16 - Behind the Balancing and Settlement Code with Aditi Tulpule (Legal Counsel @ Elexon)

[MUSIC PLAYING]

OK.

[CHUCKLES]

All right. Hi, guys. Quentin from Modo here. We're sat with Aditi. And we are at Elexon headquarters.

Houston Road behind us. So if there's any loud noises, that's what that is. And we going to be talking about Elexon's role in the energy system, openness, data, the balancing of settlements code, and a lot of other stuff. So Aditi, thank you so much for coming on and taking time out of your day.

How are we here? Who's Aditi, and what do you do at Elexon?

Right. So I'm a lawyer by profession and practice, and I'm a part of the legal team here at Elexon. I'm a legal counsel. And I usually am involved in all activities at Elexon, which ranges from taking industry modifications through to Ofgem level and recommendations right down to getting involved in any queries that come in from market or industry or just people that are not necessarily even a part of the BSE or parties to BSE as we refer to them here at Elexon.

So just anybody that's interested in anything we do or want to do anything innovative in the market that gets in touch with us if there's a legal angle to be considered--

Just come to you.

--on there.

Right. Makes sense. Before Elexon, were you in the energy stuff or were you doing other types of law?

So like most of commercial lawyers, I started out with doing contracts, and I was quite lucky to be part of doing that sort of activity for blue chip companies like Toshiba, did a bit for WTS Global and things like that. So my role was essentially commercial, and then I moved into the energy sector about 10, 15 years ago now. And I've been focused on electricity for the last seven or eight years of that.

OK. And what does Elexon do? One of the things I want to make sure we cover in this podcast is exactly where Elexon sits in the electricity system. Because Elexon does a really important job. And a lot of folks maybe don't even know, firstly, that it exists, or secondly, what that job is. Elexon does a great job of promoting itself online and we use the acronym Buster quite a lot at Modo.

But yeah, for anybody who's listening and doesn't fully understand this thing, let's make sure we explain that today.

Sure.

So what is Elexon?

So we're basically a not for profit organization. So I'd like to get started on that point.

Yeah.

Simply because that might help to put our role a little bit more in context for your viewers that aren't necessarily well versed with Elexon itself or what we do. In a nutshell, we settle contracts for the electricity industry. Now, these are contracts that are entered into by suppliers and generators.

And to put a bit more context to that activity as well, we need to look at the bigger picture here.

Electricity is not like gas. I think a lot of people know that. But from our perspective, the key difference is it can't be stored like gas can be stored, which makes it intrinsically difficult to manage on the network. Because it's got to be balanced or the term that we use in industry is balancing.

Balance on the second to second basis and that role is undertaken by the electricity system operator. Where we come into the picture--

Which is national grid.

--which is national grid. Yes, commonly known as national grid. Whether it stays national grid or changes, we'll see in future but that change is afoot. Where we come into the picture is all of this has to be commercialized as an activity or contractualized and that's usually done through the wholesale markets.

So essentially, suppliers and generators, to keep it very simple, they meet in the marketplace called wholesale market. They decide how much electricity they're buying or selling in future. So that can be day ahead, it can be intraday as in same day. And those contracts are then sent to us essentially.

We look at what they said they would be buying or selling and then check whether they actually did that. Now, the reason why often they won't have done that is because you can't predict demand or generation to the n-th degree. And that's increasingly the case at the moment because of all the renewable generation that we've got on board.

And of course, we could go into a whole lot more detail on that. But suffice to say that if you've got a nuclear power plant that's going to be generating an x amount of electricity every half hour, which is typically a settlement period here in the UK--

So like a flat line.

A flat.

Baseload.

Baseload generation.

That's chugging away, doing its thing.

Absolutely. Until you make it stop, which hopefully it doesn't happen. But you get the picture.

So that's the old world.

That's the old world.

Where it's very predictable and you know what's going to happen. Sorry to interrupt you.

No, no. Absolutely. But what's happened is, of course, we want more renewable generation and we want that to happen but a large part of that is either solar or wind. And famously, you can't predict the sun and you can't predict the wind and particularly in this country.

So--

[CHUCKLES]

Yeah.

So taking that into account, what we now have is a large part of intermittent generation playing a large part or the supplying the pool of generation, if you like, in the country and on the network. And because you can't store electricity, you've now got the situation where you don't know how much is being generated but you have to make sure that it doesn't exceed the demand on the network.

And at the same time, you've got increasing demand, which again is becoming unpredictable, because you've got a large amount of electrification happening across the board. So to give you an example, a large number of us are now moving from gas heating or gas-based heating into underfloor heating, which is largely electric or electric vehicles. A number of us are switching from our gas guzzlers and do the right thing with the environment and moving to EV charging or EVs as they called.

And what's been happening as a result is the demand aspect of things also can't be predicted as well as it possibly will have been in the past. So you've got this sort of imbalance being created on a regular basis now, more and more regular as time has gone on with the demand as well as the supply. And you now have a situation where more balancing actions are having to be taken by the electricity system operator as a result.

If I use an analogy here, so let's use an example. So let's say Orsted owns a big wind farm and they have to sell that power in advance, right. Day ahead, let's say day ahead.

Sure.

It's not always like this but let's say a day ahead.

Yeah.

And so they have to say, I think it's going to be quite windy tomorrow and therefore, I'm going to generate 100 megawatts from my wind farm. And then the day happens and for a bit of that time it's 100 megawatts of wind but some of it's 98 or 96 or 102, right, because you can't control exactly how much wind there is.

And so when they differ from what they've agreed--

they sold that power a day ahead to another counterparty. Let's say, British Gas or somewhere, right?

And then when the thing actually happens, it's now. It's real time. There's a difference in what they agreed--

those two counterparties, what they agreed to buy and sell. And so do I understand this if I'm explaining this--

yeah, do I understand this that Elexon comes in and makes that difference whole again or holds them to account for that difference.

I think the latter half is probably more correct to say that we hold them to account for getting those positions wrong. And it might sound really harsh because, you know, sort of anybody just listening into this podcast that hasn't really had much to do with the industry is going to think, well, why are you slamming them for this? And ultimately, who's paying those charges? It's going to be flowing to the consumer in some part, isn't it? So how is this right?

And it's a fair question, but the point really is that those actions--

so when, for example, Orsted in this situation will have said, well, we're generating an x amount and they haven't, there is a shortfall on that system if there was a demand to match that 100 megawatts, which means somebody else has had to come in and fulfill that role.

So it's a rules-based system.

It's a rules-based system.

And what Elexon does is says, this is how we are going to make sure these rules get followed.

Correct.

And make sure that legally everybody is encouraged because it's a rules-based system to take part in this market.

Yes, and do more to accurately guess what is going to happen or at least be in a situation to then pay up.

Yeah, OK. And so do you guys handle the payments as well? So you do--

this is a volume--

I'm trying to avoid using industry terms as much as we can on this podcast and I've already slipped into it. So this is a bit of power that wind farm x has missed out on or it hasn't been windy enough, so there's a shortfall there, and this is a bit of power over here that someone else had to buy. And so you do the maths to make sure that the megawatt hours is transferred. Do you also do the payments bit as well?

Yes, we do. And we've got a separate agent, if you like, function with us that actually does that physical settlement for us as well, yes.

OK, and so if Elexon almost enforces--

I'm not saying you're the police, but Elexon kind of enables this rules-based system, what are the rules? There's a big document that is the rules, right? Do you want to talk about that for a second?

Yes, which is the BSC essentially, which is the Balancing and Settlement Code, which sets out just exactly what the parties obligations are depending on who the party is. And we've got a number of different parties that are party to the BSC for lack of a better word.

We should have some sort of gong that we do every time someone says the word party that isn't actually a fun party.

No.

We should have to face some sort of swear box or whatever. Anyway.

Yeah, point well made to be fair. I think we're all guilty of that here anyway.

But no, so essentially we've got different types of parties. I mean, to give you an example, you've primarily got generators and suppliers, which would be the obvious aspect. But you've also got what we now call VLPs or Virtual Lead Parties. So this is a role which was created quite recently to help with market access for smaller assets to participate in the market, and we'll probably come onto that in a minute.

QUENTIN SCRIMSHIRE: Yeah, let's do that later if we can.

Sure, absolutely.

But coming back to the Balancing and Settlement Code. So this is a bit like the Bible for how the electricity world works, and you guys make sure it happens. So when was this big, long document created, and who created it?

20 years ago actually almost of the date I think, yeah. It's 20 years ago. And it was created under the auspices of the energy system operator. National Grid has been the single shareholder for Elexon. So we do this. We provide what we call is part C functionality for the license that National Grid has to operate as the electricity system operator in this country.

So we've come in, and we are delivering part C of the functionality of that license and the requirements that that puts in place. The BSC is born out of that. But it is an industry document, and so it's modified by industry very often to make sure it's fit for purpose.

So the crib sheet, as you call it, the Bible, as you call it, the industry functions by is very much owned by industry and it's very much modified by industry to make sure that it's still something that they can sign up to, that they can comply with. So it's not hard and fast. It's not like a statute that needs to go through parliament for change. It's far more responsive in that sense.

So the Balancing and Settlement Code is a document. It's like how many pages is it?

Do we know? Putting you on the spot here.

Yes, you are. I think it was--

last count was something like 900 something.

900 pages--

ADITI TULPULE: Yeah, something like that.

--of pure gold explaining the rules of the electricity system.

We only deal with it in sections.

QUENTIN SCRIMSHIRE: So it's a really long document, and it was created 20 years ago. So let's talk about that for a second because 20 years ago the electricity system looked very different. So we had big centralized power stations that burnt stuff and create electricity and then sent it to big cities, right?

And so now, exactly as you explained 10 minutes ago or so, we've now got lots of distribution connected small assets, and the world's changed. So you talked about modifications. So this big long--

I keep on calling it the Bible. I'm going to carry on. This Bible of the electricity sector.

So the industry can change it and modify it. How does that work?

So really good question there, and pretty much the core of what we do apart from the actual settlement functionality, which is largely mathematical calculations and kind of done by a system. I think a large part of what we as a team here at Elexon do is get engaged in modifications. And these are changes that are proposed by anybody really. I mean, used to be limited to sort of parties to the BSC, but now anybody can really propose a change.

Anybody that thinks that something in the market isn't functioning can bring that to our attention, can raise what we call a modification by putting in a proposal to say, right, we don't think this is working for these reasons, and we think this is the solution that could help us achieve where we want to get to. And these modifications, we have a process, of course, that is set out in the BSC for how it has to be conducted. And for any--

There's a circular argument here where to modify the rules about how you make modifications to the BSC you have to look in the BSC about how to modify the rules for the--

anyway.

Well, a little bit circular I will admit that. But I think you do need it because there are different sort of--

it's really kind of to make the process as flexible as possible without compromising the credibility of the market, which is absolutely key to us. So we will be as flexible as we possibly can without allowing that change to affect the credibility of the settlement process.

So how does that work in practice, right? Because 20 years ago--

I keep on talking about the 20 years ago the electricity system had lots of big players in it with very large balance sheets with lots of power, and this document was created. But now we have lots of small players ranging from the consumer or prosumer up to small funds or asset owners or cooperatives. So how do they all get a voice in a world that was created for the big players?

So essentially, I mean, the big players are obviously parties to the BSC. And if you do become a registered supplier or a licensed supplier as we call that an industry, you will be a party to the BSC. Whether you're a small supplier or a large supplier, you will be party to the BSC. So all of those suppliers, of course, have a voice.

At some point I'm going to have to say, ain't no party like a BSC party. But I think I only have to say that because I was told I have to say that by our team.

Oh, you've done a good job.

I think I just had to put it in there.

That's fine. It's very welcome. And actually if you attend some of these work groups, they can be really fun parties if you're interested in the kind of discussions we engage in. You're welcome to one of them if you like.

Yeah, definitely.

[INAUDIBLE]

party. Come along.

But no, there actually is another point is that these work groups are absolutely open so you don't need to be a party to the BSC in whatever form or measure you might be. You don't need to be involved with Elexon or the BSC to come and have a voice. You asked me how people have a voice. You can attend these work groups and be heard. And of course, you know, we will take your concerns on board. These are minuted. So there's a process, again, set out in the BSC for how these concerns are taken into account.

We also run consultations on every single modification. So if you're interested in a change that's being brought in, then that's announced on our website. So not only can you be a part of the work group if you're not necessarily the proposer or indeed a supplier or a generator or party of the BSC, you can start in the work group, but you can also respond to consultations. These are industry-wide documents. Anybody can respond to consultations. And we're under an obligation to consider these responses and take them into account. So absolutely.

And to add to that, I think I should like to say this. This is probably me boasting on behalf of Elexon. But we are known as a code manager that's actually quite open to ideas. So we've had people, innovators, come in and just walk in through our doors and discuss ideas with us as the experts in the field and we will give our opinions on them.

So. you know, it's a very open environment that we have.

Can I bring something up now then? We're going to talk about some code changes.

We're energy storage people, right? And we--

it's a square peg that doesn't really fit in a round hole. And it's very, very annoying, right? Because every time anything to do with energy storage happens, you have to fill out all these forms or be a part of the BSC or whatever it is and you have to tick the box saying, I am a generator. And it's really triggering.

ADITI TULPULE: Strong responses I should imagine.

Yeah, so what on earth is happening there? I put you on the spot here a little bit. But the BSC and all of this stuff is built around are you a generator or are you a supplier? So where does energy storage fit in?

Ooh, it's the billion dollar question, isn't it? I think Ofgem's taken a view that they'd like for this to fit into more of a generation category rather than demand, which alternatively it could have been. I think probably it would be fair to say that we couldn't consider storage as supply simply because you then run into so many obligations that suppliers have, which really traditionally would--

I mean, there's just no need why you'd need to do all that.

Becoming a licensed supplier is tough, right? You need a big balance sheet to prove that if things go bad, you've got the money to make whole on whatever happened to you, right?

I think yeah, it kind of traces its route back to kind of the credibility of the system. And therefore, you being a supplier, you being able to kind of shoulder the imbalanced costs, which is the cost that you would be paying if you got your predictions wrong, which happens very often as we've seen now.

And that's probably one of the kind of unfortunate reasons in the current climate where we've seen small suppliers kind of go under unfortunately. So really, I mean, we do need something that prevents that.

That's really interesting because, yeah, the reason why small suppliers have gone and--

there's loads of reasons, right.

I'm not going to post-mortem this too much. But when it comes down to it, the fact that it's a rules-based system and if you use power or energy, you have to pay for it at some point and Elexon makes sure that everybody has to pay for what they use, the fact that that system is looked after by Elexon is part of the reason why suppliers do go bust, right?

Because if there wasn't, then everyone--

if everyone wasn't held to the rules, then the system wouldn't work at all. So I'm not blaming Elexon for a bulb going under. That's not what I'm doing. But it's part of the--

the system needs to work, and the system needs to work in a way that everybody is on the hook for what they say they're going to do.

That is true because I think ultimately we're looking at three things really, aren't we? We're looking at making sure that the system is credible, i.e. The lights do stay on.

Yes, yes.

I think that's the key thing. We're interested in making sure that consumers aren't paying more than what they should be paying. So I know that it's really difficult at the moment to kind of--

you know this is going to--

is like we're opening Pandora's box because obviously the wholesale costs have shot up. But the point here is that Elexon's role is to ensure that the settlement system works.

And the settlement system is designed in the way it's been designed to ensure that there's credibility in the system, i.e. Consumers have a guarantee that when they turn on that switch, there is going to be electricity that's going to come on, and more importantly, that they're not going to have to pay through their noses on a daily basis trying to negotiate contracts with suppliers or whatever or dealing with the big boys when really they shouldn't be doing that. So it's a system that protects the consumer, it brings credibility, it brings trustworthiness, and I think it's worthwhile protecting it.

So who pays Elexon? So if Elexon's a not-for-profit organization and then Elexon has all the overheads and cost of having the balancing mechanism, reporting service, and making all this data open and available, and--

yeah, I mean, just generally doing the Elexon stuff, there must be a lot of cost associated with that. But it does help the industry, don't get me wrong. Who pays for all that?

So the BSC parties do, in a nutshell. And essentially, it comes to us as a part of the fees that they have to pay to become a party to the code, which is a requirement in law. So in a nutshell, it's industry which is paying for it, but more importantly, BSC parties.

OK, coming back to like key code changes. Almost got them the wrong way around. So what sort of changes

have happened recently or are happening that we should probably cover here? I know lots of them have got P numbers, right?

Yes, so we like our P numbers.

And our modifications usually do have--

no, they all have P numbers. Let's just put it that way. Others are change proposals.

So coming back to your point. So I get into so much detail sometimes I lose sight of the question. Apologies.

Do it. Let's do it. So after you.

Yeah, so I think the few that I would definitely like to mention, especially keeping your audience in mind, generate storage--

people essentially either grid connected storage or co-located storage. This is really all about increasing market access, reducing barriers, lowering thresholds for entry into the market so that assets--

we like to call them assets essentially--

generation demand or anything really that can bring value towards balancing the market actually does have the opportunity to participate in that service.

And there are a number of sort of smaller markets that do kind of facilitate things to that end. So you've got the balancing mechanism. You've got the ancillary markets. You've got the reserves market, the wholesale market, of course.

And we're trying to make sure that we allow for these assets to participate directly as much as possible into these markets so it kind of affords them with a revenue generation stream that hasn't existed so far. But it also works for the energy system operator or the electricity system operator because these assets then become visible to the system operator, which is a big win for them.

So we're talking about Virtual Lead Party right now, right?

ADITI TULPULE: Yes.

And what P number is that?

So that was P344.

P344. And in layman's terms--

I'll have a go at this. So loads of distribution connected batteries were getting built.

And it makes sense for them to be in the balancing mechanism because National Grid wants to use those kind of assets. But to be in the BM, you had to be a party, a BSC party, and that meant you had to go through all of the complicated market access stuff.

You had to get physical lines between you and National Grid. There was a cost and expense. And that was a barrier to entry. So Elexon--

or I don't know who proposed it, but Elexon facilitated the change which meant that smaller assets could play in the BM and provide this really valuable flexibility to National Grid without having to go through all of the rigmarole of being a BSC party. They could do it virtually. Is that right?

That's correct. Yes, that is absolutely right. So essentially, if I was to sort of press a legal point, it would be that the VLPs don't take balanced responsibility. So the key point here is that they're not suppliers. So they play this sort of interim role, if you like. They're sort of a sub player in the market.

But they still can provide the services that a supply would've otherwise provided to these assets by taking them into the balancing mechanism. So the Virtual Lead Party is not a supplier, doesn't take balance responsibility, but it still is able to trade in the balancing mechanism. And that's P344 for you.

but. Then we realized actually it's not gone far enough.

And so we brought on P375.

So it was proposed obviously by an industry party. But we--

Can we say who it is? Can we shout them out?

P375. Who was it?

MAN: P375 was done by Flexitricity.

Flexitricity, of course.

Flexitricity. Thank you, Flexitricity for this.

Yes, definitely. So Flexitricity's--

Other aggregators and BSC parties are available.

Yes, yes. So Flexitricity proposed this. And Elexon obviously, you know, we were very much in favor of this change and so has industry has been. It's been very welcoming. And Lord Redesdale actually called this a game-changer, which I have to agree with because if you think about what this has done is it's allowed for a settlement type situation to actually be undertaken behind the boundary point.

Now, Elexon traditionally stopped at the boundary point. We kind of don't get involved with anything that happens behind. But you've got all of these assets. It might be a battery storage facility that's co-located that doesn't actually have its own metering point.

Yeah, they can put it behind the meter battery on a big steel plant or a big manufacturer which until now couldn't play in the BM because the only way that they could is at the boundary meter.

ADITI TULPULE: Yes, that's correct.

And now you're saying, well, we'll net it off. We'll net off those flows behind the boundary meter and so everybody can play in the BM behind the meter.

Which is incredible.

Yes, absolutely.

Has any other country done this?

I'm not sure actually to be fair. I like to think that we're leaders in this, especially in the way that we're structured. So I mean, different countries have different sort of systems and they're structured differently.

So we don't have a BM in all countries.

Well, exactly. And some of them do have direct access into the wholesale market or the markets are structured differently. But the way we're structured, I think we're probably the only ones or at least the first ones that have done this.

And it's win-win, right? Because National Grid gets access to more assets to balance the system, which should reduce the costs of balancing the system and the flexibility of the system.

Absolutely. And I think the key thing here is to bring on these assets that are almost underutilized. They can probably do more. And they can be motivated to participate and be more dynamic and provide that response to market and get compensated for it because otherwise why would you participate?

You know what really excites me is that this is almost--

I know that this is a very ambitious project, right? But this is almost the first step, right? Because we can do this and you have the data and you have the controls. Why not do it with an EV fleet or domestic batteries?

You know, why don't we go as small as we possibly can and balance all of it in real time.

Absolutely. I think that's definitely where we'd like to see the market headed. I mean, that actually bring us quite nicely to another aspect that we're involved in which is the market-wide half hourly settlement. I mean, so far we've obviously talked more about things that are half hourly settled or are more industrial or commercial in nature.

So let's just for a second to explain. So metering in the UK, generally speaking--

so settlement periods are half an hour, right? But lots of meters out there, they don't work on a half hour basis. They're just old fashioned meters that spin round. And you don't know when the power was, but you have to go and check them and a meter person comes out and reads the meter.

And sorry, I just wanted to explain that before you carry on.

Yeah. Yeah, absolutely key point. And actually I might add to that and say, a lot of us--

I mean, I have a smart meter at home, right? And it's capable of actually being settled on a half hourly basis. It is because it's able to kind of give that information in half hourly chunks to the HHDC or HHDA, whoever is involved.

What are those acronyms?

Half Hourly Data Collectors or Half Hourly Data Aggregates.

We got so far through this program without a load of Elexon acronyms.

I do apologize. I was doing so well. I'm going to bang the gong again.

Oh right, right. I'm going to stay away from that. Redo this. OK, so we've got smart meters that are actually capable of providing those half hourly readings to allow for half hourly settlement. But a lot of those, unfortunately, are still what I like to harshly call stupid because they're not really being settled on a half hourly basis. Not very smart at the moment.

But

they are obviously capable. And this piece of work, the market-wide half hourly settlement aspect, will actually change that. It will allow them to rise to the occasion, as I call it, and actually provide and do the job they were born to do, which is to provide that data on a second to second or minute to minute basis.

And if we go back to why, right? If I understand this correctly, the reason why half hour settlement is important is because people get paid--

well, people can pay different amounts for the energy each half hour, which means they can be encouraged to, I don't know, charge their car on a cheap price rather than a flat rate across the day. So if everybody's on half hour--

I'm simplifying here, but if everybody gets settled on a half hour basis, we can get actual consumer change in behavior, which should hopefully bring down costs in balancing the system and decarbonization and all that stuff, is that right?

Absolutely. I mean, it's actually just allowing the system to be more reflective of what the situation in the market actually is. So if you think about it, everybody goes home at 4 o'clock, or at least used to pre-pandemic when people were commuting more.

And you're going to want to go home and charge your car, you know, turn on the kettle, make yourself a cup of tea. There's going to be a demand surge.

And we know that, traditionally, that demand surge happens between the hours of 4:00 to 7:00 in the evening typically. And of course, electricity is more expensive at that point just as a result because there's higher demand. It's just market dynamics. But unfortunately, that doesn't translate into how people pay because the flip side of that is no one's really using that much electricity between the hours of 2:00 and 3:00 in the morning, for example.

And electricity could be and is really in that half hour cheap, way cheaper than what you'd be paying between 4:00 and 7:00.

But as a consumer, I don't get the benefit of actually running my washing machine or my dishwasher, for example, between the hours of 2:00 and 3:00. I'm still paying the same charge. And that isn't helping anybody really. So what we're trying to do is facilitate that half hourly settlement, which means that every half hour you have a choice of the price that you pay for that half hour.

So that gives more power to consumers eventually because, hopefully--

obviously the missing step here is the time of use tariffs. But suppliers have been meaning to bring that into the picture for a long, long time, which means consumers will have a tariff which is based on their usage, not just the amount, but also the time.

Yeah, and I guess 20 years ago when the BSC--

the Bible--

was created, we couldn't really think forward 20 years to know that this data would be--

the cost of doing this and putting smart meters was going to be cheap enough. So that's why we have to modify this thing constantly. And we don't know now what the BSC will look like in 2050.

So how do we do a modification? So we want to put the Modo modification in, and we want to make it so--

we want to match Australia and do 5-minute settlement periods, right? How do we make that happen?

Right, you just pick up the phone, call us, ask us.

Got a direct line now.

Get Mods through.

Just get Mods through. Literally just pick up the phone, talk to us, and tell us that you want to raise a modification. You will then be asked to fill in a proposal form, which you can fill in, which is essentially just four or five things. It just tells us what it is that you think isn't working, why do you think it's not working, what do you think the solution could be, and why you think it's a good idea for industry to adopt that?

Because at the end of the day, the more--

as we discuss Elexon, our funds come in from industry so there is a cost-benefit analysis that we must undertake to make sure that any change that's being proposed is actually going to be beneficial to industry more widely and it's going to deliver to the consumers as well.

Can we choose our own P number?

I don't actually know the answer to that.

Who comes up with the P number?

Well, it just kind of rolls off our ledger of numbers. So we've gone so far. But there have been fun times when certain P numbers have actually gone through the modification process earlier than others. So you end up with the P395, for example, after a P420, and you're just like, how did you--

what?

I want to put P1000 in now for 30-second settlement. And it's going to take so long to get there. That's why I was thinking P1000.

Right, I'm going to have to leave that to my colleagues in operations to answer given that I'm going to say something and they're going to come chasing straight after me going, no, we can't have that, or absolutely can do. So I don't know.

I'm joking, right? But so we talk a lot in the office.

ADITI TULPULE: P1000.

How do we get to second by second metering, right? Because if basically the faster--

the shorter the time period of the settlement period, the more you can get to like a real liquid market.

ADITI TULPULE: A real time settlement.

Real time settlement. Real time settlement means--

it should mean lower costs in the same way that real time settlement of stocks and shares or whatever means that participation is--

you don't have to price in risk about time periods in the same kind of way. So it should be lower cost for everybody. So how do we get to real time? I know we'll never get to perfectly real time because--

ADITI TULPULE: There's always a lag.

--as you said at the beginning, we're not trading--

yeah, there's lag. And there's lag. Good point. But also electricity has to be balanced, and there's a balancing element.

How short a settlement period do you reckon we're going to get to?

Ooh, I mean, I wouldn't like to put a number on that at all at this point given where we are in the scheme of things. But what I can say is we're definitely making changes to the BSC, and industry-wide there's a great momentum to kind of go towards a more reflective system, a system that's more reflective of the reality of the situation. And of course, settlement and bringing those settlement periods potentially down from half hour might be one way of dealing with it.

But I think at this point in time, it's really important that we make sure that we get the data first. We don't actually have the data first to kind of allow for that analysis just to see whether 1-second settlement would actually be better than a 15-minute one and which would be more commercially feasible such that the consumers aren't paying any more than they have to. I think that's the key point here. So we're not quite there to answer that particular question, but I can definitely say that we're definitely--

the way forward is more collection of data--

near real time collection of data as well.

Because also much of Europe's on 15 minutes as well, right? And we've got Project TERRE happening. So what's going on with Project TERRE?

Because we did the Brexit thing. Well, we kind of half did it.

We're not going to go down that rabbit hole, but it made a bit of a problem for Project TERRE, right? So what's happening now?

So from what I know, we've got systems that are now sort of ready. I mean, obviously we did have a derogation from--

Sorry, Project TERRE is the Trans European Replacement Reserves E?

MAN: Exchange.

Exchange.

Exchange. Thank you. Thank goodness you're here.

Honestly, I mean, you're quizzing me.

Yeah, I'm sorry.

So this is like Great Britain taking part and Europe sharing balancing actions and kind of having--

they can have access--

the Europeans can have access to--

it's really sad saying Europeans we're not in it anymore. But Europe can access our BM and we can access theirs and all that stuff. So sorry to cut across you. That's what Project TERRE is.

So what's happening with it?

Right, so essentially that was--

P344 kind of looked at allowing access to the wider access as you like for VLPs to participate in the balancing mechanism. And that was also the Project TERRE, that modification. And of course, we've been able to sort of implement project, so the wider access aspect of it.

Well, Project TERRE. Obviously Brexit happened. And we did have a delegation at that point in time from Europe to say that we didn't have to kind of match the 15-minute settlement period because that would have been a huge change for us.

so. Even if we would have had access to TERRE, just coming back to your earlier point, I think it would have been on a 30-minute basis from our perspective.

Where it's sat at the moment, I think it's just kind of taken a bit of a backseat whilst we figure out whether we will be allowed into this sort of balancing mechanism on a Europe-wide basis. But there are other alternatives, of course. I mean, we got interconnectors in place. And traditionally, they would have also been a part of--

they might have been able to participate in the TERRE balancing activities. But I mean, we are where we are at this point. And I don't know if I can solve this issue sat here.

Yeah, yeah, yeah. No, I understand.

It was a bit unfair of me to put you on a spot like that. But it's just something we were talking about this morning. All right, I want to touch on--

I know you guys are doing a big project for--

so BMRS, Balancing Mechanism Reporting Service, which is both I think mostly beloved by the industry and data geeks like us but also perhaps it is ready for a bit of a revamp. And you guys are doing a big project about that.

And I know it's important to you. So maybe we should talk about that for a second. What is happening there?

So the project is called Kinnect. And it's essentially updating our systems so it's basically making all of that data that was going on to the BMRS, which is the old legacy system as we like to call it, to make it more accessible, faster, more dynamic, and more accessible by putting it on a cloud-based platform.

So it's a cloud-based solution which then will offer open access to a lot of that data free of cost to industry. Anyone that wants to kind of have access to it will have access to it. And a part of it is a customer-facing solution, which means that you might actually be able to even get data the way that you want it customized to the way that you want it.

QUENTIN SCRIMSHIRE: Nice.

Yeah, so it's a huge change from where we were.

I think at Modo we definitely used--

I mean, the BMRS API, we probably abused the amount of data we pull from that. We're probably responsible for a lot of your server costs, so sorry. Sorry about that.

Nailed the culprit.

Yeah. And one of the things--

so systems sell price and system buy price are the same thing. So why do we get them both?

So again, this is something that is part of the rules.

And it is that way because, you know, we've been a part of the centralized system.

And eventually I think we might get to a point where we might just have one price coming out. But for now, the way that the system is designed, we do need a separate sale price and a separate buy price.

In balance price, cash out price.

What else do you call it? The NIV price some people call it. I mean, just system sale price, system buy price all for the same thing, the number which you--

Yeah, the system price and balance cost, [INAUDIBLE]

cost. Yeah, it goes by different names. But yeah, eventually I think we might find a happy ground and just call it one thing. But for now I think--

God help anyone who's trying to get their head around this industry right now.

I think we're pretty much done. So have you got anything you want to plug, anything you want to talk about? This is your chance.

Ooh.

Any other exciting stuff happening at Elexon?

Oh, definitely. Loads of exciting stuff happening at Elexon. Always is. We're pretty much at the forefront of industry.

I think I'd just like to talk a bit more about our settlements role and how that could kind of be more relevant going forwards, even when, well, essentially balancing is increasingly happening at a local level. And we see that gaining momentum because you've now got sort of markets that essentially--

well, I said DSO, but really LDNO-led markets like UKPN for example.

And you've got--

they're willing to do sort of 1 kilowatt sort of activities in the market, which is very, very--

it's a low threshold and should see far more participation. But at Elexon, we've got a huge amount of experience and expertise just doing settlements at the centralized basis. There's absolutely no reason why we couldn't sort of gain some entry into that space if something was to happen [INAUDIBLE].

Oh, so DNO-led balancing to manage their system.

Local balancing, yes.

Local balancing. A bit like what the Piccolo platform is doing. But you guys could do the settlement bit of it in the same way. Interesting.

Well, there's no reason why we couldn't. Let's just word it that way. So yeah, we're definitely interested in kind of getting involved at that level as well definitely.

Oh so I'm sure it's already happening, but we need to get the Elexon people speaking to the DNO people and link this thing up.

Which is why I think people should know about us.

Yeah, yeah. For sure. And so one of the things I'm going to plug on your behalf which is that the Elexon website, it has a lot of great information in there.

Yes, it does.

So all the acronyms when our team--

we get new joiners, we send them straight to the Elexon website to learn about stuff. There's some great educational things.

I just want to say--

I just want to give a shout out to whoever manages that because I think it's a great, great resource. And it'll be really interesting to see what happens as you make more data available in BMRS.

So I guess that brings us to the end. Aditi, I just want to say thanks for coming on this has been awesome. Thanks to Elexon for hosting us and giving us Elexon branded water to drink. Hopefully I'm still here this time tomorrow.

And yeah, until next time--

and if anyone's, you know--

normal stuff. If you like this conversation, please do comment and let us know what you think. And remember to follow us on Spotify or whatever else you listen to this on. All right, thanks, guys, and we'll see you next time.

Thank you.

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