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.

company position

We are not convinced of the need for significant changes to the cash-out arrangements but welcome further investigation.

We are concerned over proposals for a centralised market for intermittent renewables as it would be contrary to NETA principles and anti- market. The arrangement should be changed to accommodate one generation type; consolidation occurs in the portfolios of existing players anyway.

If we are to remain part of the EU, it is essential that any changes to cash-out are consistent with developments in Europe as cash-out is inextricably linked to the concept of market coupling/ splitting

> Read the full company position paper

latest news

SmartestEnergy responds to cash-out consultation - 25/01/2012

Any proposed changes to the cash-out system need to take account  of wider developments across Europe, SmartestEnergy has stressed in its response to Ofgem's paper on the issue.

> Read the full press release

> See the news archive on cash-out