About / Methodology
Watch: How the Balancing Market Works
See how the balancing market works and why cheaper generators get skipped
How the Balancing Market Works in 2026
After Gate Closure, NESO dispatches generation using offers submitted to the Balancing Mechanism. In an ideal world, the cheapest units would dispatch first (merit order). In reality, network constraints and operational requirements cause deviations - creating skips (cheaper units not dispatched) and favouritism (more expensive units over-dispatched).
Stage 0: All BM Actions
All units stack by offer price with no exclusions applied. This is the raw merit order of all available bids and offers in the Balancing Mechanism.
What is a Skip?
A skip occurs when generation that was economically efficient to dispatch (in-merit) is not actually dispatched. This creates additional costs for consumers. When cheaper generation is skipped in favour of more expensive alternatives, the difference in cost is ultimately borne by electricity consumers through higher wholesale prices.
What is Favouritism?
Favouritism (or over-dispatch) occurs when a unit is dispatched MORE than its merit position suggests. The unit benefits from additional revenue, but consumers pay more than necessary. This is the opposite of a skip - where a unit dispatches less than expected.
How We Calculate Skip Costs
Skipedia uses an attribution model to calculate the cost of each skip. For every settlement period, we rebuild the merit stack from cheapest to most expensive and compare what consumers actually paid with what they would have paid if the stack had been dispatched in price order. The difference is the excess cost of that period. This excess cost is then shared among the skipped units in proportion to how much cheaper they were than the marginal price and how much volume was skipped.
For each settlement period: actual cost paid − counterfactual merit-order cost. This is the total extra cost consumers paid because the cheapest units weren't dispatched.
The period excess cost is allocated proportionally: each skipped unit's share is based on its skipped volume × (marginal price − unit's declared price), relative to all skipped units. Units that were cheaper and skipped more get a larger share of the excess cost.
Skipped volume ÷ total dispatch volume. A higher skip rate means more of a unit's available capacity was bypassed despite being economically efficient to dispatch.
Battery storage units are disproportionately affected by out-of-merit dispatch, accounting for roughly a third of all skip costs despite being among the cheapest flexible assets on the system. This site focuses on surfacing that evidence.
All costs shown cover upward dispatch (offer) skips only — cases where a cheap generator was not asked to increase output. Downward dispatch (bid) skips, where a unit willing to reduce output cheaply was bypassed, are excluded. Bid skip costs are small relative to offer skips and introduce additional complexity, particularly around administrative prices.
Staged Methodology
Skip rates are calculated using a staged exclusion methodology developed by LCP Delta for NESO, applied in six stages (0–5). At each stage, volumes with valid reasons for being skipped are excluded from the merit stack and skip rates are recalculated, progressively narrowing down to truly unexplained skips. By default, Skipedia shows Stage 5 — where only volumes accessible to the ENCC remain, and any remaining skips are unexplained.
The starting point: all available bids and offers in the Balancing Mechanism with no exclusions applied.
Exclude volumes procured outside the BM: wind offers, Balancing Services Adjustment Data (BSAD), and winter coal contingency contracts.
Exclude units inaccessible within BM timescales: MZT/MNZT ≥12 hours, NDZ ≥90 minutes, and actions breaching SEL/SIL limits.
Exclude system-flagged acceptances (taken for locational balancing or system security) and frequency response actions.
Exclude actions to reverse (unwind) a previously accepted bid or offer, as these only become available when the opposing direction is accepted.
Exclude volumes not accessible to the Control Room: units with MZT/MNZT/NDZ ≥31 minutes and volumes outside SEL-MEL/SIL-MIL ranges. Remaining skips are unexplained. This is the default view throughout Skipedia.
You can switch between stages using the stage button in the navigation bar. Comparing stages reveals how much of the skip cost is attributable to each category of exclusion.
Data Sources
- -Skip rates data sourced from the NESO Data Portal (NESO), which provides detailed breakdowns of skip rate metrics for the GB electricity market.
- -Supporting market data (BM unit reference data, generation by type, settlement prices) sourced from the Elexon BMRS API.
- -Updated daily to reflect the latest available settlement data and calculations.
We are not affiliated with NESO, Elexon, or any market participant.
Comparison to Official Figures
The figures presented in this dashboard are derived directly from NESO's official Skip Rates data. While we aim to present this data as accurately as possible, users should refer to NESO's official publications for regulatory or contractual purposes. Our aggregations and visualisations are designed to make this data more accessible and to highlight trends over time, but may differ in presentation from NESO's own reporting formats.
Glossary
Key terms used throughout this dashboard.
Settlement Period (SP)
The GB electricity market operates in 30-minute intervals called settlement periods. There are 48 settlement periods per day, numbered 1-48. SP1 starts at 00:00, SP48 ends at 00:00 the following day.
EFA Block
Electricity Forward Agreement blocks divide the day into six 4-hour periods. EFA 1: 23:00-03:00, EFA 2: 03:00-07:00, EFA 3: 07:00-11:00, EFA 4: 11:00-15:00, EFA 5: 15:00-19:00, EFA 6: 19:00-23:00.
BM Unit
A Balancing Mechanism Unit is an individual generation asset (e.g., a wind farm, battery, or gas turbine) or demand unit that participates in the GB balancing market. Each unit has a unique identifier.
Bid vs Offer
In the balancing mechanism, an Offer is when a unit increases output (or decreases demand) - typically dispatched when the system needs more power. A Bid is when a unit decreases output (or increases demand) - dispatched when there's excess power on the system.
GSP Region
GB is divided into 14 Grid Supply Point groups for electricity distribution. Each region (e.g., East Midlands, Scotland, London) has distinct network characteristics affecting constraint patterns.
Merit Order
The merit order ranks available generation from cheapest to most expensive. In an ideal market, the cheapest units dispatch first. Skips occur when this order isn't followed due to constraints or other factors.
Gate Closure
Gate Closure is the point (typically 1 hour before delivery) when the forward wholesale market closes and the balancing mechanism takes over. After Gate Closure, NESO uses bids and offers submitted to the Balancing Mechanism to balance supply and demand in real-time.
B6 Constraint
The B6 boundary is the main transmission constraint between Scotland and England. When Scottish renewable generation exceeds the transmission capacity across B6, cheaper Scottish power cannot reach English demand centres, forcing dispatch of more expensive southern generation.
SO Flag
An SO (System Operator) flag marks actions taken by NESO for grid stability rather than economic dispatch. These include frequency response, voltage support, and other ancillary services. Units with SO flags are excluded from skip rate calculations as their dispatch serves operational rather than economic purposes.
Favouritism / Over-dispatch
Favouritism (or over-dispatch) occurs when a unit is dispatched MORE than its merit position suggests. The unit benefits from additional revenue, but consumers pay more than necessary. This is the opposite of a skip - where a unit dispatches less than expected.
NESO
The National Energy System Operator (formerly National Grid ESO) is responsible for balancing electricity supply and demand across Great Britain in real-time. They publish the skip rates data this dashboard uses.