Environmental Engineering Reference
In-Depth Information
(
35.60/MW h), though the SBP shows rather more variation during the day, crudely refl ect-
ing the shape of the national demand curve. The typical contract price for this month would
be around £ 15/MW h (
€
23/MW h). It can be seen that there is an incentive for suppliers and
generators to get their forecast as close as possible to their actual position due to these non-
symmetrical prices.
€
The Balancing Market
The system operator, National Grid, needs to give orders to generation plant to change their
output in order to match supply and demand, just as in the days of the CEGB and the pool.
This is done using another market known as the
balancing market
. Ahead of delivery, fl exible
generators (and to a lesser extent fl exible suppliers) can place bids to reduce power output
or offers to generate extra output. In the case of a supplier it would make a bid to increase
demand or an offer to reduce demand. After gate closure, the NGC examines the bids and
offers and accepts those it needs to balance the system. Suppliers and generators pay their
accepted bids and are paid their accepted offers. This type of market is therefore known as
a
bid - price auction
. Simplistically, the value of the bids sets the system sell price and the
value of the offers sets the system buy price, though there are other costs and adjustments
that feed into these prices. The total cost of balancing the system in general is slightly less
than the balance of the proceeds for the SSP and SBP. This is due to the fact that two genera-
tors may be out of balance separately and pay for this, but together their imbalances cancel
out. The excess is reallocated to suppliers and generators in proportion to their total genera-
tion output or total demand as appropriate.
The British Electricity Transmission and Trading Arrangements (BETTA)
Until April 2005, the electricity wholesale market in Scotland operated differently to that in
England and Wales, though there were similarities in terms of 'top-up' and 'spill' prices. After
this date, the two markets were merged to give a version of NETA operating across Great
Britain. At the same time, the transmission network in Scotland, which had been operated by
the two Scottish generation and supply companies, became independently operated by
National Grid, who consequently became responsible for the entire Great Britain transmission
network. These new arrangements became known as the British Electricity Transmission and
Trading Arrangements (BETTA).
7.7.3 Competitive Wholesale Markets in Other Countries
Introduction
The England and Wales pool-based wholesale electricity market was ground-breaking when
it was introduced. Since its introduction, other countries have introduced wholesale electricity
markets based on power pools, bilateral forwards and futures markets and balancing
markets.
Broadly speaking, the wholesale price of electricity can be set in advance (
ex ante
), in real
time or after the event (
ex post
). Ex ante prices can typically be set at the
day - ahead
stage.
