National Grid : Electricity System Operator Annual Report 2020/21

National Grid Electricity System Operator Limited

Annual Report and Accounts

2020/21

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Annual report and Accounts

	1	Foreword from our Chair	4
	2	About Electricity System Operator	6
	Our role	6
	Our mission, vision and values	8
	Who we are	10
	3	The year in review	12
		Key statistics and the year in review	12
		Progress against objectives	24
	4	Strategic Report	28
	Our people	29
	Our business environment	32
	Responsible business	34
		Risk management	38
		Financial review	42
		Section 172 statement	48
		Corporate governance	50

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2020/21

5 Directors' Report

6	Financial Statements
Statement of Directors' responsibilities
Independent Auditor's report
Statement of profit and loss and other comprehensive income

Statement of change in equity

Statement of financial position

Statement of cash flow

Notes to the financial statements

Glossary and definitions

Contents

62

66

67

68

72

72

73

74

75

98

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Foreword from our Chair

Foreword from our Chair / 4

1

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Welcome to the Annual Report and

Accounts 2020/21 for the National Grid

Electricity System Operator (ESO).

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The last year has been shaped by the Covid-19 pandemic, which has deeply impacted all of us and the communities we operate in. For the ESO, the pandemic brought about unique operational challenges - both what we do and how we do it. I am pleased at the incredible resilience shown by my colleagues who have managed the many demands of the last year admirably while continuing to deliver fantastic service for our customers and consumers.

Our swift response to the pandemic, based on the implementation of well-developed crisis response plans, enabled us to move quickly to new ways of working.

Many colleagues have now spent a whole year away from the office, while those in the control room have seen significant changes to their office environment. As we start to return to the office, we want to capture what we have learnt about the value of flexibility and digital collaboration over the last year.

On the operational side, the pandemic presented us with challenges throughout the summer of 2020. Lower demands for electricity made the grid harder to operate. To address this, we introduced a new Optional Downward Flexibility Management service, giving us access to flexibility from distributed generators we previously could not contract with. We also entered into a contract with EDF Energy to reduce the output of Sizewell B for a fixed period of time.

While the costs of operating the system over spring and summer 2020 were higher than previous years, the demands and challenges were unprecedented and we took every opportunity to ensure that all our actions were efficient and in the best interests of consumers.

2020 was the greenest year ever for Britain's electricity. Between April and June 2020, we went for almost 68 days without running any coal power stations and the number of coal free hours increased by 40% compared to 2019. This demonstrates the progress we are making towards our ambition to be able to operate the electricity grid carbon free by 2025.

Over the last year we saw broad discussion on the industry roles required for net zero and the extent to which institutional governance and frameworks may need to evolve. I was pleased to see Ofgem publish their review of system operation and we continue to engage with them and the Department for Business, Energy and Industrial Strategy (BEIS) on this important topic.

2020 also saw the ESO launch some strategic initiatives to drive change in the electricity sector. Our work on Early Competition, Offshore Coordination, and Future Markets will put competition and efficiency at the heart of the electricity sector, helping to ensure that we protect consumers and communities. You can read more about these projects

in the Report.

Finally, the year has seen changes to the Board and the Executive Team. John Linwood and Regina Moran both joined the Board as Non-Executive Directors in the year and bring a wealth of Technology, Engineering and Commercial experience. Gregg Smith joined the Board in the year as Finance Director. In the Executive Team Isabelle Haigh joined as the new Head of National Control, Norma Dove-Edwin as the new Chief Information Officer and Matthew Wright as the new Head of Strategy and Regulation. All four executives bring great skills and experience and will help the ESO deliver on its ambitions.

Fintan Slye

Chair, Electricity System Operator

National Grid Electricity System

Operator Limited

1-3 Strand, London WC2N 5EH

Registered in England and Wales

Number 11014226

5

/ Chair our from Foreword

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