Alternative approaches to the ORPS methodology

Project summary

Transmission connected generators are required to provide Obligatory Reactive Power Service (ORPS) as an Ancillary Service to help maintain a reliable electricity system. The Connection and Use of System Code (CUSC) contains the methodology which calculates the default payment rate for ORPS providers. It remains unchanged since 2007 and is based on the Retail Price Index (RPI) and wholesale power prices, being designed to compensate providers for the costs of providing ORPS. The project’s aim is to redesign the methodology into an enduring solution, so that it compensates ORPS providers in a manner which is fair and reflective of the costs they incur due to the significant changes to the energy landscape and move to net zero.

Name Status Project reference number Start date Proposed End date Expenditure
Alternative approaches to the ORPS methodology Live NIA2_NESO084 Jan 2025 July 2025 £200,000.00
Summary

Transmission connected generators are required to provide Obligatory Reactive Power Service (ORPS) as an Ancillary Service to help maintain a reliable electricity system. The Connection and Use of System Code (CUSC) contains the methodology which calculates the default payment rate for ORPS providers. It remains unchanged since 2007 and is based on the Retail Price Index (RPI) and wholesale power prices, being designed to compensate providers for the costs of providing ORPS​. The project’s aim is to re-design the methodology into an enduring solution, so that it compensates ORPS providers in a manner which is fair and reflective of the costs they incur due to the significant changes to the energy landscape and move to net zero. 

Benefits

This project will develop a flexible methodology for addressing future energy scenarios. It will reflect the diverse and changing technological and commercial characteristics of the industry by fairly and accurately compensating ORPS providers. It will achieve this by understanding the costs incurred by different ORPS providers and compensating appropriately for different fuel types, while taking lessons learned from a mixture of Transmission System Operators (TSOs) with differing market arrangements. It is also anticipated to reduce the overall ORPS payments made to generators, reducing the amount collected through Balancing Services Use of System (BSUoS), resulting in a positive impact on the end consumer. 

ENA smarter networks portal