What is the BSUoS cost?
BSUoS costs recover the cost of day-to-day operation of the transmission system. Generators, suppliers and end users are liable for these costs, which are calculated on a half hourly basis. BSUoS costs are dependent on the balancing actions that the System Operator (National Grid) take each day. National Grid provide a monthly forecast of BSUoS costs and these costs are typically volatile.
So, what has happened to BSUoS costs?
BSUoS costs have increased. This is mainly due to The Western Link Interconnector being out of service during 19th February – 22nd March and a very recent failure of an underwater section of cable – around 150km from Hunterston.
The Western Link Interconnector provides a capacity of up to 2.25GW and flows between Scotland, England and Wales. The concentration of generation - including a high proportion of renewables in Scotland, when the interconnector is down, this results in system constraints as there is too much generation in Scotland and not enough offsetting demand; this tends to be concentrated in the south of England.
This balancing action has had an adverse impact on BSUoS costs for March and April.
Critically, the recent failure of the underwater cable near Hunterston has resulted in a significant increase to our expected BSUoS outturn average rate for 2019.
Additionally, when demand is low and/or wind is high, there is potential for extreme volatility in BSUoS. This is further influenced by (i) how quickly the Interconnector returns and (ii) how much balancing action National Grid are forced to take to constrain Scottish wind output.
What happens next?
The repair to the underwater cable is anticipated to be complete by the end of May 2019 and may lead to further cost increases up until then. If you are an Energy HQ, npower Business Solutions, customers, actual BSUoS costs will continue to be passed through to your invoices in line with your regular reconciliation schedule.
For further information about BSUoS charges, please visit the National Grid ESO website here