The Balancing Mechanism (BM) is one of the most important tools which National Grid uses to balance electricity supply and demand in real-time.
When electricity generation and consumption are not in balance, National Grid uses the BM to purchase changes in generation and consumption to correct the mismatch. Unlike balancing services such as STOR, the BM is an ad-hoc market, with no forward commitments, and highly dynamic prices.
Energy customers and small generators cannot access the BM directly; they have to go through licensed suppliers. However, existing suppliers, many of whom own their own fleets of flexible generators, are conflicted: they have an incentive to trade their own capacity first. Flexitricity does not own any generating assets, which means we always put our customers first.
But a supply licence is not enough. It’s also essential to have the correct communications systems and a 24-hour control room. This is why Flexitricity is ideally placed to trade its customers’ capacity in the BM.
How does it work?
Any licensed generator or licensed supplier can post prices and capabilities for varying their consumption or generation after “gate closure”, that is, 60 to 90 minutes before real time. Prices are either bids (to consume more, or generate less) or offers (to consume less, or generate more). After the “gate closure” National Grid is the only counter party who can accept these bids and offers—the market is closed for other buyers.
The BM is a major market opportunity for flexible capacity. By bringing our customers into the BM, Flexitricity is unlocking new revenue for those customers by trading their flexibility, as and when it’s available.