Balancing Mechanism

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Watch this episode of The Energy Academy to learn more

Assets are dispatched into the Balancing Mechanism by ESO via bid-offer acceptances (BOAs). BOAs instruct assets to deviate from their physical notifications by a specified amount, over a specified time period.

Balancing Mechanism units are paid, or pay, to be dispatched into the balancing mechanism according to the bid-offer pairs submitted to ESO at gate close, 1 hour ahead of delivery. Each BOA has a price and volume which we can use to calculate balancing mechanism revenues and throughput.

Sometimes ESO issue bid offer acceptances by mistake, such as the issues we've seen recently with assets being dispatched by the Open Balancing Platform bulk dispatch algorithm at extremely high prices for very small volumes (you can read more about that particular issue in this explainer by Zach). ESO sometimes looks to undo these actions by submitting a Manifest Error claim. These have to be submitted within 4 hours of the erroneous acceptance being issued, and cost the claimant £5,000. Unfortunately ESO do not produce a useful data source for Manifest Error notices, so instead we predict which actions may be revoked. Based on an analysis of historic Manifest Error claims, we assume offers priced in excess of £9,999 GBP/MWh, and bids priced lower than £-9,999 GBP/MWh, with a total cost of over £10,000 GBP will be revoked by ESO, and so we do not include these in the Benchmark.

Non-Balancing Mechanism units do not participate in the Balancing Mechanism, so this revenue stream is not available for these assets.