Reserve Scarcity Pricing Review
Formal title: Reserve Scarcity Pricing Review
Reserve scarcity pricing was introduced as part of the Electricity Balancing SCR via P305 ‘Electricity Balancing Significant Code Review Developments’ to address several defects of the previous imbalance calculations. They excluded the costs borne by consumers during disconnection and voltage reduction and the previous method for pricing reserve costs into cash-out did not accurately reflect the real time value of the reserve, e.g. the value consumers would put on capacity in a tight system. Ofgem expected that P305 would incentivize the market to provide more flexibility (through price signals) when it was required.
Since the implementation of P305, the way the GB electricity system and how it is balanced has changed significantly. Over the past 5 years the volume of renewables on the system has increased dramatically as has new and planned interconnection with Europe. During the summer of 2020 the Covid 19 pandemic led to the lowest system demand observed over a summer in the UK in around 60 years. Managing the system has become more challenging as demonstrated by rising Balancing Mechanism (BM) costs.
Issue 92 was raised by National Grid ESO 11 December 2020.
Issue 92 Workgroup meeting one was held 1 February 2021.
Issue 92 Workgroup meeting two was held 18 March 2021.
An RFI was issued for Issue 92 on 14 April 2021, and responses are requested by 5pm 12 May 2021. Documents are available below.
Issue 92 Workgroup meeting three was held on 2 June 2021.
The Issue 92 Group is currently on hold pending a cost benefit analysis from the Proposer of implementing a change to RSP .