With the introduction of single price-single imbalance model, the consumption and production imbalances are merged to one balance instead of the previous system of separate balances for consumption and production. Production, consumption, and trades are calculated and settled for each hour, and the outcome is one imbalance for the balance responsible party in each hour.
In the earlier balance model, there were separate balances for production and consumption, and the imbalances were calculated and settled for both balances separately. In addition, the imbalances in the consumption and production balances were priced differently, but the single price-single imbalance model uses one price in the imbalance settlement period.
The introduction of the new model anticipates the future transition in 2023 when the market will switch to 15-minute settlement periods instead of current hourly periods. The single price-single imbalance model and the 15-minute imbalance settlement period will enable balance responsible parties and other market parties to create more accurate forecasts and imbalance management.
“Retailers aims to have their electricity purchases and sales in balance every hour. In practice, the retailer purchases electricity according to a consumption forecast. Balance responsible party of the retailer has responsibility to correct possible imbalances.” says Jani Piipponen, Balance Services Manager at Fingrid.
The transition to the single price-single imbalance model will not directly affect the way private consumers use electricity, but provides the foundation for future balancing management services, where private consumers can be accessed via service providers.
“The single price-single imbalance model will contribute to the development of future aggregation models for various balancing markets, enabling a better combination of consumption and production.”
The single price- single imbalance model is the outcome of extensive Nordic collaboration
In October 2019, the Nordic countries decided to implement a single price-single balance model for imbalance settlement. Preparations for the transition have called for substantial collaboration with the all parties in the electricity market in the Nordic countries.
“The Nordic countries have harmonised balancing market and common systems. Transmission system operators and stakeholders have worked together to develop these,” says Marja Eronen, Senior Expert at Fingrid.
The transmission system operators and the authorities work in collaboration to enhance the energy market. The single imbalance model now introduced follows the European network code.
In the Nordic countries, imbalance settlement is carried out by eSett, a service company owned by the Nordic transmission system operators.
“In terms of the system changes for imbalance settlement, changes have been ready well before planned go-live. Stakeholders involved actively in the development of the model and were well aware of the changes,” Piipponen says.