, open platform to provide settlement and other value-added services appropriate to the needs of the future market.  Our Foundation Programme will allow us to provide customer-focused services able to adapt quickly to rapidly developing flexibility markets, recognising for example, the impact of Electric Vehicles and storage, local balancing and Market-wide Half Hourly Settlement.

What will the Foundation Programme deliver?

The Foundation Programme will be delivered in phases, with a roadmap that is flexible to meet industry priorities and leverage existing investments where possible.

We have determined that delivery on the new platform of BSC changes relating to the mandatory European TERRE regulations, is an opportunity to reduce the overall cost to BSC Parties of this EU requirement when compared with developing TERRE on the existing technology and then again on the new platform. 

The Foundation Programme will establish a new participant management solution and a data and calculations platform, providing us with a stable, hybrid architecture by December 2019 (the deadline set by TERRE). We will have also delivered a streamlined and digital market entry process in February 2019 ready for wider access to the market by new BSC Parties including Data Aggregators.

The cost to deliver this first part of the Foundation Programme is approximately £12m. This is already provided for in our 2018/19 budget which was issued to industry and then agreed in March. We will look to recover the costs in the usual way based on market share. The Rough Order of Magnitude cost to migrate the remaining Agent systems from our legacy systems to the new platform is currently estimated at £14m across future years and this will be included in future budgets.

I also want to take this opportunity to reassure our customers of ELEXON’s commitment to act as the administrator and operator of the BSC (and provider of settlement services for Contracts for Difference and the Capacity Market), and that we will continue to deliver our services effectively, efficiently and economically.  As you know we are a not for profit organisation providing code administration, code operation & assurance, and policy support.  As such we are focused on delivering solutions to industry be that in our day to day operations, or for example leading on the development of the market-wide Half Hourly Settlement (HHS) design for Ofgem, or proposing new arrangements to enable consumers to purchase power from multiple providers.

As is our way, we will engage with Parties to help shape and test industry changes on the new platform and so will look to work with your Operations and IT/Architecture teams as you would expect with such a significant BSC change.

Over the coming months, I will be engaging with our customers to discuss how we are supporting them in further detail. In the meantime, our Annual BSC Meeting and Seminar on 12 July 2018 is also an opportunity to hear how we are supporting change and innovation.

If you have any questions about the Programme, please feel free to email communications@elexon.co.uk.

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