Modelling bid-offer prices

Modelling accepted Bid Offer pricing using the fundamentals supply stack

We vary demand and rerun our fundamental price model to get a bid and an offer price per half-hour period. These represent the volume-weighted average accepted bid and offer prices for each settlement period, and are the same across GB, regardless of region.

The reason we assume the same price across GB is due to the Transmission Constraint Licence Condition (TCLC). This states that bid and offer pricing cannot be adjusted to take advantage of being behind a constraint.

We also assume a minimum spread between the offer and bid price (£50/MWh), which is informed by historical data.

An example week from August 2030 is shown below.