- Traders at firms including Vitol, Uniper and SSE allegedly threatened to shut down power plants ahead of periods of tight supply, only to revive them and produce more expensive power for the UK national grid via the “balancing mechanism”.
- Off-on manoeuvre strategy results in soaring balancing mechanism costs which are ultimately paid in customer bills.
- National Grid ESO and Ofgem are reviewing the current system and considering adding a licence condition prohibiting electricity generators from gaining excessive benefit from inflexible offers in the balancing mechanism.
- Price spikes are a feature, not a bug of the current market and are designed to encourage generating capacity on to the grid when it is most needed.
- Transition to cleaner energy will mean rethinking who provides the backstop to our power needs when supplies run short.
Is the UK being held to ransom in the power market?
Traders at Vitol, Uniper and SSE allegedly threaten to shut down power plants ahead of periods of tight supply in the UK power market resulting in soaring balancing mechanism costs ultimately paid in customer bills. National Grid ESO and Ofgem are reviewing the current system