Comment on NESO’s Reformed National Pricing proposal

Following the Review of Electricity Market Arrangements programme, the National Energy System Operator (NESO) identified four key challenges to the future system that need to be addressed:

• Increasing levels of generation redispatch through the Balancing Mechanism (BM), creating operability and cost challenges
• Insufficient visibility of and access to balancing resources
• Overlap between the wholesale market and balancing activities
• Distorted wholesale markets, and incentives to increase system constraints

NESO set out five proposals to reform the GB balancing mechanism (BM) and related systems, through its Reformed National Pricing (RNP) Call for Input running from February to 14 April 2026, in order to address these concerns:

1. Lowering the mandatory BM participation threshold, to increase liquidity and competition
2. Re-aligning the electricity market trading deadline with Gate Closure, one hour before the start of the settlement period
3. Requiring physical notifications (PNs) match assets’ traded positions
4. Requiring unit-level bidding in the BM, removing the allowance for portfolio trading across GB
5. Reducing settlement periods from the current half-hour to a shorter period, either 15 or 5 minutes

Outlook Energy Services Limited has commissioned Cornwall Insight to examine the second reform proposal “Re-aligning the electricity market trading deadline with Gate Closure, one hour before the start of the settlement period” through analysis of the potential impact on wind generators as a result of the change.

This paper is intended to provide analysis to support NESO in its consideration of the potential impacts of changing Gate Closure in line with the stated purpose of the Call for Input to “work collaboratively with stakeholders to ensure that the design and implementation of these changes reflect operational realities while delivering efficiencies that help keep consumer bills as low as possible and the system secure. This includes understanding the potential disruption of the reforms, including system upgrades and resource requirements.”.

The examined change to Gate Closure is one of five potential changes set out by NESO in its Call for Input, and we have not considered the impact of the other changes or potential interactions between them, including with Gate Closure changes, as part of this work.