BSC Modification P462: Removal of CfD/RO Subsidy Distortion from Balancing Mechanism Bid Prices Advances Through Assessment Procedure

NGESO-raised BSC Modification P462, which would amend BSC Section T paragraph 3.11 to pay lost support mechanism value and remove CfD/RO subsidy distortion from Balancing Mechanism Bid Prices, has progressed through 19 Workgroup meetings since January 2024, received a finalized Cambridge Economic Policy Associates (CEPA) Cost-Benefit Analysis in April 2026 (presented to Panel in February 2026), and the BSC Panel has approved two Assessment Procedure extensions (12 months in November 2024, four months in December 2025). The Assessment Phase Consultation is now scheduled for 19 November to 9 December 2026.

If implemented, P462 would materially alter how Balancing Mechanism Bid Prices interact with support mechanisms, aiming to prevent actions being taken outside consumer cost order due to CfD/RO subsidy distortion of the bid stack merit order. This affects settlement charges under BSC Section T and could change dispatch and cost outcomes for CfD and RO-supported generators participating in the Balancing Mechanism, with direct consumer cost implications flagged by the Proposer (NGESO).

This is a structurally significant balancing market design change because it targets the core interaction between GB's legacy and current support mechanisms (RO, CfD) and real-time balancing bid formation, an issue with parallels to REMA (Review of Electricity Market Arrangements) discussions referenced in Workgroup meeting 4. The extended, CBA-intensive assessment process (over 19 Workgroup meetings and two Panel-approved timetable extensions) signals contentious and technically complex analysis, likely reflecting disagreement over quantifying wholesale market impacts and Maximum Contract Capacity solution approaches discussed in meetings 10-12. The consideration of an 'Alternative Solution' in later Workgroup meetings suggests the original proposed drafting may be contested, and the outcome could set precedent for how legacy subsidy schemes interact with real-time balancing markets as GB approaches decarbonization targets.

Balancing and Settlement Code (BSC), Section T 'Settlement and Trading Charges' paragraph 3.11

Assessment Phase Consultation · 19 Nov 2026

Primary sources