Balancing Mechanism participation
Regarding the proposal to lower the threshold for mandatory participation in the Balancing Mechanism, ESN members expressed cautious support provided the threshold is set at an appropriate level, potentially 10 MW. However, our response also highlights the risk of disproportionate cost and complexity for smaller assets. A proportionate approach to participation requirements is needed to avoid discouraging investment in smaller-scale projects.
Settlement periods
Our response is also broadly supportive of shorter settlement periods. As the system becomes increasingly reliant on variable renewable generation, shorter settlement periods can support system balancing by enabling flexible assets to respond more precisely to short-term fluctuations and should strengthen signals for fast-acting technologies such as energy storage.
However, the scale of change involved – including impacts on systems, data processes and metering – will be significant and should be managed. ESN members therefore consider a move to 15 minute settlement periods to be the more proportionate and practical first step.
Market trading and gate closure
Our members do not support aligning the market trading deadline with gate closure. This change would restrict near realtime trading, reduce market liquidity and shift additional risk onto market participants. In a system with high renewable penetration, the ability to trade close to delivery is essential, and, for energy storage and other flexible technologies, this capability underpins their value to the system. Constraining it could ultimately increase costs for consumers.
Final Physical Notifications
Our response also raises significant concerns about proposals to require Final Physical Notifications (FPNs) to match traded positions. While improving forecast accuracy is a reasonable objective, a rigid requirement would reduce operational flexibility, could distort trading strategies and risks undermining efficient market behaviour. ESN members instead support the use of improved data and incentive based mechanisms to encourage better alignment.
Unit level bidding
ESN members are concerned about proposals for unit level bidding. A lack of clarity around the definition, coupled with the scale of the implied change, has led to significant uncertainty among industry participants. There are concerns that it could increase administrative burdens, reduce market liquidity, and – under some interpretations – represent a shift towards centralised dispatch. This approach was previously ruled out under REMA and remains strongly opposed by the sector.
Dispatch reform
Although the CfI provides limited detail on dispatch reform, our response warns against overly constraining market behaviour, as it moves the system away from market-led dispatch.
Our response supports the principle that NESO should be enabled to take actions, trade and procure flexibility ahead of realtime and outside of the gate closure window. However, such forward actions should be delivered through market based mechanisms – e.g. flexibility and constraint markets or new response market products – rather than centralised dispatch. ESN members, alongside much of the industry, are opposed to any move towards more centralised dispatch or a central pool model. Nor was this change supported through REMA.
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