The effects of lockdown on the Balancing Mechanism

The COVID-19 pandemic and its subsequent lockdown restrictions have impacted GB’s energy market, with record low demand and wholesale prices. These changes in market conditions have seen National Grid as the Electricity System Operator (ESO) face operational challenges in balancing the electricity system.

Research from Cornwall Insight highlights that during April and May 2020, the volume of accepted actions in the Balancing Mechanism (BM) more than doubled compared to the same time last year. Overall, across the two months, 7.1TWh of actions were accepted compared to 3.3TWh in April and May 2019. Accepted bid volumes (i.e. to reduce generation) in May rose from 0.80TWh in 2019 to 1.86TWh in 2020. These are shown in the below graph.

Total bid volumes in the balancing mechanism.

Lee Drummee, Analyst at Cornwall Insight, said:

“Many of these actions have not been taken to match supply and demand purely, but also to manage an imperfect system and maintain stable operating conditions. For example, the ESO is frequently required to turn down the output from Scottish generators on windy days due to insufficient transmission capacity to transport the electricity south.

“On similar days, with high levels of asynchronous generation and low demand levels, the ESO also needs to ramp up output from synchronous generators (typically CCGT plant). By doing this the ESO maintains adequate levels of system inertia, preventing large and speedy deviations in frequency.

“The increase in offer volumes alongside higher bid volumes during this low demand period indicates that more significant volumes of actions are being taken to resolve other system issues too.

“May 2020 saw 0.28TWh of wind generation turned down on the BM compared to 0.06TWh in the same month of 2019. While an increase in installed wind capacity has predominantly seen a rise in activity, accepted volumes have been exacerbated in recent months with demand at historic lows.

“It will be interesting to see how the easing of lockdown restrictions impacts activity in the BM going forwards, or if the operational challenges will remain at current levels.”