Learnings

Outcomes

The project assessed whether alternative Dynamic Response (Dx) auction designs could deliver material benefits. It evaluated three core design levers: auction timing, number of auctions per day, and product duration (including a move from 4-hour EFA blocks to 30-minute products). The work combined qualitative design review with quantitative analysis using historical auction data and fundamental market modelling.

The DX Auction Review found that the current day-ahead design is broadly effective, with limited evidence that changing auction timing or frequency alone would deliver significant net benefits. The main opportunity is improving forecast accuracy closer to delivery, which can reduce required Dx volumes, though gains may be offset by higher bid prices and wider market effects. A hybrid model (day-ahead base procurement with closer-to-real-time top-up) emerged as a potentially beneficial future direction, provided pricing and incentives are carefully designed.  

Moving to 30-minute products could improve flexibility and lower procurement costs under the right conditions, but it is likely to increase price volatility. The most material implementation risk is under-procurement if buy-order caps are not recalibrated for this higher volatility; this could erode or exceed expected savings.  
Overall, the project supports targeted, incremental balancing market reform.

Overall, the project concludes that:

• there is no strong evidence to support immediate fundamental changes to auction timing alone;
• incremental design refinement is more likely to deliver value than wholesale redesign;
• any move to 30-minute products should be accompanied by strengthened buy-order methodology to manage under-procurement risk; and
• further development of hybrid procurement (base + top-up) could be valuable as part of wider real-time response market evolution.

Lessons Learnt

This project provided several important lessons for the design and delivery of future analytical and market design studies, extending beyond the specific findings on Dynamic Response auction design.

Early clarity on the technical context and work scope proved critical to delivering proportionate analysis. Agreeing upfront which questions the project was intended to inform, and which potential design options were out of scope (due to duplicated work or impractical assumptions etc.), helped maintain focus and avoid unnecessary complexity. This ensured analytical effort was aligned with NESO’s needs and complemented parallel internal workstreams rather than duplicating them.

The structured sequencing of qualitative and quantitative analysis was particularly effective. An initial qualitative assessment allowed a wide range of potential auction design options to be screened and shortlisted, enabling quantitative modelling effort to concentrate on areas where trade‑offs were most material. This approach improved efficiency and ensured that modelling outputs remained closely tied to practical decisions, rather than exploring theoretical changes with limited operational relevance.

The project also reinforced the importance of being explicit about uncertainty. Many of the options assessed involved behavioral responses from market participants and evolving system conditions. Presenting results as ranges and scenarios, rather than single point estimates, helped communicate where potential benefits could be offset by supplier behavior or operational risks. Clear distinction between demand‑side effects, such as reduced volume requirements from improved forecasts, and supply‑side effects, such as changes in bidding behavior, strengthened 

Regular stakeholder engagement throughout the project materially improved relevance and delivery. Ongoing dialogue with NESO teams ensured that assumptions reflected operational realities, implementation considerations were explicitly considered, and outputs remained aligned with NESO’s wider strategic direction. Iterative engagement, along with deep dive workshops, rather than one‑off validation, supported shared ownership of findings and improved confidence in the results.

From a delivery perspective, the project highlighted the importance of establishing efficient collaboration arrangements with external partners at an early stage. Setting up appropriate environments for data sharing, document management, and real-time collaboration from project outset can support more efficient delivery and reduce delays.

Finally, clear governance and expectation management between NESO and Partner supported a proportionate and focused outcome. Regular check‑points to confirm whether further analysis would materially change conclusions helped prevent scope creep and ensured the project remained focused on value‑adding outputs.