What is the Balancing Mechanism?

The Balancing Mechanism (BM) is the NESO’s primary tool to balance supply and demand on GB’s network. In the Electricity National Control Centre (ENCC), we use the BM to buy and procure the right amount of electricity required to balance the system. We do this minute by minute, second by second, to balance supply and demand in real time.

Open for auction

The BM is a continuously open online auction, with thousands of trades issued daily. Each trading period is 30 minutes long.

For every half hour, the BM signals how much it will cost to provide power at that time.

The auction gate opens 60 to 90 minutes before real time. During this window, market participants submit “bids” or “offers” into the BM. A bid is the price they’ve calculated to either consume more electricity or generate less electricity; an offer is the price to consume less or generate more. What the ENCC needs at any point in time will depend on the current system frequency.

Decision making

At gate closure, the market closes for that half hour period. The ENCC then begins to accept bids and offers.

To decide on which participants to choose or which bids and offers to accept, we review the technical parameters of all participants to see what they’re physically capable of providing. From those that can deliver what we need, we instruct the ones that are the most efficient regarding both their ability and cost. Generally, we go with the most competitively priced bids and offers, but sometimes we consider other operational and locational factors in our selection.

Once we accept a bid or offer, we issue Bid Offer Acceptances (BOAs), which are an instruction to the participant that we want them to change their output. Participants have to accept these BOAs, meaning that they then agree to act on these instructions and adjust their output accordingly. These agreements therefore keep the system in balance.

The balancing team in the ENCC continuously reviews BM data, reviewing bids and offers and issuing instructions 24/7 to keep the system in balance, and the frequency stable.

Did you know?

In 2020, the ENCC issued 1,800 daily balancing instructions to market participants. This has now increased to 3,100 daily balancing instructions an increase of 170%. 

Wider access

To learn more about how to get involved in the Balancing Mechanism market, visit our BM guidance document library. Here, we explain the different routes available to service providers and the processes they need to follow.