1. Webinar on imbalance settlement
F. A. Nobel TenneT NL Convener Project Team ISH
Webinar, 19 Sept. 2018

2. Agenda Point Topic 1 Entities 2 Settlement volumes 3 Prices 4
Settlement cashflows 5
Requirements imbalance pricing 6
Requirements balancing energy pricing 7
Summary of imbalance settlement process 8
Current imbalance settlement harmonisation (ISH) proposal 9
Survey on expected implementation

3. Entities involved TSO* BRP BSP
* TSO: Connecting TSO or any third party entrusted with settlements in accordance with EBGL Art. 13.

4. Intended TSO-TSO exchanges:
Settlement volumes, MWh per ISP
TSO*
BRP
BSP
Imbalance
Balancing energy
Intended TSO-TSO exchanges:
IN, aFRR, mFRR, RR
ISP: imbalance settlement period

5. Balancing energy price(s) Intended TSO-TSO exchanges prices:
Prices, EUR/MWh* per ISP
TSO*
BRP
BSP
Bid price(s)
Balancing energy price(s)
Imbalance price
Intended TSO-TSO exchanges prices:
IN, aFRR, mFRR, RR
* EUR: or other currency

6. Settlement cashflows pursuant EBGL Title V

7. Settlement cashflows pursuant EBGL Title V
Description of figure
Cashflows resulting from EBGL Title V Settlements, and involving TSOs (or third parties entrusted with such settlements).
BRP, BSP, TSO are according to EBGL; USER is the tariff payer.
Arrows denote direction of payments; some settlements may involve bidirectional payments, hence the double arrow.
Unbracketed numbers within the arrows refer to the respective Chapter in EBGL Title V, Settlements.
The payment to the TSO to remunerate payment of balancing capacity to BSP is assumed to be assigned to the USER.

8. Requirements imbalance pricing
[Article 55]:
For any given imbalance price area:
for the calculation of an imbalance price
For any given ISP:
ultimately 15 mins
In each imbalance direction:
BRP surplus (positive imbalance)
BRP shortage (negative imbalance)
Boundary conditions to imbalance price(s) imposed by balancing energy price(s):
One-sided limitations ('not be less than´ resp. ´not be greater than´)
Non-exhaustive (boundary condition per direction prescribed)
Single imbalance pricing, unless conditions and specifications for dual pricing are accepted [Art. 52(2)(d)]
'single imbalance pricing' [currently not defined] is the use of a single price for positive and negative imbalances for each imbalance price area within an imbalance settlement period [Art. 52(2)(c)]

9. Requirements balancing energy pricing
[Article 45]:
For all balancing energy
For any given imbalance area
in which imbalance is calculated, [imbalance area cannot be larger than imbalance price area]
For any given ISP
ultimately 15 mins
Per balancing energy direction:
Negative (relative withdrawal by BSP)
Positive (relative injection by BSP)
Marginal pricing (pay-as-cleared), unless alternative is proven more efficient [Art 30] *
* Out of scope of this project team.

10. Summary: imbalance settlement process
Input components
Per ISP and per imbalance area/imbalance price area
Volume/Price determination rules
Single imbalance price, unless …
Bounded by (marginal) balancing energy prices
Subject to harmonization: partial or full?
Output
Imbalance price
Per ISP/direction/imbalance price area
Imbalance volume
Per ISP/BRP/imbalance area

11. Current ISH proposal for public consultation

12. ISH proposal
Main components of imbalance prices: An exhaustive list of main components is proposed.
Each TSO may only use the following prices as main component for calculating the imbalance price (per imbalance area, ISP and direction):
Value of avoided activation (VoAA) of balancing energy from FRR or RR;
As requesting TSO: price(s), per direction, of standard or specific products for FRR energy;
(where applicable) RR energy;
(where applicable) imbalance netting;
A scarcity component (if approved by local NRA);
An incentivizing component (if approved by local NRA).
Each TSO may only use the following volumes for calculating the imbalance price (per imbalance area, ISP and direction): volume, per direction and product, of standard or specific products for FRR energy and (where applicable) RR energy + (where applicable) imbalance netting.

13. ISH proposal
Value of avoided activation (VoAA) of FRR or RR: Price (single or dual) for each ISP during which there has been no activation of balancing energy in either direction in the imbalance price area. For the calculation of the VoAA, each TSO may use only the following prices and volumes:
As connecting TSO: price(s), per direction, for the volume of balancing energy from standard or specific products for FRR available to the TSO for the ISP + (where applicable) RR energy + (where applicable) imbalance netting;
As requesting TSO: price(s), per direction, for the intended exchange of energy available to the TSO to request for the ISP.

14. ISH proposal
Single/dual pricing: Each TSO is to implement single imbalance pricing no later than application of ISP = 15 min. Minimum conditions for a TSO to request relevant regulatory authority to apply dual pricing are defined:
ISP > 15 min (exception), or
TSO requests activation of both positive and negative balancing energy from FRR or RR, or
Net sum of all imbalances does not indicate a clear direction for a given ISP, or
due to specificities of the local market/area or
because costs of balancing energy are entirely to be covered by the BRPs.
In case of application of dual pricing for a given ISP and a given imbalance area pursuant condition (b) or (c) , the TSO shall calculate an imbalance price in one direction according to its methodology for calculating a single imbalance price for that ISP and that imbalance area; its methodology to calculate the imbalance price for the other direction shall not use any main components other than in accordance with this proposal Article 5.

15. Timeline: all-TSO proposal on ISH
Activity
Start
End 1
Public Consultation Proposal ISH
open
28/09/2018 2
Review of Stakeholder comments and NRA shadow opinion by PT ISH/WG-AS
29/09/2018
T.B.D. 3
MC decision
08/11/2018 4
Submission final all TSO Proposal to all NRAs
18/12/2018

16. Survey on expected implementation

17. ISH survey: general overview
Survey sent to all members ENTSO-E: 36, representing 33 countries
No response from 3, Luxemburg responded by mail that the survey is not relevant for them
Relevant answers 29
Multiple choice survey, with predetermined answers but comments allowed.
Survey only for the purpose of sharing the views from the TSO and non-TSO members of the PT ISH, (and to further discuss options with NRAs), but cannot be used to claim a position of ENTSO-E nor of any TSO or third party involved in the development of the “ISH proposal”, on specific issues related to the EBGL or to the proposal.
Currently not intended for public use.
Cleared by WG AS to be presented in EBSG meeting.

18. ISH survey: questions
Q1: What dispatching model do you intend to use: Central (CDM) or self-dispatching model (SDM)?
[Q2: Number of imbalance areas for which you will be connecting TSO?]
[Q3: Number of imbalance price areas for which you will be connecting TSO?]
Q4: What methodology for deriving imbalance prices from balancing energy prices do you intend to use (not current methodology): Volume-weighted average price (VWAP)? Marginal price (MP)?
[Q5: Details on methodology]
Q6: Do you intend to add a scarcity component? (YES/NO)
Q7: If you add a scarcity component, will it be for all ISPs (ALL)? Or for some ISPs (SOME)?
Q8: Do you intend to add an incentivising component? (YES, …/NO) If YES, what will it consist of?
Q9: Do you intend to apply for dual pricing? (YES/NO)
[Q10: If you intend to apply for dual pricing, on the basis of which condition(s) (a-e)?]

19. ISH survey: answers Q1: CDM 4; SDM 25
Q2: Number of imbalance areas for which you will be connecting TSO?
Q3: Number of imbalance price areas for which you will be connecting TSO?
Q4: VWAP 15; MP 10; other 4
[Q5: Details on methodology]
Q6: scarcity component? YES 17; NO 12
Q7: If Q6 YES: ALL ISPs 4; SOME ISPs 13
Q8: incentivising component? YES 5; NO 15; other 1; no response 8 (question was added later in process)
Q9: dual pricing? YES 12; NO 15; other 2
[Q10: If you intend to apply for dual pricing, on the basis of which condition(s) (a-e)?]

20. Informal, non-binding information
Based on current version of proposal ISH
For illustration purpose only