cash-out

Electricity is unlike other commodities in the sense that it cannot be stored, so supply and demand must remain balanced at times. Through bilateral trading, electricity suppliers and generators are incentivised to balance, with National Grid the System Operator, being responsible for the remaining imbalance.

‘Cash-out’ refers to the imbalance price that a market participant is exposed to if they consume or generate more or less energy than they are contracted for. Under the current electricity market arrangements, Britain has dual cash-out prices with a the System Sell Price (SSP) and the System Buy Price (SBP). These cash out arrangements are integral to maintaining a competitive and secure electricity market in Britain.

Ofgem decided to launch a Significant Code Review (SCR) of the electricity cash-out arrangements in summer 2012. The consultation is now over and we await further announcements.

company position statement

SmartestEnergy believe that if the current balancing arrangements are to be changed, the best combination of market arrangements would be to move towards single trading accounts, assist balancing by reducing gate closure, and maintain dual-cash out.

As many of the proposals cannot purely be assessed as stand-alone changes (due to the nature of the system) we have given our view of the best combination of complementary arrangements. However, in general we are satisfied with the current arrangements and the case for change still needs to be made.

> Read the full company position statement

latest policy updates

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