Elexon: the company keeping Britain’s electricity market running smoothly

Great Britain’s electricity market is a precise and well-oiled machine. Between power being created at a generator and it reaching your home or business, there’s an intricate string of events that shapes everything from the price you pay for electricity, to how green it is.

As the electricity system operator for Great Britain we’re at the heart of this process, but there are a host of organisations in the market – both big and small – whose role is just as critical in making the machine work.

Every day in the market, generators and suppliers are doing business and determining how much electricity is being produced and traded. Our job is to make sure this process doesn’t tip the fine equilibrium of supply and demand too far out of balance – it’s what we call ‘balancing’ the system. But for this to work second-by-second, someone needs to be checking for differences between how much electricity is being produced and how much is being sold.

Elexon makes trading possible in the electricity balancing mechanism, helping us with our job operating the system and keeping the lights on

That’s where Elexon comes in. Elexon manages the Balancing and Settlement Code (BSC), one of 11 major codes governing Britain’s energy system. The BSC contains the rules and commercial arrangements which, among other things, make trading possible in the electricity balancing mechanism – helping us with our job keeping the lights on.

Elexon compares how much electricity generators said they would produce and suppliers said they would sell with the actual volumes, then works out a price for these differences. It makes sure that generators and suppliers either pay, or are paid, to settle any differences. As well as managing settlements for the balancing mechanism, Elexon – through its subsidiary EMRS – also manages settlement services for the government’s Contracts for Difference and Capacity Market initiatives.

While Elexon is wholly-owned by National Grid ESO, it’s fully funded by and accountable to its customers – almost 500 signatories of the BSC (including all licensed electricity companies in Great Britain) – making it a not-for-profit service provider to industry and completely independent from our operations. And though National Grid ESO is Elexon’s shareholder, it doesn’t have a seat on Elexon’s board.

Find out more about who does what in Great Britain's electricity system

On top of being responsible for the wholesale market arrangements and systems needed to deliver BSC services, Elexon is also a key player in supporting developments in the market – particularly when it comes to promoting competition.

We recently worked with Elexon to widen access to the balancing mechanism for smaller providers, opening up opportunities for new providers and technologies to become part of the market for the first time. Changes like this help make Great Britain’s electricity system smarter and more flexible as we shift away from traditional large thermal power generation to cleaner, decentralised power.

A more open and accessible balancing mechanism supported by Elexon means more diversity and competition in the electricity market, with benefits both for our zero carbon ambitions and for electricity consumers in Great Britain.