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What Does ELEXON Do?
If you're new to the electricity industry, it can be a challenge to understand exactly what ELEXON does!
In brief, ELEXON manages the systems and services which balance and settle the wholesale electricity market. Note that the balancing of actual electricity supply is made by National Grid, which operates the high voltage transmission network.
A quick introduction to the market
Like most commodities, electricity is traded on a wholesale market.
Most of this trading is done in a forwards market, with generators and suppliers entering into contracts with each other for every half hour of every day; sometimes years in advance. For each half hour, they can continue to trade up to 1 hour beforehand, at which point the market for that time period is closed. All generators and suppliers have to notify National Grid of their planned supply and demand for each half hour of the day.
National Grid ensures that supply and demand match using a balancing mechanism, which includes the accepting of bids and offers from generators and suppliers to increase or reduce their supply or demand.
Where does ELEXON fit in?
ELEXON’s systems capture the contracted volumes from generators and suppliers so we can see what they said they would produce or consume. We also capture data on actual supply and demand volumes. Any difference must be paid for. So, if a generator has supplied less than what it said it would for the half hour it must pay for the imbalance between its declared and actual position. Or, if a supplier’s offer to reduce demand for a half hour was accepted by National Grid, then it will be paid for that balancing action. Prices and payment are managed by ELEXON through the settlement process.
For more information, check out our 
beginners guide to the electricity trading arrangements (582Kb)
. We also regularly run an Introduction Seminar for industry newcomers, which will help you understand ELEXON’s role and some of the technicalities of the electricity industry – click the link above to register online for the next session.
We also manage changes to the systems and processes of settlement
The document which governs the balancing and settlement arrangements is known as the Balancing and Settlement Code (BSC) – ELEXON is also known as the Balancing and Settlement Code Company (BSCCo).
The BSC and its subsidiary documents, systems and processes are constantly evolving and always under review. Any BSC Party – such as a generator or a supplier – can raise a proposal to make a change to them. We work with industry experts and the BSC Panel to assess the impact of each proposal and manage the consultation process with the industry. The electricity regulator, Ofgem, makes the final decision on modifications to the BSC itself, whereas BSC Panel Committees made up of industry experts oversee changes to the subsidiary documents. ELEXON then implements approved changes to the Code and subsidiary documents as well as managing any consequential changes to central systems.
We provide assurance that the BSC arrangements work.
Our systems and processes are fundamental to the everyday work of generators, suppliers and National Grid, and those companies need be confident that they work! And, as BSC Parties, those companies also need to adhere to the obligations, performance standards and targets of the BSC.
We provide advice and guidance on the BSC and what parties should do to comply with it, and suggest corrective actions where they are not complying. We also provide assurance that other electricity companies are abiding by the rules and provide a disputes service to rectify any settlement errors.
We support the governance arrangements as set out in the BSC
We provide support and advice to the BSC Panel and BSC Panel Committees, run committee meetings, prepare reports and send out information for meetings – an important and time-consuming role!
In addition, ELEXON has a significant procurement function to secure all of the services which run our central systems. We support the industry by making available a large amount of data that our systems collect, collate and generate. We also run various events and consultations to help facilitate industry debate. You can keep up to date with ELEXON by signing up for our weekly Newscast through the myELEXON facility.