03 Mar 2022
Imrith Sangha

BESS and BSUoS: are you still paying import charges?

Balancing System Use of Service (BSUoS) is a charge levied on users of the transmission system (generators and suppliers) by the National Grid Electricity Service Operator (NG ESO). Its purpose is to recoup the costs of the day-to-day operations that take place to balance the system. BSUoS is charged for each half-hour settlement period, and then billed daily, on a £/MWh basis (proportionate to how much a given asset has used the system).

In this article, we’ll summarise how BSUoS charges work for battery energy storage system (BESS) assets, recap the changes that occurred in April 2021, and see how these changes have impacted BESS.

How do BSUoS charges work for BESS?

There are two main factors influencing BSUoS charges for BESS assets; if an asset is directly connected to the transmission network or via a distribution network, and if an asset is exporting or importing energy.

Table 1 (below) shows a summary of when BESS assets are liable for BSUoS charges.

Table 1 - Summary of BSUoS charges liability for BESS assets.
  • Both transmission and distribution connected BESS assets are exempt from BSUoS charges on their imported volumes. This is subject to assets declaring themselves as a storage facility, using this form, to National Grid.
  • Directly transmission-connected assets are liable for BSUoS charges on their half-hourly exported volumes. Embedded generation <100MW (generation assets connected to distribution networks) are exempt from this charge.

What changes happened in April 2021?

In April 2021, two big policy changes occurred that directly impacted BESS assets:

  • CMP281: ‘Double charging’ of storage assets ended. This means declared storage facility assets are exempt from import charges. Previously, all users of the transmission system, including storage, were charged for generation and import. However, as storage assets already help to balance the system, they were deemed to be at an unfair disadvantage.
  • CMP333: supplier users are now charged on gross demand, removing the embedded benefit distribution-connected BESS assets (<100MW) received for providing generation. Previously, suppliers were charged on net demand from the transmission network, measured at the grid supply point (GSP). Embedded generation reduced net demand from the transmission network and, in turn, a supplier’s liability for BSUoS charges. This resulted in embedded benefits for distributed generators, as the majority of these savings were usually passed through contractual agreements to them by suppliers.

How have these changes affected BESS?

The loss of embedded benefits because of the implementation of CMP333 means distribution-connected BESS assets (<100MW) are losing a potential revenue opportunity that previously existed. The impact of this can be seen in the last three months, where BESS asset participation in merchant markets has increased as a result of market saturation in Dynamic Containment. This is highlighted in Figure 1 (below), which shows a theoretical estimation of the average embedded benefit that BESS assets would’ve been receivable for under policy prior to CMP281 and CMP333 alongside average asset monthly revenues for comparison. (All assets used for the underlying data are Balancing Mechanism Unit registered and distributed-connected.)

Figure 1 - Average asset estimated theoretical receivable BSUoS benefit (Nov 21 - Jan 22).

Further changes to BSUoS are coming - soon to be confirmed by Ofgem, and due to take effect on 1 April 2023. Generators will be exempt from BSUoS charges. Taking away the liability of BSUoS charges for transmission-connected BESS assets on their exported volumes.

Ofgem BSUoS Task Force concluded that “Final Demand” (i.e. the end consumer) should be liable for all BSUoS charges, and that these charges should be fixed in advance. In future, the whole BSUoS cost will be charged as part of the customer’s non-commodity costs within their contract, making the process simpler and more transparent.

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