General information & history of the imbalance price
The more uniform imbalance price across control areas (reBAP)
Since December 2022, the following model description has been used to determine the reBAP in compliance with resolution BK6-21-192 of the Federal Network Agency: Model description of the reBAP calculation since 08.12.2022 (in German).
As part of the further development of the imbalance price system, the above-mentioned model implements the resolutions of the Federal Network Agency BK6-12-024 of 25.10.2012 (in German), BK6-19-217 of 11.12.2019 (in German), BK6-19-552 of 11.05.2020 (in German), BK6-20-345 of 11.05.2021 (in German) and BK6-21-192 of 28.04.2022 (in German) (supplemented by the annex to BK6-21-192 (in German)) in order to achieve a high level of balancing group loyalty in balancing group management for the balancing group managers (BKV). In addition, the BNetzA decided to abolish the release on the imbalance energy market (RAM) on 31.10.2022 with resolution BK6-22-162. The TSOs will implement this on the delivery date 08.12.2022. At the same time, the TSOs will take into account the capacity in excess of the dimensioned demand for the two support points in IP Module 3 (scarcity component).
General information on the balancing energy price (IP)
To ensure grid security at all times, every (commercial) electricity producer and consumer must provide a quarter-hourly forecast of the electrical energy to be fed into or withdrawn from the grid on the following day. Unforeseen deviations in the forecast or power plant outages lead to a deviation, which also leads to a deviation in the respective balancing group (BK). To compensate for this, the transmission system operators (TSOs) must use balancing reserve as balancing energy.
The uniform imbalance price, also known as the reBAP (uniform imbalance energy price across control areas), determines the price of the imbalance energy used on the balancing group side. In a perfectly balanced system without any forecast deviations within the individual balancing groups and therefore also without the use of balancing reserves, this value would therefore amount to €0/MWh. Therefore, the IP is not understood as a penalty for forecast deviations of the balancing groups, but rather represents the price of the actually activated balancing reserve. This can lead not only to costs but also to revenues if the prices for balancing energy are negative or a balancing group has deviated from its forecast to support the system.
History
Until May 2009, each power frequency control area in Germany had its own individual, specially determined imbalance price.
In June 2010, a uniform imbalance price was introduced throughout Germany. With the full cooperation of the German TSOs in the national Grid Control Cooperation (GCC), the determination of the imbalance price is also standardized throughout Germany (BK6-08-111 (in German)). This represents an average volume-weighted energy price, which is calculated for each quarter of an hour from the costs and revenues for calling up the balancing reserve and the balance of the Grid Control Cooperation. Due to the symmetrical price system and the balancing of positive and negative volumes and costs, small GCC balances in the denominator can lead to high prices. To avoid high prices for small deviations, the balancing energy price is capped at the highest invoiced working price for secondary control and minute reserve. These non-scalable costs are charged via an additional price component. Depending on the sign of the GCC balance, this is a price surcharge or discount that remains constant over the month.
Over the years, the following notable adjustments and improvements have also been made to the balancing energy price system:
In December 2012, the IP was further developed in accordance with resolution BK6-12-024. The main changes include the linking of the IP to the hourly intraday exchange price index ("exchange price coupling"). In order to provide a stronger incentive for BGMs to be balanced or to act in a system-supporting manner, a surcharge or discount on the reBAP was also introduced in the event that 80% of the positive or negative balancing capacity contracted throughout Germany is activated ("scarcity component"). In addition, the above-mentioned resolution made it possible to include the costs from the price cap that could not be passed on until then, together with the additional revenue, in the grid fees.
A rolling mechanism was integrated in October 2013 to regulate the handling of price corrections after publication of the reBAP. Due to the complexity of determining the individual input variables of the reBAP, errors can occur in the reBAP calculation. The rolling mechanism was therefore developed. This provides for the offsetting of additional or reduced revenue resulting from error corrections in the reBAP of the following month(s). Offsetting takes place via an additional component, which represents a price premium or discount that remains constant over the month in every quarter of an hour. In order to prevent miscalculations from significantly influencing the reBAP, the corresponding correction limit within a month was set to a maximum of +/-3% of the standard labor costs for the respective month. Furthermore, this value may not exceed +/-3 €/MWh.
Model description of the reBAP calculation from 01.10.2013 to 30.04.2016 (in German)
The industry solution was implemented on 01.05.2016. This provides for an additional cap on prices to avoid price peaks with low GCC balances. As part of the coordination of an industry solution between the BRPs and the TSOs, an additional capping step (IP20) was developed and approved for implementation by the Federal Network Agency. The aim was a further limitation to avoid high imbalance prices for GCC balances between -125 MWh and +125 MWh or -500 MW and +500 MW, which remain after the IP2 calculation step. The limitation is carried out with a linearly increasing or decreasing function depending on the GCC balance. To determine the limitation function, the volume-weighted average price of the hourly product of the respective hour from continuous intraday trading on EPEX Spot is given a premium or discount of between €100-250/MWh.
Model description of the reBAP calculation from 01.05.2016 to 31.01.2020 (in German)
The scarcity component will be adjusted in February 2020. This provides for a comparison of the balancing capacity provided with the balance of the imbalance energy used instead of the balance capacity provided with the balance of the German Grid Control Cooperation (SaldoNRV).
Model description of the reBAP calculation from 01.02.2020 to 30.06.2020 (in German)
The exchange price coupling was fundamentally revised in July 2020. In particular, the revised exchange price coupling complies with Recital 17 of the EB Regulation to efficiently work towards a balanced system, create incentives for market participants, maintain system balance and reflect the real-time value of energy in the IP system. This now provides for a comparison with the intraday price index IP Index, which was introduced specifically for this purpose, in order to form the IP3. In addition, a minimum gap of 25%, but at least €10/MWh, is provided between the ID Index and the imbalance price if the absolute value of the GCC balance is greater than or equal to 500 MW. In the range between 0 and 500 MW, it increases linearly with the level of the GCC balance.
Model description of the reBAP calculation from 01.07.2020 to 31.07.2021 (in German)
The scarcity component was fundamentally revised in August 2021. This is intended to ensure incentives for market participants to balance the balancing group, particularly at times of severe system imbalances. The proportionality of the influence of the scarcity component on the level of the reBAP is achieved by limiting the effectiveness of the price component to times of severe system imbalances and by the non-linear increase in the price component depending on the GCC balance. The newly defined component is a second-order function (parabolic curve) depending on the GCC balance and takes effect if this has a value of at least 80% of the control power dimensioned for the GCC or exceeds it.
Model description of the reBAP calculation from 01.08.2021 to 21.06.2022 (in German)
The imbalance price was fundamentally revised in June 2022. The previous components IP3 ("exchange price coupling") and IP4 ("scarcity component") will now be managed as IP Module 2 and IP Module 3 respectively following the European harmonization carried out as part of the introduction of the Imbalance Settlement Harmonization Methodology "ISHM" (in German) and will be transferred to the new methodology in the previously known manner. However, the remaining (capping) components such as those of the former IP1, IP2 and IP20 will no longer apply. The offsetting of deficits and surpluses will also be changed. The handling of price corrections after publication of the reBAP, previously carried out as a 3% or €3/MWh surcharge or discount, is also no longer applicable due to the requirements of the ISHM. Another new feature of the newly introduced IP Module 1 is the conversion of the previously cost-based IP determination (previously in IP1) to a price-based determination based on the prices of the aFRR and mFRR platforms PICASSO and MARI. The switch to an ISHM-compliant calculation represents the biggest innovation in the field of balancing energy price determination in the last decade. In addition to the harmonization aspect in the ISHM, the reduction of complexity and susceptibility to errors in the calculation coupled with faster calculation and publication of the data is one of the main objectives.
Model description of the reBAP calculation from 22.06.2021 to 07.12.2022 (in German)
In December 2022, the abolition of the release of standard labor bids was taken into account in the IP. The Federal Network Agency decided to cancel the release on the balancing energy market (RAM) on 31.10.2022 with resolution BK6-22-162. The TSOs will implement this on the delivery day 08.12.2022. At the same time, the TSOs will take into account the capacity in excess of the dimensioned demand for the two support points in IP module 3 (scarcity component) from this date. It should also be mentioned that since November 2023, the "disposable loads" that have been removed in the meantime have again been taken into account in the GCC balance (via the additional measures) and in the scarcity component.