Introduction to Elexon and the Energy Market by elexon

Introduction to Elexon and the Energy Market

CONTENTS

About Elexon

A letter from our CEO

Elexon’s stakeholders

What Elexon does

Where to find out more

Access our data

How the GB energy system works

Our people

Our seminar

Presenter profiles

About Elexon

Introduction to Elexon and the Energy Market

“Serving at the heart of the energy industry, building a path to Net Zero” With its purpose of serving at the heart of the energy industry, building a path to Net Zero, Elexon is shaping the energy sector of the future. We manage the Balancing and Settlement Code (BSC), which sets out the rules so that Great Britain’s energy system operates effectively. We are trusted, independent, reliable market experts. We are funded by our customers and provide our services without making profits. We deliver an ‘end-to-end’ code manager service for the BSC. This includes helping new companies enter the market, ensuring Settlement accuracy, and managing changes to BSC rules to support initiatives to move to a smarter energy system. We also provide expert support to the Government, Ofgem and industry. Market-wide Half-Hourly Settlement (MHHS) reform will see the electricity industry working together in a significant move forward in how electricity is used and accounted for. Ofgem has placed responsibility on the industry to deliver the Programme and made Elexon the Senior Responsible Owner (SRO) of the Programme. We also deliver Settlement services for the Government’s Contracts for Difference and Capacity Market arrangements; as well as the upcoming Nuclear Regulated Asset Based scheme. Britain’s energy sector is going through unprecedented change and the needs and demands of our customers and consumers are evolving. We are working to ensure that our systems and processes support the changes needed so that the energy sector plays a major part in helping to meet the UK Government’s ‘Net Zero’ carbon emissions target.

Elexon settles around 37TWh each year in balancing actions and imbalancing volumes That’s approximately £1.7bn of settlement transactions

4 4

Introduction to Elexon and the Energy Market

Peter Stanley Chief Executive Officer I joined Elexon in 2016, and was appointed as Chief Executive Officer in 2023. I’d like to thank you for joining our Introduction to Elexon and the Energy Market Seminar, and am confident that you will gain valuable insights into Elexon and Great Britain’s electricity industry. Elexon sits at the heart of the industry, working with Ofgem, National Grid, the Department for Energy Security and Net Zero (DESNZ) and BSC Parties to facilitate wholesale electricity markets, building a path to Net Zero. This pre-seminar pack has been designed to help you understand a bit more about Elexon before you come to visit us in person. We’ve included information around Elexon’s role, who our stakeholders are and what the BSC is. We’ve also included profiles for presenters that you will meet on the day. There is also an overview of our Board and Executive Team. At Elexon, we are commited to delivering customer value, through service excellence and successful delivery of our strategic programmes. In the seminar, we will provide an overview of our key strategic programmes, including the delivery of Market-wide Half Hourly Settlement and our technology platforms and data. On the day of the seminar you’ll get a brief introduction from a member of our Executive Team before hearing directly from colleagues across the business on a broad range of topics. You will be able to ask questions, and meet our Operational Support Managers, who are your first point of contact at Elexon. I hope you’re looking forward to attending our seminar and are able to take advantage of the wealth of knowledge and experience in the room. To get the most out the day, I encourage you to network with other attendees, ask questions during the presentations and interactive sessions. We look forward to welcoming you at Elexon. Yours sincerely, Peter Stanley

Introduction to Elexon and the Energy Market

Who are Elexon’s stakeholders? Elexon works with a broad range of stakeholders, including electricity market participants, known as BSC Parties, as well as regulatory bodies, other code bodies, the Department for Energy Security and Net Zero, Ofgem, the Anergy Networks Association, and Low Carbon Contracts Company (LCCC). We also work with service providers such as CGI, KPMG and C&C.

470 Parties

Regulatory Central Bodies

150 Party Agents

Service Providers

Introduction to Elexon and the Energy Market

What Elexon does Elexon manages the Balancing and Settlement Code (BSC), one of the major codes that sets out the rules governing electricity, so that Britain’s energy system operates effectively.

The Balancing and Settlement Code (BSC) What is the BSC? The BSC is a legal document that defines the rules and governance for the balancing mechanism and imbalance settlement processes of electricity in Great Britain. If you want to generate or supply electricity in Great Britain it’s mandatory to sign up to the BSC. The BSC sets out what Elexon Ltd can and can’t do as the BSCCo, and is supported by a series of Code Subsidiary Documents (CSDs) such as Balancing and Settlement Code Procedures (BSCPs) and metering Codes of Practice (CoPs). In the early days of the BSC we used to work with paper copies. Though this still exists today, it’s now been digitised to make it more accessible. The Digital Code includes the BSC and its CSDs as well as Simple Guides and Guidance Notes.

10,000 pages

Equivalent to 25 packs of printing paper

364

documents

The Digital Code is made up of 364 documents totalling 10,000 pages – that’s equivalent to 25 packs of printing paper. Its size reflects the broad scope of the BSC, there’s everything from Change and Assurance arrangements to the detailed calculations of balancing and Settlement in there. Around half of the content is value added guidance to help you understand not just the ‘what’ and the ‘how’, but also the ‘why’.

Introduction to Elexon and the Energy Market

How does BSC Change work? The BSC Change process is used to progress changes to the BSC arrangements in response to any concerns, problems or defects that Parties may identify in the current processes. Under these processes, changes can be made to the Balancing and Settlement Code, its Code Subsidiary Documents and to BSC Systems. In this respect, the BSC is a living document that continually evolves to reflect the changing market. The changes made to these documents can also impact market participant’s systems and processes, so Elexon has a robust Consultation and Release process to carefully control any changes made to the BSC. There are two main type of change that can be made to the BSC, Modifications and Change Proposals (CPs).

Modifications

Change Proposals

Changes that amend the BSC (i.e. obligations within the code itself)

Changes that amend the processes and systems that underpin the code (i.e. the CSDs and BSC Systems, which are the IT systems used in Settlement).

It’s important to note that while Modifications make changes to the BSC, any CSDs or BSC Systems impacted by the proposed Modification would also be updated as part of the Modification process. Outside of Modifications and Change Proposals, there are also Issues. This is where potential Changes or issues without a known solution are explored in order to decide whether a Modification or a Change Proposal should be raised.

Introduction to Elexon and the Energy Market

How does Elexon identify what type of Change is needed? If you identify a concern, problem or defect you can address it by raising a Modification, Change Proposal or Issue (which leads to a Modification or Change Proposal). The below matrix is a useful way of deciding what type of Change is needed:

Will my solution amend the BSC?

Change Matrix Do I have a clear solution?

Yes

Modification

Change Proposal

Issue

So the Change process looks like this: Participant identifies concern, problem or defect

Issue Modification

Change Proposal

Changes made

Introduction to Elexon and the Energy Market

What kind of Changes did Elexon make in 2023? In 2023 we successfully raised and had approved 5 Modifications and 2 Change Proposals. Here are some examples of what we’ve been working on in the last year:

Modification P376

‘Utilising a Baselining Methodology to set Physical Notifications’ This Modification implemented a baseline methodology which allowed Virtual Lead Parties (VLPs) of the Secondary BM Unit, or Suppliers for an Additional BM Unit, to determine the expected energy flows for a Metering System Identifier (MSID) Pair when calculating Non Delivery Charges and Delivered volumes. This benefitted Parties as it allowed Balancing Service Providers to be fully recompensed for their actual change from normal usage and the impact this change had on the system.

Modification P427

‘Publication of Performance Assurance Parties’ impact on Settlement Risk’ This Modification made an amendment to BSC Section Z, allowing the Performance Assurance Board (PAB) to recommend that the Panel publish league tables of Performance Assurance Parties’ (PAPs’) contribution to Settlement Risk along with relevant risk data. It benefits the market by increasing the effectiveness of all detective and investigative Performance Assurance Techniques (PATs) through greater incentives.

Issue 101

‘Ongoing Governance, Funding and Operation of the Marketwide Half Hourly Settlement (MHHS) Data Integration Platform (DIP) by BSSCo’ This Issue was raised to look into the ongoing governance of the Data Integration Platform (DIP) that will support the flow of messages between participants under the Market Wide Half-Hourly Settlement. This Issue is currently at Assessment stage, with a Consultation around the proposed arrangements having been raised in January 2024. The Consultation will close on 21 February 2024, with the Issue Report due for publication in March 2024.

Where to find out more This site contains a wealth of resources to guide and advise customers on the processes within the BSC, Alongside the Digital code itself and the supporting BSCP documents.

The Elexon Corporate website holds key information about Elexon Ltd, including our Purpose, Vision and Strategy. This is where we post organisational News and Insights, current vacancies and customer surveys.

Access our data The Elexon portal contains your organisation’s Operational, Financial and Credit data alongside market data that Elexon publish.

The Elexon Insights Solution is a key pillar of Elexon Kinnect, a digital customer-centric platform delivering a smart and flexible central data platform for the industry. Through a number of releases over the next few years, the platform will publish Balancing Mechanism Reporting Service (BMRS) data as well as Open Settlement Data. Watch the video below to find out more.

Top outputs we delivered for customers in 2023 Helped 58 companies enter the market and register for BSC roles

5 Modifications 2 Change Proposals

10 Qualification applications approved by the Performance Assurance Board

Delivered 18 iterations of the Kinnect Insights Solution/Customer Solution/ Settlement Solution

Managed £1.6Bn in Credit Cover

Reviewed 20 consultations and responded to 6

£1.6 billion 4,868 Settlement Runs carried out

4,868

26 Helped 3 Virtual Lead Parties enter the market

Processed more than 11,155,893 Energy Contract Volume Notifications (ECVNs)

Managed 99 Trading Disputes totalling more than £19Bn

11 million

£19 billion

Introduction to Elexon and the Energy Market

How the GB energy system works Generators like power stations, wind and solar farms generate the electricity Great Britain needs.

Once they’ve generated that electricity, they sell it on to...

Suppliers who buy based on their predictions around how much

energy their customers will need to use. They then sell that electricity on to...

Consumers , or customers. This is anyone that uses

electriticity in GB. Whether that’s just boiling the kettle for a cuppa at home or powering a central London spin studio or a large factory, we’re all consumers within the GB energy market.

National Grid ESO is Great Britain’s electricity system operator. They are responsible for moving energy around GB’s system to meet demand as it rises and falls, balancing supply and demand.

Ofgem is GB’s independent energy regulator. They make

sure that the market operates fairly and the rules are followed.

The Department for Energy Security and Net Zero is the government department that implements the energy policies decided on by the UK government.

Introduction to Elexon and the Energy Market

Our people Elexon’s Board

The members of the Board have a strong mix of multi-disciplinary experience and a composition that follows corporate governance best practice. The Elexon Board is ultimately accountable to BSC Parties. As well as the below members, the Board also includes Elexon’s CEO, Peter Stanley.

Anne Heal Non-Executive Director

David Titterton Industry Non-Executive Director

Devrim Celal Industry Non-Executive Director

Ian Graves Industry Non-Executive Director

Sara Vaughan Chair

Tim Fitzpatrick Independent Non-Executive Director

Introduction to Elexon and the Energy Market

Elexon’s Executive Team Elexon’s Executive Team is responsible for the company’s day-to-day management. They work with the Board, the BSC Panel and our colleagues to ensure the successful delivery and development of the Balancing and Settlement Code (BSC).

Geraldine Buckland Chief People Officer

Helen Adey Director of Strategic Programmes

Jessica McGoverne Director of Corporate Affairs

Matthew Johnson Managing Director, EMRS

Peter Stanley Chief Executive Officer

Saso Bruzzese Chief Technology Officer

Steve Page Chief Financial Officer 15

Victoria Moxham Director of Customer and Code Management

Introduction to Elexon and the Energy Market

Our seminar Agenda

Agenda item

Time Presenter

Registration and coffee

9:30

1. Executive Introduction

10:00 Peter Stanley Chief Executive Officer 2. Introduction and housekeeping 10:05 Raeece Ibrahim Operational Support Manager 3. Imbalance Settlement 10:10 Samantha Safari Product Analyst 4. Insights Solution 10:50 Zaahir Ghanty Product Owner 5. Feedback session one 11:00 Raeece Ibrahim Operational Support Manager Break 11:10 6. Supplier Volume Allocation 11:25 David Thomas Market Design Advisor 7. Market-wide Half Hourly 12:05 Kevin Spencer Settlement Senior Market Architect 8. Feedback session two 12:45 Raeece Ibrahim Operational Support Manager Lunch 12:55 9. Our role as National Electricity 13:30 Martin Cahill Transmission System Operator Senior Commercial Codes (NETSO) Change Lead 10. Imbalance Prices 14:00 Yinka Afolabi Product Analyst 11. Feedback session three 14:30 Raeece Ibrahim Operational Support Manager Break 14:40 12. Performance Assurance 14:50 Simon Waltho Framework Risk & Technique Analyst 13. EMR Settlement Limited (EMRS): 15:10 Roan Chavez What is our role? Business Analyst

14. Feedback session four Close 16

Cameron Guest Settlement Analyst 15:35 Raeece Ibrahim Operational Support Manager 15:45

Organisation Elexon Elexon Elexon Elexon Elexon

Elexon Elexon Elexon

NETSO

Elexon Elexon

Elexon EMRS

Elexon

Introduction to Elexon and the Energy Market

Presenter profiles

Raeece Ibrahim Operational Support Manager

Samantha Safari Product Analyst

Zaahir Ghanty Product Owner

Raeece joined the Customer Engagement team as an Operational Support Manager in 2023.

Samantha became part of the Settlement & Insights team at Elexon in October 2021, joining us in a Product Analyst capacity.

Zaahir joined Elexon in 2009. He works in the Settlement and Insights team and is responsible for the design and development of our Insights Solution platform.

David Thomas Market Design Advisor

Kevin Spencer Senior Market Architect

David’s been with Elexon since 2016. He recently became a Market Design Advisor and is focused on maintaining the integrity of the current Settlement process and future market design.

Kevin is an expert on Market-wide Half Hourly Settlement having been part of the team that led the development of the MHHS Target Operating Model.

Martin Cahill Senior Commercial Codes Change Lead, NETSO

Martin joined ESO in 2023, working in the Commercial Codes Team. Prior to that, he spent 10 years at National Grid.

Introduction to Elexon and the Energy Market

Yinka Afolabi Product Analyst

Simon Waltho Risk & Technique Analyst

Roan Chavez Business Analyst

Yinka joined Elexon in 2021 and works as a Product Analyst in the Settlement & Insights team.

Simon started working at Elexon in March 2022, working for just 8 days in our offices before we went into national lockdown for COVID-19.

Roan re-joined EMRS in 2023, having worked for Elexon previously as a Market Entry Analyst in the Participant Management Product Team from 2019-2021.

Cameron Guest Settlement Analyst Cameron is a Settlement Analyst in the EMRS team. He joined Elexon in 2023.