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Read all about Balancing Reserve in this explainer

Balancing Reserve

Assets contracted into Balancing Reserve (BR) receive an availability payment for withholding a portion of their capacity from other markets, providing ESO with guaranteed headroom or footroom. This reserved capacity is then dispatched by ESO in real-time to help supply meet demand, via the Balancing Mechanism. You can read more on Balancing Reserve in this explainer.

BR contracts are awarded via a day-ahead auction, with a different clearing price for each settlement period. Assets which hold a BR contract must ensure that their (MEL – PN) ≥ contracted capacity, and (PN – MIL) ≥ contracted capacity when providing negative BR. Assets must ensure they have sufficient energy to deliver their contracted capacity for the full duration of the settlement period.

We collect the awarded contracts and assign revenues to assets based on the clearing price for each settlement period and the contracted capacity of each asset. Therefore, Balancing Reserve revenue is equal to:

BR revenues (GBP) = Clearing price (GBP/MW/h) x contracted capacity (MW) x 0.5

As assets are dispatched via the Balancing Mechanism, utilisation payments are included in the Balancing Mechanism revenue component.

Currently, only BMUs are able to participate in Balancing Reserve, though ESO have announced plans to open the service to non-BMUs later down the line.