The Balancing Mechanism (BM) is the market the National Energy System Operator (NESO) uses to keep electricity supply and demand in Great Britain exactly matched in real time. Generators, batteries and some large electricity users tell NESO what they would charge to change their output, and NESO’s control room picks the actions it needs.
How it works
Electricity in Great Britain is traded in half-hour periods. Most of it is bought and sold in advance between generators and suppliers. Shortly before each half hour, the market for that period closes at a point called gate closure. From then on, NESO is the only buyer and seller, and it uses the BM to fix whatever imbalance remains.
Participants submit two kinds of price:
| Term | What NESO is paying for |
|---|---|
| Offer | Generating more electricity, or consuming less |
| Bid | Generating less electricity, or consuming more |
NESO usually accepts the cheapest bids and offers that are technically able to help, but it also has to consider where on the network the power is. An accepted bid or offer is an instruction the participant must follow.
Why it matters
The BM is used for more than matching totals. NESO also uses it to manage network bottlenecks, which is how wind farms end up being paid to switch off, and to keep enough stable, controllable generation running. NESO says its control room now issues around 3,100 balancing instructions a day, up from 1,800 in 2020, as more variable wind and solar connect.
The cost of these actions is recovered from generators and suppliers and ultimately from bill payers. NESO put total balancing costs at about £2.7 billion in 2024/25, of which about £1.7 billion was for thermal constraints, where lines would otherwise overload. More network capacity, batteries and flexible demand are the main ways to bring these costs down.
Read more: Live UK grid page.