Exploring the Balancing Mechanism with Claire Dykta (Head of Markets at ESO)

Got the kind of the complexity of dispatching lots of things in a very short period of time. We've got the the kind of the information shortfall of having many, many smaller assets but perhaps not the same quality of information coming into the control room. I think we also have the fifteen minute rule at the moment, which is linked to kind of the the typical dispatch duration of a battery. Could you give a little more color around perhaps how that might be changing?

As you say, fifteen minutes sort seem to be the typical duration of a battery. So we have a limit at the minute that we will only dispatch a battery for fifteen minutes because we can be sure that it will deliver that beyond that it becomes much more uncertain. With some of the changes that we're proposing around. Information flows and other things, we can actually lift that rule off and say actually if you give us different information.

We don't need to put a fifteen minute limit on our dispatch instructions because we would have more certainty about Yeah. What you're able to do and then whether you're delivering or not against what you've said you'll do. Hello, everybody. Welcome back for another episode of transmission.

In this week's episode, guest host, Ed Porter, is joined by ESO's Claire Dictor.

Over the conversation, they dive deep into the balancing tokenism. If you are enjoying transmission, please hit subscribe and give us a rating. It helps us reach a wider audience. With that, let's jump in.

Hello, and welcome to today's edition of Transmission.

We are joined by ESO, and we're gonna be talking about the balancing mechanism and storage and the balancing mechanism. And we've been joined by Claire. Claire, welcome to the podcast. Thank you for having me.

Thank you for coming on. And I think we're just gonna get straight into it. So Could we start off with what is the bouncing mechanism? And what does it do?

Nice easy question to start off with. So in GB, the wholesale market is designed to self balance. So everyone who's a participant in that market, whether they're a generator, or a supplier or, like, a non physical trader. So it's someone who's just speculating.

They're incentivized to balance their position. So that happens over a really long time frame down to what something we call gate closure.

So every day is split into half hour blocks called settlement periods. And when you're an hour away from the settlement period, the wholesale market stops trading its physical positions.

And then system operator, so control room knows how the market has like resolved itself, and basically whether it's got any issues it needs to solve.

Once you've had that gate closure of the wholesale market stopping trading, that's where the balancing mechanism kicks in.

So it's designed to be an operational tool for the system operator to really fine tune what it needs to keep the electricity system running. So historically, that would have been, I don't know if a if a power station suddenly tripped off or if your demand forecast was a bit low and it turned out higher, we'd be using the balancing mechanism to do that fine tuning. And and historically, we would have sort of reset about two or three percent of the entire market through the balancing mechanism.

How that works is people submit things called Bowers, which stand for bids and offers. So people submit price and say, this is how much that I am willing to pay or be paid to either increase my generational consumption or reduce it the ESA stacks all of that enterprise stack and then goes through them to select all of the offers it needs to balance the them. Okay. So so loads of, loads of process there.

Let's just make sure we've got that all all lined up. So so we said sort of a a long way before delivery. So maybe three years prior to a particular settlement period, we start thinking about supply and demand. And so when you say we're gonna be balanced in that set assessment period.

We what we mean by that is both supply and demand match, and there's not too much electricity. There's there's not there's there's not a shortfall.

So that's the first part. And then, and then people trade through open markets kind of up until that point, gate closure.

And then a gate closure we think that the market should be as close to balance as possible, and then effectively everything is passed over to the hands of the control room or the system operator.

Who, as, as you said, will will consider the the boas that they have. So so bids and offers and bids generally to turn down and offers to turn up. Sort of conventional generation or or battery speak offers to discharge and bids to charge. And so so the controller will see all of those sort of bids and offers and be able to work out what the cheapest bidder offer is to use for the the particular problem they're trying to solve. And that's how they will guide us from gate closure through to delivery. Absolutely.

And historically, that would have been relatively easy, which is hugely undermining what we do in the control room, but it would have primarily been a megawatt difference would be the problem we were trying to solve. So if you suddenly, like I said, if a power station suddenly tripped off, you were short of megawatts, you would procure some more.

As we're rapidly going through the transition to a decarbonized power system where we've got a much higher penetration of renewable power.

The the problems that the control room need to solve are much more complicated. Like, the power system doesn't just work anymore. So when you have a power system that's running with loads of conventional generations, say coal or gas or something. Mhmm. The the physics of the system work quite well. I'd say you'll have heard of terms like the inertia on the system and the bolts and things like that. You've got a conventional system, the system is designed that broadly, all of that stuff just works, once you're in a high renewable system.

The system isn't designed for that, say your inertia is lower. You might have more issues with voltage.

So the control room is no longer just trying to make up megawatt shortfalls or or, or or or too many megahertz. It's it's also trying to solve voltage problems, or or maybe generation being in the wrong place in the country. So we're saying that there's kind of not not, you know, we're not just talking about power these is, you know, being a megawatt short or being a megawatt long. We're also saying there are other things that we're trying to solve for like inertia or or, or voltage or a locational issue.

Now maybe let's put this into practice. Right? So so why is this a hard thing to do or perhaps like, what are particularly difficult days for the balancing mechanism to cope with? So I describe it a bit like a game of Wacamole, which you're possibly not old enough to remember.

Then I'd die.

Wacamole Wacamole's in my in my range for sure. The control room will look and say, okay, this is what the market has provided me, this is where the market is closed.

What's my first issue that I'm looking at? And it might be that there's a it's a really windy day. Yep. So there's loads of wind generation in Scotland. Mhmm. Now there isn't enough, transmission capacity. So there aren't enough overhead wires to bring all of the generation that's connected in Scotland down into England where a lot of the demand is.

So what we would have to do is we would have to buy off the generation in Scotland. So it's a bit like saying We've sold a hundred and twenty tickets to get on a train to go over the border. Mhmm. All of those hundred and twenty ticket holders and expect easily turned up, but we've only actually got one hundred seats, so we need to buy twenty of the tickets back.

Okay. But once we've done that, we're then twenty tickets short in that example. So we've we've we've created a megawatt imbalance. So we have to buy the megawatts somewhere else where we can accept them.

So in in that example, you kind of you you need a hundred and twenty people in England, and they start off in Scotland. But your train can then take a hundred. So you buy the tickets back in Scotland, but then you also have to pay some people to turn up in England. In England.

Exactly. Okay. So we would do that and then you go, okay. I've solved that issue.

What is my next one? If it's a really windy day, you might have really low inertia.

And how does that happen? The sim simple analogy is if you've got a system with high inertia.

It's a bit like dropping a stone into a swimming pool full of treacle. So you could drop the stone in and it wouldn't really ripple very far at all, so it wouldn't create a disturbance. Yeah. If you've got a system with low inertia, it's like dropping a stone into a pool full of war and you'll see the ripples travel on. And these disturbances that go across the system cause all sorts of protection that's in place on the system to to operate. So you might say a generator somewhere else in the country might shut down because its protection has spotted that there's a disturbance on the system so it closes down to protect itself. Okay.

We'll just just kind of just just on that. Right? So you're saying in a in a high wind day, you might have lower inertia on the grid. So I I understand that.

And then and then around the sort of the ripple moving through system. That that's what someone said. Well, how does a how does a ripples, like, what's the stone in that analogy? What what causes the ripple to start?

Could be anything, so it could be a lightning strike. Okay. It could be if if say one of the interconnectors trips off, that can it can travel right across the grid obviously very quickly. Yeah.

So there's two ways that we deal with that. One is that we buy synthetic inertia. So we try and recreate inertia really complicated, but you're you're just trying to arrest that disturbance happen. The other one, which is where batteries come in, is that we will hold what we call response.

So that's, batteries and other technologies that are connected to the system that either automatically detect that a disturbance has happened, so they will see it in the frequency trace. Mhmm. Or we them to do something, and they will react to counteract the effect as the disturbance. Okay.

And this is we would kind of talk about this as low and high responses in terms of from the from response services. What what what does what does low? What of what's a low service? What's a high service?

So that just refers to frequency. You see, with all of the services that we buy for the system operator, ultimately, it comes down managing the frequency second by second and keeping it as close to fifty hertz as we can. Mhmm. When you have things happen on system, your frequency can run higher or your frequency can run lower.

We have operational limits that we have to keep within because once you go beyond operational limits, you can start to damage equipment that's connected to the system so you generator turbines and things can get damaged. Okay. Worst case scenario is that if you can't arrest a frequency run you would you would end up with a blackout because the system would effectively collapse. Okay.

And then putting, I know, we're always trying to stay away from things like the system will effectively collapse. In a in a in a in a in in this because in reality, I mean, that happens very rarely in a system like this because of the amount of spons and reserve type services we have available. But but just to kind of go into how storage kind of fits into those low and high services. So in a high service, we're talking about high frequency.

So batteries will be charging off high frequency to bring that frequency down and then a low service your batteries will be discharging to bring that frequency up. Yeah. And the good thing about batteries is that they're so, quick to respond. So because we've got this like very light low inertia system where disturbances can travel quickly.

A battery can act you know, pretty much instantaneously so it can react very quickly. So we can we basically run the system very differently to how we used to because we can deal with the problems much quicker. Okay. And and just on that analogy of the the sort of stone dropping into the pool, If you are, like, is there are some power stations more valuable than others? So imagine if that put that stone is dropped in the shallow end, Is it helpful to be sort of have your have your power station kind of in the shallow end near to where that that sort of emergence that that that ripple starts?

Or is is it does it does sort of not matter where it is, and it could kind of be anywhere in the country?

It can be anywhere. So say, different power stations have got different characteristics, which are useful in different situations.

If you if you have a very light low inertia system. You have a disturbance on it. It can be felt right across the system, so it can travel very quickly, particularly across the low inertia. System.

Mhmm. And and kind of okay. That that makes sense to me. And and when when does the control room get in get involved in this?

So you've mentioned that you can pull some levers to help to manage things like inertia, or you might be coming into the start of assessment period and thinking okay, things aren't gonna be quite right. We're, like, when when does the controller get get involved? Cause do they start just an hour out, or does it is it does does planning for that start? Well, well in advance.

See, see, planning starts, say for that particular half hour period, planning would have started for that ten to fifteen years before. So we're looking now at the mid twenty thirties, what the mix on the system is gonna be and what services we need. But If I kind of fast forward to kind of two ish years out, that's when we buy things called ancillary services. Okay.

So we have a suite of services that we will buy that, depending on the design of the products, they're all a bit different.

We will either buy something to help with a particular incident. It might be, a frequency response service, or it might be something called restoration Okay. Which is what we use if we do have a shutdown of partner systems, how we sort of kick start it again.

Sometimes it's more of a sort of option and exercise type design where we might buy the k ability upfront, and then we'll exercise it within real time. Okay. Is that I I I, frequency response, I know.

And and things like restoration, I understand, option and exercise. That's that's maybe a new one. What what how does that or what's an example of that?

Yeah. So with so that's more of a kind of just how we design particular products. So it might be the we will buy capability to make sure it's available in the settlement period, and then the control room will dispatch it.

We do that particularly for, units that aren't operating in the balancing mechanisms. So there are Okay. Assets that aren't aren't in the balancing mechanism that we will sort of bind them to an ancillary service and then the control room can dispatch them.

Yeah. Not through the balancing mechanism, but still in the same time frames. So I know in sort of previous winters with National Grid have or yeah. So, and the control room have had access to bringing call units back online. Is that an example of kind of the option and exercise, or is that that's a different product. It is how it is how the contracts are designed, but things like contingency coal units are completely held out of the market. So they're not allowed to operate in the market because they would distort the normal operation of the market.

We can only use them in certain circumstances, and the contracts are designed to absolutely minimize the impact on, like, the proper financial workings of the market. Yes. Yeah. Okay. That makes sense to me. So so one thing that we have kind of just talked about a little bit here is some, we've talked about assets being registered in the balancing mechanism, and that brings us on to BMUs and non BMUs.

What what's what's a BMU and what's a non BMU.

So so really simply, a BMU, that stands for balancing mechanism unit, non BMU is not a balancing mechanism unit, and they are assets that are either making themselves available to the control room in the balancing mechanism or we procure them through a different rates. If an asset, it makes itself available in the balancing mechanism, there's a whole process that you have to go through to be able do that, which involves registering your assets. You have to accede to the balancing and settlement code. So there's a huge document with loads of rules in it that you have to comply with.

There'll be all sorts of rules around metering data that you provide, and there's, rules as well around communications links, so making sure you've got an appropriate really secure and robust, comms link that the controlling can communicate with you. And so and so that's helpful for the controlling because they can see kind of what's happening on that on that site. They can see whether it's live, what what options they have to turn it up, turn it down.

What's the opposite of that then? What so so what's a what's a non b mu? So a non b mu is a way of recognizing that actually operating in the balancing mechanism.

Can be too much of a hurdle for some to to pass. Like, obviously, there's a cost to all of that, and it might be that you have a particular business model or you're at a particular stage in your life cycle that it's that's not viable to do. So non BMW, allows a route to market for an asset without passing all of those hurdles. Okay. The controlling can still dispatch it in that settlement period using just a different, you know, dispatch tool.

But it is separate So, like, obviously with the balancing mechanism, if you picture it in your head, there's, there's a screen on a desk with all of the units stacked up. Separate screen with anything that's not in the balancing mechanism. So you're kind of managing two different if you like. And with these with the controller engineers, they are having to do this every single minute of every single day. Time is really precious to them. And so where there is a where there is a one screen with the assets on and another screen over here with a separate list of assets on, it's kind of more complication to be juggling across. Do do you think that there is over time, do you think we'll end up with more Bmus or more non Bmus?

I think so so it is, it is a really hard job, in the control room. I've done I've done a couple of guest shifts hands down. It's the hardest thing. I've ever done. It's really nerve wracking because ultimately what they do, so we talked we a little bit about the control room.

There's three people that manage the frequency, and they are effectively sitting at their desk and watching the little squiggly line that shows what the frequency is. And when it starts to go in a direction that's unexpected, they do something about it. That's really difficult to do. You have to be really concentrated in it, and you're you're right as we've transitioned from a system that you know, you're dominated by conventional generation. So a few big assets to one that's increasingly becoming is sort of accessed by lots and lots of small assets. Mhmm. When you're sat there balancing the system second by second, you need to be able to move really quickly.

As with everything in the power industry, all of the systems and the procedures and the rules and everything are designed more or less as they were at like privatization at the end of the eighties. Yes.

So there's a massive shift the industry needs to go on to open all of that up and kind of enable the transition.

One of these things that is happening is as shifting all of our procedures and our IT systems, so that we are able to better operate in that world, which means being able to issue and to units faster and to be able to issue more instructions than we would have originally designed the systems for. Okay. And then, and then taking that back to kind of the the, like, if if you imagine kind of maybe half of the assets today are non BMUs and half the assets of BMUs.

Over time, as that system gets better at dispatching assets, do we think that they're, like, would would we expect to kinda see more BMUs coming online or do we think that it'll shift towards kind of the main more non bm used?

So we've got we've got a whole host of diff different things over the next few years to improve access into the markets and improve the way that we do things. One of these is that we're actually gonna consolidate effectively the list that we see in the control room. So you you wouldn't see a different between and you'd be able to dispatch just as quickly across both of them. So taking a lot of the It's sort of split second decision points away from the people doing it, allowing them to sort of make a decision, and then, and, and then it's all automated other than them Okay.

Have it kind of having to make five decisions Okay. And to do something. So I think I think Ener said those, at the end, we're saying that at the moment, we've kinda got two systems. We want to bring it all into one system, and the control room and the control room engineers just want to say, look, I want, I just want power in a in a very sort of simplistic way.

Don't really mind whether it's a VM or non VM. I just that's what I would like. And then it's up to the owners and operators of those individual assets to pick which one of those registrations they would they they would like. Yeah.

If I so if I put it really simply all day, this this is how it happens. So the control engineer at the minute will say, Or I need power maybe in this location or something. And they'll go, right. These are my options.

I need two of those. So I need to write to instructions, and they'll issue the instructions. Right. With all of the new capability that we're releasing into the control room, the control engineer will be able to go, I need, this amount of power in this location, and the system will issue the instructions than based on what's available in that stack.

So Yeah. Just massively increases the capacity of the control room in terms of issuing directions. Yeah. And we're gonna we're gonna come back onto that under under OPP in a in a in a in a moment.

But but maybe before we go. So, actually, I've been maybe a silly question for me. You have three engineers to manage frequency.

Why why do you need three? It feels is that is that is that sort of like you can have you can have lunch and sort of goes to the loo and there's still one left or are there three different things that need to be managed as So, so they don't leave the desks or the one shift and they get covered. They can't they can't, that makes it sound like they're chained to the desk. They're not chained to the desk. But you can't leave, you need to get someone to cover. The reason that there's three is it's split into the national balancing engineering and then two zone on engineers. One looks after the north and one looks after the south.

So the national balancing engineer is ultimately accountable for frequency. So, so they call the shots, if you like. And what they will do is they will liaise with their two zone or engineer they'll be giving them guidance and instructions on what to do. So, you know, maybe I'm anticipating this problem in the south saying, Can you get me x, y, and zed, and the Zonal engineer will do that. It's the same for the north.

The national balancing engineer will be sat there basically watching the frequency trace. So the national balancing engineer will be sat there watching little signal on the TV to show when Coronation Street is gonna end and it'll they'll have something on standby to you know, fire up or dispatch, dispatch, whatever, as and when that happens. So there's one national balancing engineer who oversees frequency and then there's a a north and south split where you are looking to take actions to remedy the frequency across those. Yes.

Okay. Okay. I think I'm there. And no one can leave the desk. But they don't want to leave their desk.

They're having a good time.

Okay. Great. I I think I've I think I've got it. Okay. So, and then, and then just within Within your within sort of ESO's role, you can't own batteries and you can't own assets. But it might be kind of if I could put a sort of hypothetical question to you, If if if you could magically have more of, let's say, I can give it a one gigawatt ten gigawatt hour battery, and you could just kind of put it any way you like.

Like, what would be, like, what would be helpful? Is it do you kind of think, You know what? You were mentioning the example earlier earlier of you might have too much wind in Scotland and not enough generation in England. It might be nice to have more batteries in Scotland to help capture some of that wind or might be a nice to have more batteries in England to kind of cover for when there might be too much wind and not enough transmission capacity.

If if if you kind of could magically have some storage on the network, do you ever think about where it would go? So, yes, it's a bit like batteries, and all sorts of storage. It's got loads of different applications. So as you say, they can help with, what we what we call transmission constraints.

So we're Okay. It's difficult to get all of the generation that's in one part of the country to a different part of the country so they can help with that. Mhmm. They're just generally held full with frequency.

So frequency is quite often, you know, it's an it's national. It's not local.

You mentioned that we're not allowed to own any assets or anything.

We're actually currently in a process to, separate separate out from our current owner and become an independent system operator which we own by government.

As we do that, one of the things that we're gonna pick up is we're going to create and publish something called a strategic spatial energy plan. Okay. Which has got an acronym. It must have an acronym.

But that will start as to give some of these indications, say for particular technology types, where would they be best placed around the country to provide maximum benefit. Yeah. Okay. I think that that makes sense.

That makes sense to me. And there's a question I think we get from industry quite a lot is sort of, okay, where should I be putting this? Like, and it's quite a hard question to answer. So, yeah, I'm interested to hear that, well, that is coming.

I'm disappointed to hear that you haven't quite decided on the acronym just yet because that's gonna be we do need another one. Sure. Okay. So then perhaps moving into the more detail side of this. So on on from kind of the the general, and we've already kind of started making this change, but on from the more general kind of how does the BM work to specifically things that are happening near term. So we have the within your within sort of ESOs role, you can't own batteries and you can't own assets. But it might be kind of if I could put a sort of hypothetical question to you, if if if you could magically have more of, let's say, I can give it a one gigawatt ten gigawatt hour battery, and you could just kind of put it anywhere you like.

Like, what would be, like, what would be helpful? Is it do you kind of think, oh, You know what? You were mentioning the example earlier earlier of you might have too much wind in Scotland and not enough generation in England. It might be nice to have more batteries in Scotland to help capture some of that wind, or it might be a nice to have more batteries in England to kind of cover for when there might be too much wind and not enough transmission capacity.

If if if you kind of could magically have some storage on the network, do you ever think about where it would go? The OBP coming soon, or it's already in progress what is what's the OB? So OBP stands for open balancing platform, and it is how to put it it's starting to modernize the way that we schedule in dispatch assets in the control room. So when people talk about the balancing mechanism, they might be talking about the market. So it's generally people, outside of the so talking about this sort of concept of a market to the balancing mechanism.

But, balancing mechanism is actually the IT system as well that runs it. So there's a really complicated algorithm that sits underneath and the balancing mechanism this big IT platform.

As I said, that is that's been sort of underpinning the way that we schedule and dispatch for a long time. Safe and balancing platform is moving to a sort of more agile modular system, which gives us a lot more flexibility. So it automates a lot of the things that we do manually at the minute, but it is also modular as opposed to one huge system, which means that it sets us up better for the future. So as the market continues to develop, we can update and kind of evolve our systems quicker because it's not just one big huge scary thing that we're trying to modify is, like, modules that are built together.

Okay. Okay. That that makes sense. And I think the storage industry broadly is quite quite excited to where OPP might be able to bring dispatch in the balancing mechanism because it's a new revenue source for storage in comparison to not so much new, but it might be an improved revenue source to kind of what they've seen in the past.

But it's it's not just kind of one upgrade, is it? So so within OBP, you've got things like bulk dispatch that it's part of OVP and will be delivered, I think, in December of this of this year, but that's not the full OVP, right? So there's kind of lots of different parts of it. Yeah.

So ABP is a huge program and it will run for a few years and be sort of releasing a number of releases during that time.

The first release, you're right, is this December.

That's got a whole host of capability in it, but the main one that I think battery, the sort of owners or optimizers will be interested in is this bulk dispatch tool that we've we refer to. So That's what I mentioned earlier, where currently we have to issue a single instruction to a single unit, and that ability that we're releasing through ABP will allow us to simultaneously instruct multiple units. So that in conjunction with other changes that are coming in that allow us to issue the instructions faster. So it takes us about thirty seconds to issue a single instruction at the minute. We have changes also going in, this quarter that would bring that down to ten seconds That sounds like not a big deal.

But if you think that if we see, something happen on the system and we want to instruct our reserve services. So that's kind of the capability that we have on hold that we can say, we need you now. And like, go. Go. Go.

At the minute, we can issue one instruction at time. It takes us thirty seconds. Mhmm. So if we want to instruct twenty batteries. That's an awful lot of instructions that we have to write.

With this new capability, it allows us to do one instruction in ten seconds and just send it out. So the that hugely opens up the route to market for for batteries in that instance because it takes away the time constraints that we have. Yeah. I think we're super excited to see that come through and to kind of track the impact that that will have. Certainly bold dispatch should improve kind of the use of batteries in the BM, but I suppose it kind of not it's not so much that won't answer all of the questions. Right? Because there are other there are other limitations to batteries in the BM currently.

Yeah. So I think a big one is, information. So we we operate according to data. So We can see what units are doing in in the sort of days gone by when we had CC GTs on the system it was still due, but when it was dominated by sort of stations, the size of CC GTs, if something happened to one of them, you could see it in the frequency trace and you would see it in their real time data immediately.

So you kind of knew what was happening. You knew how to deal with it. As we've got more and more smaller assets on the system, it makes that much harder. So finding a way sort of together where we have access to the right level of information.

So we get that kind of Yeah. Allows us to operate it much more effectively we know what's going on, then we know, like, what to do to deal with it. Yeah. So we've got the kind of the complexity of dispatching lots of things in a ratio period of time.

We've got the the kind of information shortfall of having many, many smaller assets, but perhaps not the same quality of information coming into the control room. I think we also have a sort of fifteen minute rule at the moment, which is, which is linked to kind of the the typical dispatch duration of a battery. Could you give a little bit more color around the fifteen minute rule and perhaps how that might be changing? Yeah.

So that's, that's actually another link through to information. So, as you say, fifteen minutes sort of seem to be the typical duration of a battery. So we have a limit at the minute that we will only dispatch a battery for fifteen minutes because we can be sure that it will deliver that beyond that it becomes much more uncertain. Okay.

With some of the changes that we're proposing around sort of information flows and other things, we can actually lift that rule off and say, actually, if you give us different information, we don't need to put a fifteen minute limit on our dispatch because we would have more certainty about what you're able to do and then whether you're delivering or not against what said you'll do. And this this feels like a win win. Right? So this feels like the controller engineer get get they they will receive more information over a longer period of time to better understand kind of what storage can do, but also the the storage assets themselves will see better and longer dispatch.

And so it feels like one of those ones where it when it happens, which is potentially Q1 ish of next year, kind of TBC. Exactly. When when when that goes live, but that will be a big thing for storage as as well as the improvements, the bulk dispatch. Yeah.

I think from our perspective, So we've said that we will be able to operate, the power system for zero carbon for short periods in twenty twenty five. Okay. Which is really close. Yeah.

And we have, you know, huge investment coming into the UK energy market particularly into the battery section of the market. So these changes that are coming in in stages over the next sort of six twelve months, keep us on the path to be enabled to operate zero carbon passes can't do with that batteries and ensures that we're providing sort of open fair access to batteries and giving those routes to market that allow people to stack up their, you know, business cases, whatever they might have been. So so I think that's that's really probably the most important question. Right?

Which is I think there's a lot of win wins along the way to to get to that sort of future world. How does how does ESO and kind of the process of change? How do they give enough confidence to those investors. We'll be looking at the UK, but we'll also be looking at markets like Ecot or they'll be looking at NEM in Australia.

Would you ever be thinking about where they put their batteries? How would they get confidence that coming into the UK market and being able to access the revenues through the balancing mechanism? How do they get confidence that that will happen and that they should be investing in the UK? I so I think the UK is a massive success story for Bachelors.

If I think back to, oh, I don't know what year it was a few years ago when we introduced this brand new product called enhanced frequency response, which was designed for batteries specifically, where we've come from from them, which was only maybe six this years ago to where we are now is is huge. We've had such a rapid development.

And we said, you want to there's a lot of battery capacity would, like, wanting to connect to, no. So the interest is there.

What we're doing is based from a technology point of view, so some of the things that we've talked about, but also from a market design point of view, making sure that the to market are there and that they're fair and accessible so that investors can look at the market and build a business case, not everyone, centers their business case around the balancing mechanism. Right? There's different models. Yeah.

So our role is to keep keep on top that and keep pushing forward. So all the technology things that we talked about that just makes the balancing mechanism fair. Mhmm. But actually some of the things that we're doing design as well.

So this year before Christmas, we should be increasing the volume of like a dynamic regulation that we've killed, which is one of our frequency response products.

That is, dominated by batteries. It's just, you know, all of these little pieces together allow investors that there's different revenues that can be stacked together to create, like, investable business care. And I think there's huge confidence in those frequency response services, DCDM and DR. They've I think they've been a massive success story. I think if you go back three years, you get the the the amount that you're procuring now is almost three times what you're procuring going back two years, and and you are procuring that at a price, which is a fraction of what it kind of has been procured for. And so I I totally agree as a massive success story.

That brings us on to, I think maybe the the the kind of last question of all of this, and it's amazingly gone through an entire, conversation on the balance mechanism without saying two words that are skip and rates. But but can I ask you what a skip rate is? Well, that is the million dollar question. So a skip rate is where an asset hasn't been dispatched and it should have been. Okay.

However, say as we were talking about right at the start of the conversation.

When the control room are looking at dispatching unit, they won't necessarily just go up the price stack and go right, cheapest first then the next then the next then the next because sometimes we need to procure a particular characteristic and you might need to go to number five in the queue or number eight to get it. So there's a system reason why you might need to do that Yeah. Each year constraint or an inertia requirement type of thing. Yeah.

Exactly. And and I don't think that is always as transparent as it could be. So when you're outside looking in, you you're sometimes out there going, well, hang on. I was definitely cheaper than that asset that's been dispatched.

So why wasn't I used first? Yeah. And the terminology skip rate is kind of the start of being used to describe that.

There's there's quite a lot of discussion about what a skip rate actually is because there are valid reasons that units are not dispatched sometime. But what we absolutely need to get to is all of the technology stuff that I've mentioned that means there are no There are no barriers for technology reasons or something else that an asset wasn't used. So there will there will always be instances where we might have needed I don't know, vaults in the mercy regions. So we've had to use unit a and not, you know, one, two, and three that were cheaper than it.

But anything at the minute that is being skipped because we can't get to it quick enough or our procedure wasn't quite right. That will all come out with the series of changes that are coming in over the next sort of six twelve months. Okay. And and people really care about this, right? Because batteries, they're doing a lot of things well, like they're doing a wholesale trading well that runs up until gate closure, and they're doing the reserve and and response products reasonably well. And the thing that it kind of where they maybe feel like they there's more value on the table, is it within the balancing mechanism, solving some of these kind of super fast response and location type problems. And the way that the industry is looking at it is kind of going well, skip rates is kind of is is a metric that we can use workout kind of how much the value we're capturing, how much the value we're kind of leaving on the table.

And I I would so there's a big piece of work OB to then resolve some of that and bring skip rates down. So fewer things being skipped. How do ESO want to track this and how can investors who are looking at it? How can they get confidence from kind of the direction that's moving?

Yeah. And it's really we reckon it's really important that, like, everyone in that sector is confidence and the investors the battery developers, the optimizer, they, you know, everyone.

What we've done actually is try to bring this all together so everything's in one place.

We actually held, an event in the middle of October where we talked through all of the things that we've been talking about today. So about information, about some of the technology releases, about market design issues, and put all of that together in one kind of plan and said that this is what we are committing to do. We can show you a pipeline of changes that we're going to make and also said, and for each of those changes, this is the impact that we're expecting it to have.

What we've also committed to do is we talked a bit just about skip rates Mhmm. Is to create a sort of agreed industry standard if you like of skip rates. So let's all agree the categories of skip rates.

We will categorize all of our decisions within those, and we will use an independent party to kind of review all of that as well. Okay. Make all of that public And then as and when all of these different things release that we're talking about, we should be able to see the impact in those skip rates coming down in each of the categories. And this is this is this is something that that that Modo will love, and I think industry will love.

Right? It's just it's going back to kind of the, what does the pure data say? And we can go from the metric to get us some confidence in terms of in terms of is it moving the right direction? Is it not?

I suppose the obvious question to this is, well, if it goes If it doesn't change, what do we what what might we do? Do we would we kind of like, is there something that we might think about in terms of change we might make to OB to to kind of do further improvements, or is it kind of we're pretty certain that OBP is gonna solve the problem? It's just a matter of time. We're really confident in the plan that we've set out that that will make tangible changes.

There will always be some evolution always going to be fine tuning of, actually, if we did this or that. There's probably some market design changes that we can make as well, which are a bit more longer than because we need to do them sort of jointly with industry, not just, you know, within our four walls, but but yeah, like, confident that the OB, this December and other changes will will make a visible difference. Okay. Yeah.

We're really excited to see it come through and to and to track it and talk about it because Yeah. Well, if you need to check out a sort of intro to skip rates, there is one on the Moto platform, and I'm sure the slides from that BM event are also available online as well. So, yeah, there we go. Good.

Well, that brings us to the end of of the BM and and batteries in the BM, which has been an absolute pleasure. I have two final questions.

One is, is there anything that you would like to to plug this can be personal or this could be professional, anything you'd like to talk about? Or anything I'd like to plug. So I've already talked about the event Yes. That we had on Monday.

Say, I guess I'd say the thing I want plug, which isn't really plug. It's like come and talk to us. So, I have been, doing this role in the ESO for a year now. And I've spent quite a lot of time talking to developers.

Let's say to investors, actually, We really value just talking to people and understanding, some of the drivers that are behind people questions like what people are actually and what they're worried about. So if I could plug anything, it would be like come and talk to us. Like we're always happy to talk. And how does someone do that?

Say, well, so I'm pretty easy to find on social media or at the events and things that we mentioned, they always have contact details on. So, yeah, can reach out to anyone in.

My team or, in national control as well, we're always happy always happy to to listen, to talk to come and talk to other people as well. Okay. That's that's I think you'll have people taking you up on that. Yeah.

And and the and they already do. So that's that's good. And then the last part is your contrarian view. So is there something that that you believe that that you think a majority of other people don't?

Oh, so I have to be careful with this because I remember, a few years ago standing up at a very well known back forum that tends to take place in the autumn and announcing that the ESO was not gonna sign any more long term contracts. Okay. And that caused, a flurry of excitement So what would I say if I was going to be contrary?

Probably that things are not going to be stable. So Okay. Women are willing to change.

Things are going to keep changing. Say we mentioned, our frequency responsible market's DCD R and D, they're amazing. Like, I it's, like, I can't they're just getting your head around how they've been designed and how they're operating. It is, it is, like, blows my mind.

No doubt they will evolve at some time. And I I guess my thing would be, change isn't scary.

What's scary is if people can't see it coming. So, we're just in a world now where we have to learn that changes constants and, you know, if you If you build a business case based on everything as it looks today, it can guarantee in five years. It will look different.

I think that's a nice message to end on, isn't it? It's like the control rooms that we look for for, you know, huge amount of stability and certainty.

It's probably a good thing that they're the ones, you know, thinking about change and and and and how this is gonna look in the future. So, yeah, a good message to end on. Thank you, Claire for coming on. Oh, thank you.