Flash update

Elexon offers online ‘dashboard’ to help prepare for cashout changes next winter

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Ban Mac, market analyst at Elexon, invites readers to make use of the settlements company’s new ‘dashboard’ to prepare for next winter’s system cash-out price changes

The way in which Elexon’s system price (cash-out price) is calculated is changing. Expect to see higher prices on average, more frequent negative prices and higher price peaks. Are BSC parties ready for next winter?

Why are the changes being made? BSC Modification P305 was implemented in November 2015. As a result, three changes to the parameters used in the system price calculation come into effect on 1 November this year:

  • Reducing the price average reference volume (PAR) from 50MWh (PAR50) to 1MWh (PAR1).
  • Increasing the value of lost load (VoLL) from £3,000/MWh to £6,000/MWh. the VoLL is used as a cost for disconnections and voltage reduction.
  • Replacing the static loss of load probability calculation with a dynamic method.

Elexon has introduced a new System Price Analysis Dashboard. The dashboard is a data visualisation tool that allows interactive use of the system price data. It compares the system prices under the future “November 2018” scenario with the current prices.

The change to PAR will not have a big effect on average system prices (£0.57/MWh up) but intra-day volatility will increase and there’ll be higher peaks and more negative prices.

Modelling gives the highest system price as £1,990/MWh, a £461/MWh increase on the highest single live price. The lowest modelled single system price drops to -£158/MWh compared with the lowest live system price of -£100/MWh.

The difference between the minimum and maximum prices widened in modelling from £105.37/MWh to £118.86/MWh.

In general, the average impact on system prices will be low, less than £1/MWh. However, when generation options are limited and high-priced offers are being accepted, the reduced PAR will push prices even higher. For example, on 8 November 2016 the live system price was £1,523/MWh; with the PAR reduced to 1MWh it would have hit £1,990/MWh. A series of high prices could quickly result in some challenging invoices for BSC Parties. So stay prepared by utilising the new dashboard.