UK balancing manager Elexon calls for merged system operator, unified codes body

London — The UK's Balancing and Settlement Code manager Elexon has called for the UK's gas and electricity system operators to be merged, in tandem with the creation of a single independent energy code body, it said Feb. 15.

In a new policy opinion, Elexon sets out options for a single energy code body to work alongside a reformed system operator "to better manage the energy system on the road to net zero," it said.

The UK's electricity and gas system operator roles are carried out by National Grid ESO (Electricity System Operator) and National Grid Gas. The BSC, meanwhile, is one of 11 energy codes across the energy sector managed by six different organizations.

"Major changes to the codes can take years to be implemented, which does not lend itself to making fast, widespread, cross-fuel changes to support the energy transition to net zero," Elexon said.

Following the government's Energy White Paper, published in December, the government is to consult later this year on energy code governance, as well as review the structure for National Grid ESO.

In a Jan. 25 report energy regulator Ofgem recommended the ESO role be fully separated from National Grid, potentially saving customers up to GBP4.8 billion ($6.58 billion) between 2022 and 2050.

It was less convinced of the merits of separating gas system operation from National Grid, although it said a new independent system operator could recommend both gas and electricity network investments to government.

Vast scale of changes

Elexon said reforming system operation and the energy codes in tandem meant once-in-a-generation changes could be made to these central services.

Elexon's Chief Executive, Mark Bygraves, said: "The scale of change needed across the energy sector to achieve net zero is vast. Elexon has been advocating consolidation of the energy code arrangements for a number of years and we believe there is now a golden opportunity for holistic reform of the code and system operation arrangements."

An alternative option would be for a single body to carry out gas and electricity system operation together with management of all energy codes, Elexon said.

It believed, however, that this would be more complex and harder to deliver compared with a merged system operator working alongside a market operator.

A merged system operator would deliver a coordinated "whole system" approach to major changes such as heat decarbonization and electric vehicle-to-grid schemes, it said.

Meanwhile a single codes body would move faster on changes to commercial agreements across the energy sector, while simplifying code arrangements for energy companies to manage.