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Elexon methodology sets out how TERRE and BM will integrate

Emma Burns Senior Consultant

Elexon’s Replacement Reserve (RR) Schedule Methodology sets out the detail for how bids into the Trans European Replacement Reserve Exchange (TERRE) – the new European Balancing Market – will be settled for GB participants, and how TERRE bids interact with the Balancing Mechanism (BM). Here, we summarise what this document means for market outcomes once TERRE is live from October 2019. A dream of you and me together TERRE is one of the key developments to come out of the European Balancing Guidelines Network Code and will see eight European transmission system operators develop more efficient dispatch of energy and interconnector flows. TERRE will create a Common Merit Order (CMO) of shared balancing resource, with an algorithm to determine the most efficient dispatch of generation and interconnector flows. GB generation, demand-side and aggregated capacity can submit TERRE bids, and receive a single clearing price for that energy. The TERRE balancing market sits alongside the GB Balancing Mechanism. The co-existence between the market and the mechanism, however, means there needs to be clear rules about how they interact. This is especially important as TERRE balances the market every hour, while the BM is operated every half hour. Therefore, the BM can overwrite TERRE instructions. Don’t be a stranger Elexon’s RR Schedule (RRS) Methodology sets out how, given the different rules for pricing, product shape and timeframes, generators can participate in both market places simultaneously. It gives more detail about how BM Units (BMUs) will be paid ...

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