Reformed National Pricing Call for Input (CfI)

The key challenges addressed include:  

• Operability and cost challenges from increasing redispatch  
• Insufficient visibility of and access to balancing resources  
• Overlap between the wholesale market and balancing  
• Distorted wholesale price signals and incentives to exacerbate system constraints  

The proposed balancing reforms include:  

• Lowering the mandatory Balancing Mechanism (BM) participation threshold  
• Aligning the market trading deadline with Gate Closure  
• Requiring Final Physical Notifications (FPNs) to match traded positions  
• Introducing unit-level bidding  
• Shortening the Settlement Period to either 15 or 5 minutes  

The proposal suggests a phased implementation to lower the mandatory BM participation threshold to 1 MW. This aims to increase NESO’s visibility and access to balancing resources, supporting efficient system operation and reducing balancing costs.  

Aligning the market trading deadline with Gate Closure aims to remove the overlap of balancing responsibility in the final hour before real-time. This change is expected to provide more certainty on the actions required post-Gate Closure, reducing the need for NESO to take potentially unnecessary or counterproductive balancing actions.

Requiring FPNs to match traded positions prevents market participants from intentionally taking imbalanced positions at Gate Closure to benefit from exposure to the imbalance price. This reform aims to improve forecasting and scheduling, reducing the risk of NESO taking inefficient actions based on inaccurate or incomplete information.  

Unit bidding requires market participants to provide unit-level bids and offers at the day-ahead stage and intraday markets instead of at the portfolio-level. This reform aims to increase transparency, reduce strategic positioning against constraints, and facilitate more effective implementation of establishing a link between FPNs and traded positions.  

Shortening the Settlement Period to 5 or 15 minutes provides more granular temporal price signals, incentivising market participants to better match the demand curve and improve system flexibility. This reform is expected to reduce energy imbalance volumes and enhance the efficiency of the system