P415: What is the baselining methodology?

‍It’s been 10 months since the P415 code modification was implemented in the GB energy market. Over the next few weeks, we’ll be diving deeper into the commercial details you’ll need to understand if you are to benefit from this code modification properly. In today’s blog - part 1 - we’ll cover the baselining methodology. Look out for part 2 next week where we explore the role of supplier compensation. 

First, a quick recap of what P415 is. You can see Genna’s intro blog & videos for more detail. 
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What is P415?

P415 is a Balancing Code modification that enables behind-the-meter flexible assets to participate directly in wholesale markets without impacting the supply contract to the main site load.

The modification went live in November 2024, marking a significant step for energy flexibility in the UK. In practice, this means a demand site can adjust its consumption profile in response to market prices - and get compensated at the prevailing wholesale rate. When evaluating wholesale market rates, it’s essential to consider multiple markets - such as Day-Ahead Hourly, Day-Ahead Half-Hourly, and Intraday Continuous. This is because the widest price spreads typically occur across markets rather than within a single one. There are of course additional opportunities by churning your position between markets as well, and making no-run profits. Any competent aggregator should therefore be trading across these markets to capture the full range of opportunities.

For P415 to work, a site requires a flexible asset that can time shift its consumption, or store energy and respond to site demands, such as batteries or EVs. While these assets can provide flexibility, they also need to charge, which adds to demand. 

How do you access the wholesale markets with P415?

In almost all cases, participation will be via an aggregator who is acting as a Virtual Trading Party (VTP). The VTP acts as an aggregator’s route into wholesale markets, enabling them to trade flexibility without requiring supplier involvement. So what a VTP does is aggregate the capacity of multiple flexible assets and trade them in wholesale energy markets. The exact commercial arrangement between the VTP and the customer will be bespoke, but this is commonly a revenue sharing arrangement, incentivising a win-win situation. 

How does P415 interact with Ancillary services?

In short, P415 has nothing to do with ancillary services. That being said, P415 does not forbid the participation in ancillary services. So, in theory, an aggregator that acts as a VTP, making use of P415 can also offer capacity into ancillary services. The VTP would also need to be registered as a Virtual Lead Party (or Asset Metering Virtual Lead Party) in this instance to aggregate enough capacity around a grid service point. We touched on this in Genna’s most recent P415 video, here:
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What is the baselining methodology?

To calculate how much flexibility the VTP can offer (by changing the dispatch profile of flexible assets) requires calculating a deviation volume. This is the difference between what a consumer's demand would be compared to what it actually was, given the introduction of flex. This deviation volume multiplied by the wholesale price would determine cashflows for the customer and VTP. So then, how do we calculate the deviation volume? Well, Elexon has a methodology, called BL01 baseline methodology that was initially designed for code modification P376. Crucially, the methodology specified is not mandatory, and VTPs can specify their own baselining methodologies. The formula for the baseline value as specified by BL01 is:

Baseline Value = Unadjusted Baseline Value + In Day Adjustment

• The unadjusted baseline value is the straight average over the day-type (working or non-working). This is 10 days for working type and 4 days for non-working days. 
• The in-day adjustment accounts for conditions on the day up until 3 hours before gate closure. 

Where does this baseline Methodology fall short?

Behind-the-meter asset owners often aim to maximise roof space for solar generation, use a battery to store excess energy, and then leverage that battery to provide flexibility services. However, under the BL01 baseline method - which averages consumption for the same day type over the previous 10 days (or minimum 5 days)  - the inherent variability of solar output makes the approach less suitable for sites with existing solar.

This is because the baseline can shift significantly depending on whether recent days had high or low solar yield, and solar generation can fluctuate greatly over a 10-day period for reasons entirely unrelated to the site’s flexibility. While the in-day adjustments may work in some instances, they are often less effective for sites that have a substantial solar influence. To address this, future baselining methodologies could incorporate similar solar generation profiles regardless of day type.

Another limitation is that, within the previous 60 days, at least 5 eligible days are required to establish a baseline. The emphasis is on eligible: if a day is classified as an “event day,” it becomes ineligible. Put simply, an eligible day is one where no flex was delivered for P415. The implication is straightforward - if you flex too often, you risk disqualifying yourself from flex altogether. In fact, it’s entirely possible that, by deviating every day over the last 60 days, none of those days remain eligible to set the baseline. 

The final shortcoming is that the deviation volume is strictly for the deviation related to flex in wholesale markets. So the battery changing its behaviour in response to other signals such as network charges or ancillary services should be accounted for. For example, we can use the graph below. What we can see is the baseline shown by the black trace. The purple area (battery charging) is likely to still be at the supply rate (not considered a deviation volume currently if it is not relating to wholesale markets or VTP actions). While the battery discharge (downward deviation) will be sold at the wholesale price.

Elexon are looking to address these challenges and are supportive of evolutions in this space. Finally, by users being able to specify their own baselines they can potentially address all the shortcomings mentioned above. But standardisation would remove complexity and make it easier for more participants to get involved.

Conclusion

In summary, P415 creates a valuable opportunity for demand-side flexibility and behind-the-meter assets to capture revenue from wholesale market participation. However, the current baseline methodology under BL01 limits accuracy for solar-heavy sites and discourages frequent flexibility. Market-wide standardisation of baselining methodologies will ultimately be necessary to ensure fair access, especially as the GB energy market accelerates towards greater energy flexibility and market reform.

Stay tuned for Part 2, where we’ll dive into the supplier compensation model behind P415. We’ll explore why the current mutualisation approach limits the value of batteries and other flexible assets, and how direct compensation between suppliers and customers could unlock greater savings.

As always, if you’re looking to model P415 in your energy projects, reach out to the team to discuss in more detail.