Elexon has amended the Balancing and Settlement Code (BSC) rules to reduce the financial exposure of large energy storage facilities.
The BSC establishes rules for trading in electricity and guaranteeing the stability of supply. It prescribes that each balancing mechanism unit (BMU) must have a production or a consumption status to ensure accurate allocation of energy flows.
Production means that a storage unit exports power and when it imports it is known as consumption. If that status changes unexpectedly, it could mean that operators are unable to fulfill the agreed electricity contracts, potentially impacting the system balance. Unexpected status changes also lead to unexpected imbalance charges.
This was originally intended to prevent integrated energy companies from exploiting vertical integration.
Because switching between the two can cause imbalances in utility bills and incur costs, Elexon has implemented BSC modification P475, “Allow all storage locations to set and repair their own production/consumption flags,” which means that storage BMU operators can set their production and consumption status. himself.
By nature, storage units can switch between importing and exporting power. Units under 50 MW can be registered on the supplier volume allocation market with the fixed status ‘Consumption’ or can be registered on the central volume allocation market as an individual BMU and marked as permit-free. This allowed them to identify their status as ‘Consumption’ or ‘Production’, preventing the BMU from ‘flipping’ between statuses and being charged.
Storage units with a capacity of more than 50 MW are normally licensed, meaning that until now they have not been allowed to set their production or consumption status in the way that smaller units can. With this new change, now they can.
The change was first proposed in June this year and in September Ofgem approved it for implementation in February 2025. Since its approval, Alexon has worked with third-party technology providers to bring forward the implementation date, with the rule change applying from December 10.
Ofgem approved the new implementation date on December 6, allowing storage administrators to take advantage of the change sooner.
Peter Stanley, CEO of Elexon, said: “Achieving the 2030 Clean Energy target will require a major increase in flexibility provision, and that includes the development of higher capacity storage facilities.
“There is an urgent need to implement rule changes quickly, and Elexon’s collaboration with industry to implement P475 in approximately six months is an example of the speed at which we must act to support participants.”
