Trading
The majority of energy trading is done ahead of time between Suppliers and Generators. This is then refined in the spot markets closer to real time. Following this, NGESO will ensure that supply meets demand by taking action within the Balancing Mechanism (BM). However, ahead of the BM, NGESO also has the ability to trade with parties.
Why National Grid ESO Trade
NGESO carries out trades with parties for three key purposes:
1. To balance the system where there is a foreseen energy requirement
2. To ensure system security where there may be constraints
3. To meet forecast NGESO balancing requirements at minimum cost
Trading Instruments
Forward Bilateral Trades
Forward trading via bilateral agreements (typically day ahead to one hour ahead).
Forward trades are bilateral contracts negotiated between NGESO and counterparties. The bilateral market is of great importance to NGESO. Our trading requirements are often not met by standard products, usually because we are trading for a specific location or aiming to achieve a specific level of generation/demand or flow on the network. Therefore, we will often contact counterparties directly to negotiate a trade with defined parameters. These bilaterial trades can either take place with interconnector or BMU specific counterparties.
Contract enactment
Balancing contracts are agreements for services that are procured to balance and secure the system. For further information, please see https://www.nationalgrideso.com/balancing-services
Granularity of Trades
The most granular tradable period is a single half-hour block.
Requirements for Trading
In order to deliver these trading services, potential providers will either be contracted directly or agree to a Grid Trade Master Agreement (GTMA) and have an account with a UK-registered bank. A GTMA is a legally agreed trading mandate between ourselves and each counterparty. They must also have either sufficient credit rating or a letter of credit. There are several schedules within the Grid Trade Master Agreement (GTMA) each of which governs a different method of trading:
Schedule 7A of GTMA sets out the provisions for BM Unit Specific Transactions. The service enables NGESO to call upon a party to either increase or decrease their generation/demand at a specific volume for an agreed price and time. The transactions require the counterparty to submit and maintain agreed Physical Notifications throughout the transaction. This would then also be notified to the Energy Contract Volume Aggregation Agent to ensure that the party’s contractual position is correctly adjusted.
Schedule 8 - allows for a trade to be agreed over the Interconnectors at the day ahead stage subject to the outturn of the counterparty’s trading activity on European power exchanges. These are known as Power Exchange Linked Interconnector (PELI) BM Unit Transactions.
Trade Reporting
You can access trade information data via https://trades.nationalgrid.co.uk/. This website displays all upcoming electricity trades due to be delivered and no sooner than 90 minutes from the current time. The website pulls new trade data every ten minutes.