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Energy system notices explained: Know your Capacity Market Notice from your Electricity Margin Notice?

08 December 2022

Press contacts for journalists

ENA Press Office

press@energynetworks.org

Great Britain has one of the most reliable energy systems in the world. One of the reasons for this is the rigorous and well tested arrangements in place to ensure the UK’s energy supply matches its energy demands.  

An important part of the way the UK gets its power is the Capacity Market.’ This is the place where businesses, who can provide reliable sources of power ‘capacity,’ agree to become Capacity Providers and sell this energy at a set price.

Capacity Providers enter into binding ‘Capacity Agreements’ that set the amount of power they will provide and the price they will be paid for it. These agreements also mean that the Providers must respond to a range of instructions from the body managing the second-by-second balancing of supply and demand, the ‘Electricity System Operator, or risk incurring penalties including large fines. Overall, the Capacity Market is designed to ensure a steady supply of power at the least cost to the consumer. 

Balancing demand and supply

So, what if energy supplies are disrupted or energy demands are higher than normal? The balance of power supply vs power demand is something that National Grid ESO (Electricity System Operator)* monitors 24 hours a day. Should there be any events that could disrupt power generation or cause a surge in demand, from half time at a national football match to an unseasonably cold winter’s evening, the Electricity System Operator routinely takes steps to make sure power supplies match these demands.  

There are a large range of measures the Electricity System Operator can use to secure additional energy supplies if needed, from arranging an increase in the price being offered on the international energy markets to facilitating access to all available energy reserves. One part of their tool kit is issuing instructions and information to Capacity Providers. 

Capacity Market Notice 

One type of instruction they use is a ‘Capacity Market Notice.’ This is an automatic public notification that’s triggered when the large safety margins within the system, that ensure energy generation can meet demand in the hours and days ahead, fall below a set margin. The process works like clockwork – as soon as the safety margin falls below a certain a level, a notice is triggered that gives Providers four hours’ notice to increase supply. A notice being triggered is a sign that the system is working as it should, and that power needs are being anticipated well in advance of any disruption to the UK’s power. 

Electricity Margin Notice

An ‘Electricity Margin Notice’ works in the same way as a Capacity Market Notice, though instead of being automatically issued, it’s issued by the Electricity System Operator’s control room based on their knowledge of the national and international energy situation. As with Capacity Market Notices, Electricity Margin Notices are a routine occurrence, and show that future energy demands are being anticipated and responded to ahead of time. You might even see both types of notices being issued at different times during the same day. 

Gas Balancing Notification and Margins Notices

In the gas market, if the Gas System Operator predicts that there will not be sufficient gas to meet future demand, a ‘Gas Balancing Notification’ will be issued. This a standard notification that serves a similar purpose as a Capacity Market Notice, warning market participants that more gas is needed to meet expected demands, so they need to fulfil their contracts and source more gas. If more gas is expected to be needed over the next 24 hour ‘Gas Day’, a ‘Margins Notice’ is issued telling market participants to find more gas to match this demand or find ways to reduce it, including having discussion with energy intensive industrial sites who have agreed to reduce demand in advance. Margin Notices would only be used in Winter and so far, none have been issued.  

Together with world class monitoring and coordination, these notices mean businesses who provide energy capacity have a really effective way of avoiding being surprised by disruptions in energy generation and dealing with unexpected peaks in energy use. They are an important part of the system that underpins one the world’s most reliable energy networks.  

Notes to editor

*National Grid ESO is the electricity system operator for Great Britain. They're currently part of the National Grid group.

About Energy Networks Association

Energy Networks Association (ENA) is the industry body representing the electricity wires, gas pipes and energy system in the UK and Ireland.

ENA helps its members meet the challenge of delivering electricity and gas to communities across the UK and Ireland safely, sustainably and reliably.

Its members include every major electricity and gas network operator in the UK and Ireland, independent operators, National Grid ESO which operates the electricity system in Great Britain and National Grid Gas which operates the gas system in Great Britain. Its affiliate membership also includes companies with an interest in energy, including Heathrow Airport and Network Rail.

What are energy network operators?

Energy network operators manage and maintain the wires, pipes and other infrastructure which delivers electricity and gas to your home, business and community. They are private companies which are regulated by Ofgem and employ around 40,000 people in Great Britain.

More information

Press contacts for journalists

ENA Press Office

press@energynetworks.org

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