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UK: NESO Addresses Repetitive BESS Re-trading
The UK's National Energy System Operator (NESO) is addressing 'repetitive re-trading' (RTT) by BESS, a practice causing higher costs and inefficiency in the electricity grid. RTT occurs when BESS assets are paid for offering energy that cannot be delivered due to grid constraints. NESO has proposed various short-term and long-term solutions to tackle this issue, which costs consumers millions.
The UK's National Energy System Operator (NESO) is exploring solutions to a growing issue in the energy market known as 'repetitive re-trading' (RTT) by battery energy storage systems (BESS). This practice, initially more prevalent with long-duration storage like pumped hydro, is now increasingly observed with BESS installations, leading to higher consumer costs and grid inefficiency.
RTT occurs when BESS assets are located behind a constrained area of the transmission network. Storage asset owners bid to sell energy to the grid at high prices, often when there is an excess of renewable energy or wholesale prices are elevated. Although these bids are accepted, network constraints, such as thermal overload of transmission lines, prevent the energy from actually being delivered. NESO then reduces the output of these assets. However, asset owners still receive payment for their bid while the energy remains stored. As the constraint often persists, they can repeatedly bid and get paid without discharging the energy, creating a cycle known as 'bidding the unit down'.
This scenario, according to the Prospect trade Union, has become a 'cash cow for private investors' at the expense of other energy consumers. NESO estimated the cost of RTT to consumers at £136 million. Balancing costs from battery assets alone rose from £0.09 million to £3.9 million between April 2024 and March 2026, and are expected to increase further with the growth of BESS installations.
NESO has proposed several solutions. In the short term, Option 3A and 3AA are under consideration. Option 3A aims to completely ban storage from being bid down behind a constraint, which is quicker to implement but could lead to the loss of renewable energy. Option 3AA allows batteries to continue charging behind a constraint but bans discharge. This option is more complex and takes longer to implement but prevents the loss of renewable energy. For the long term, NESO is looking at Option 3C, which caps storage assets to one re-trading cycle per day, and Option 6C, which focuses on guidance for an appropriate number of daily cycles.
Implementation of Option 3A could occur within six months of a decision, while Option 3AA would require more time. NESO has stated that any changes will be consistent with their license obligations not to distort competition or create inefficiency. The information for this article is sourced from Energy-Storage.News.
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