The GB electricity market operates as a single market across England, Scotland Wales. Spot prices are determined for the entire region as a single price zone. Renewable generation provides around ~20-25% of total generation, mostly from wind which has some of the best wind resource in Europe
How is the market structured?
The GB Market has competitive wholesale and retail markets. Trading is largely done on a bilateral basis with generators able to sell physical power and financially settled contracts via bespoke contracts or standardised contracts sold over the counter (OTC) or on power market and futures exchange. Electricity users are free to choose their supplier. Network chares are regulated and passed through by suppliers into the final bill
What are the geographic boundaries of the market?
The GB Market covers England, Scotland and Wales with single system operator and regulator. The market is interconnected to neighbouring markets in Ireland, France and Netherlands. The spot market in GB is coupled to neighbouring European markets. This means that the same market software is used to determine prices within each of the European countries and determine interconnector flows during short-term trading.
What are the relevant price and delivery zones?
The GB Market operates as a single price zone. Spot market prices are uniform across the entire market. If there is congestion in certain parts of the network, the costs of managing those constraints is recovered uniformly across all users of the system.
Can I buy long-term power in the traded markets?
There are limited OTC and financial contracts traded beyond 2 years
Who do I need to contract with to buy power?
End-users must buy their power from a licenced electricity supplier unless the power is generated on-site. Renewable generators can apply for a streamlined supplier licence in order to sell their power directly in the market
How are system costs and other social charges levied?
Network charges and other system costs (such as capacity market costs and legacy renewable supports) are charged to electricity supplies who pass these through to end users
How do I prove I've bought renewable power?
Across the EU, renewable generation is certified using GoOs (Guarantees of Origin). GoO certificates are issued by the national regulator for every MWh of eligible renewable output.
These certificates are used by suppliers to meet their Fuel Mix Disclosure (FMD) requirements in order to report the average mix of electricity they have bought to supply their customers.
What are the key institutions?
Key Government Department:
- Department for Business, Energy & Industrial Strategy (BEIS)
- National Grid
- APX, N2EX (Physical)
- ICE, EEX, Nasdaq (Futures)
- Total Capacity
- Total Generation
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