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New regulation for the calculation of the electricity imbalance price

Year of issue 2020
date of issue 2020.05.11

The Bundesnetzagentur has approved the plan of the transmission system operators (TSOs) to change the way they calculate the imbalance price.

"The aim of the new calculation method for the imbalance price is to stop the wrong kind of incentives. We want to prevent imbalances in the German electricity system such as the severe ones that occurred in June 2019," said Jochen Homann, Bundesnetzagentur President. "This decision completes the measures designed to improve the upholding of balancing group commitments."

Improvement of the market-price coupling of the imbalance price

An improved market-price coupling will create a stronger financial incentive for balance responsible parties to balance their balancing groups. The market-price coupling will in future be based on a price index specially calculated by the TSOs. To provide an additional safety margin, this index will be marked up in the case of a deficit in the German electricity system or marked down in the case of a surplus. The price index will be primarily based on the prices in the transactions concluded in the 15-minute, intraday trading on the power exchange.

Up to now, only hourly, intraday trading was taken into account in the market-price coupling, even though 15-minute products are now used for short-term balancing to a considerable extent. The improved market-price coupling will impede arbitrage between the prices on the power exchange and imbalance prices and will track the real-time value of imbalance prices even better than before.

It is to be implemented by the time of the launch of the balancing energy market in Germany at the latest.

Background on balancing groups and imbalance prices

The purpose of balancing groups is the economic settlement of contracts for the supply of electrical energy. Balance responsible parties are responsible for ensuring that their balancing group is balanced in each 15-minute period, ie that the offtake and feed-in of electrical energy is the same. The imbalance price applies to the volume of electricity by which procurement and consumption deviate from each other within a balancing group.

Measures to improve the upholding of balancing group commitments

The German electricity system experienced severe imbalances on three days in June 2019. Only the responsible cooperation between the German TSOs and strong support from their European partners made it possible to maintain the stability of the system.

The system imbalances that arose were so severe that they could not be attributed to the usual causes, such as power plant failures or fluctuations in the generation of energy from renewable sources. The investigation into the reasons for them showed that there had been significant deviations overall in the balancing groups of some balance responsible parties.

In December 2019, the Bundesnetzagentur determined a package of measures designed to improve the upholding of balancing group commitments by requiring balance responsible parties to manage their balancing groups more carefully and enabling imbalances to be cleared up more quickly. The authority also recently concluded supervisory proceedings against six balance responsible parties with determinations of breaches.

The decision for a new regulation for the calculation of the electricity imbalance price (BK6-19-552) is published on the Bundesnetzagentur website at www.bundesnetzagentur.de/BK6-19-552.

Press release (pdf / 312 KB)