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OFGEM

Open letter on our review of high balancing costs during spring and summer 2020

The GB electricity system has seen an increase in balancing costs this spring and summer 2020, coinciding with the onset of the COVID-19 pandemic. Specifically, the period from March to July 2020 has seen balancing costs of £718 million, which is 39% higher than the ESO expected costs would look like in this period. These costs increased at the same time as nationwide lockdowns changed consumer electricity consumption behaviour and reduced industrial activity. Moreover, some of this period saw high level of renewables output, which required the ESO to take a large number of actions to balance the system and ensure system operability.

This letter sets outs our intention to evaluate the high balancing costs on the GB electricity system this spring and summer and identify lessons that need to be explored further in order to reduce costs to consumers going forward. This letter also describes how we intend to engage with stakeholders in this process.