Causational Analysis of Balancing Costs

Balancing costs have been increasing significantly over the past three years and are forecast to increase even further out to 2030. There are many factors which influence increasing balancing costs. Identifying what system conditions lead to higher-cost outcomes, and which of these have the most significant effect, is vital to improve control room decisions and to ensure the ESO’s balancing cost reduction strategy is fit for purpose. This project will deliver a method to quantify the probability that certain conditions will lead to high balancing costs, and a more detailed causal and statistical analysis will then be completed for the most impactful factors identified. If successful, the methodology will be used to produce a prototype tool that can identify the probability of high balancing costs outcomes and inform the control room on how to best mitigate these conditions. 

Benefits

This project will quantify the major behaviours and conditions that influence balancing costs and will create clarity for the ESO control room in their decision making. Balancing costs are currently at around £3 billion per year and are forecast to continue rising. Understanding how different factors impact balancing costs more specifically will be a key benefit from this project, for example if there was just one interval in which the ESO were to reduce the impact of interconnector swings it could save millions in balancing costs. Identification of these key factors that influence balancing costs will also provide input into the ESO balancing cost strategy, allowing for prioritisation of actions that will have the greatest impacts on these costs. 

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