Explainer
A BMU, or Balancing Mechanism Unit, is the basic unit of trade in Great Britain’s electricity balancing and settlement arrangements. Here is what a BM Unit is, the main types, how the balancing mechanism uses them and why they matter for suppliers and flexibility providers.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
A BM Unit is the smallest grouping of generation or demand that can be independently controlled, and the smallest that can be metered for settlement. Elexon, which administers the Balancing and Settlement Code, treats it as the unit of trade within the balancing mechanism. Every unit of electricity that flows on or off the system is allocated to a BM Unit, which is how each party’s energy is accounted for.
The balancing mechanism is the tool NESO, the National Energy System Operator, uses to keep supply and demand matched in real time. Parties submit offers to increase generation or reduce demand, and bids to do the opposite, against their BM Units. NESO accepts the ones it needs to balance the system and manage network constraints, and the accepted actions are settled through Elexon.
At the end of each half hour settlement period, each party’s contracted volume is compared with the metered volume allocated to its BM Units. The difference is its imbalance, charged or paid at the imbalance price, which reflects the cost of the balancing actions taken in that period. For a supplier, the accuracy of the data behind its BM Units is the accuracy of its settlement position.
Since Virtual Lead Parties were allowed to register secondary BM Units, aggregators can bundle batteries, electric vehicle charging and flexible demand at customer sites and offer it into the balancing mechanism without being the customer’s supplier. As market wide half hourly settlement puts every meter point on half hourly settlement, more small sites can take part.
The two are often confused. The balancing mechanism is about real time balancing, half hour by half hour. The capacity market is a separate scheme that pays providers to be available at times of system stress, through auctions held four years and one year ahead of each delivery year. The same asset can earn from both, under different rules.
Balancing Mechanism Unit: the unit of trade in Great Britain’s balancing and settlement arrangements, registered under the Balancing and Settlement Code.
Generators, suppliers and other parties register them through Elexon’s central registration process. Secondary BM Units can only be registered by Virtual Lead Parties.
An offer increases generation or reduces demand. A bid reduces generation or increases demand. NESO accepts whichever it needs to balance the system.
The Balancing and Settlement Code, the industry code that sets the rules for balancing and settlement in Great Britain. Elexon administers it.
Related reading: energy imbalance and settlement explained, electricity demand forecasting, what is MHHS?, and how we led the programme that separated NESO from National Grid.
If your settlement position or imbalance costs do not add up, we can find where the data breaks and fix it.