Research from Cornwall Insight shows that there has been a notable level of entry into the Balancing Mechanism (BM) from smaller providers across battery storage, gas reciprocating engines and aggregated units in the last year.
The below graph presents the number of units active in the BM — defined as having had any volumes accepted to date — from these technology types, along with the total capacity of such units.
Joe Camish, an analyst at Cornwall Insight, said: “The greatest new entrant growth over the past year has come from aggregated units, which has more than doubled from January 2020 levels of 20 to 45 units in January 2021. As a result, the total active capacity from aggregated units has risen by 87.4% to 1.7GW.
“A similar trend has been seen for gas reciprocating engines, with 19 units now having been active in the BM (excluding some that may form part of an aggregated unit), up from 9 the previous year. This has led to a significant increase in active capacity, leaping 143.4% to a total of 455MW. On the battery front, the BM has now had a total of seven units active to date (excluding some potential batteries within aggregated units), up from three in January 2020
“This trend of new entry is likely to continue throughout 2021, as new units, often with Capacity Market contracts, commission. Added to this, a greater number of parties that trade the power from flexible assets are enabling themselves to be active in the BM, often using the ESO’s Wider Access mechanisms to aid entry.
“One of the most recent measures implemented to aid entry was the launch of the wider access application programming interface (API), which launched back in September 2020. This web-based route provides an alternative to fixed-line connections, aiming to be simpler and more cost-effective. Tesla Motors were the first party to opt for the API route to market for its Holes Bay battery unit (7.1MW) in September 2020.
“Another trend amongst new entrants is the registration of Virtual Lead Parties (VLPs). A VLP is a new type of BSC Party that can register secondary Balancing Mechanism Units (BMUs) that can only trade volumes in the BM without needing to be a licensed electricity supplier or licensed generator. Six participants have now registered as VLPs, including Flexitricity, Habitat Energy, Cenergise, Adela Energy, Erova and Gazprom. While not all of these parties have had volumes accepted in the BM yet, it represents an intention to compete and enter new assets into this market.”