30 Jul 2023
Shaniyaa Holness-Mckenzie

Quick Take: Balancing Mechanism battery skip rate is 91%

National Grid ESO is required to keep the lights on - at the least cost to consumers. In the Balancing Mechanism, this means that the cheapest available action should always be taken first. When a more expensive action is taken, it means a Bid or Offer has been “skipped”.

Shaniyaa explores how much battery energy storage capacity gets skipped in the Balancing Mechanism.

In our latest Deep Dive - available to Modo Plus and Enterprise users - we explore the skip rate of battery energy storage in the Balancing Mechanism. We also look at which assets get skipped over most often (even when in merit), and which batteries get dispatched more frequently.

However, we didn’t want anybody to miss out - so, here you can read an excerpt from that Deep Dive, covering some of the key points.

Batteries are being skipped - a lot!

“Skip rate” refers to how often assets or technology types get skipped in the Balancing Mechanism - and, ultimately, there’s more than one way to define it. Certain actions are taken to solve problems that batteries can’t - but, in those cases, these actions should be flagged as “system actions”. Because of this, we have excluded any system-flagged actions from this analysis.

So far in 2023, 56% of battery energy storage Bid and Offer capacity has been in merit. “In merit” means that the Bid or Offer was cheaper than the most expensive action - and should, in theory, have been taken. (We have excluded Bids and Offers that have been intentionally priced out of the market.)

However, just 3% of this available capacity priced “in merit” has actually been dispatched.

If we look at “skip rate” as a measure of the actual number of non-dispatches (rather than as a percentage of available capacity), the numbers are slightly better - but only slightly.

The average percentage of periods when batteries are in merit, available, not being looked over in favor of system-flagged actions, but still aren’t used is 91% - this is essentially the actual “skip rate” of battery energy storage.

Big changes are needed for the Balancing Mechanism to work for batteries - and consumers

This is a hot topic in the storage world right now - last week’s open letter from the Energy Storage Network to National Grid ESO did a great job of highlighting some of the problems with the ways batteries are treated in the Balancing Mechanism. You can also read the ESO’s response here.

The measures being put in place to address the issues with battery dispatch include the new Open Balancing Platform - which will launch in December 2023. This should increase the likelihood of batteries being dispatched.

And, ultimately, there might be valid reasons for many of these skips. However, when taken as a whole, they represent a need for new markets, tools, and capabilities in the Control Room. The ESO is taking steps, within their remit, to improve this - but should they be given greater resources to make the improvements required, given the potential cost to the consumer and the carbon cost?