After real-time, the TSO charges or pays market participants depending on if they are short (have a shortage of supply vis-à-vis their nomination) or long (have a surplus), respectively. This payment or charge also depends on whether the entire system as a whole is long or short. These payments or charges are known as imbalance settlement prices and are allocated after real-time during the settlement process. Finally, the payments and charges are based on underlying balancing market prices, which in turn provide market participants that bear balancing responsibility with the incentive to have their demand and supply in balance so that overall deviations of the system are minimized. For the TSO this process should be a 'zero-sum' game where he has no financial interest and bears no financial risk.

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing

Article 30
Pricing for balancing energy and cross-zonal capacity used for exchange of balancing energy or for operating the imbalance netting process

1. By one year after the entry into force of this Regulation, all TSOs shall develop a proposal for a methodology to determine prices for the balancing energy that results from the activation of balancing energy bids for the frequency restoration process pursuant to Articles 143 and 147 of Regulation (EU) 2017/1485, and the reserve replacement process pursuant to Articles 144 and 148 of Regulation (EU) 2017/1485. Such methodology shall:
(a) be based on marginal pricing (pay-as-cleared);
(b) define how the activation of balancing energy bids activated for purposes other than balancing affects the balancing energy price, while also ensuring that at least balancing energy bids activated for internal congestion management shall not set the marginal price of balancing energy;
(c) establish at least one price of balancing energy, for each imbalance settlement period;
(d) give correct price signals and incentives to market participants;
(e) take into account the pricing method in the day-ahead and intraday timeframes.

2. In case TSOs identify that technical price limits are needed for efficient functioning of the market, they may jointly develop as part of the proposal pursuant to paragraph 1 a proposal for harmonised maximum and minimum balancing energy prices, including bidding and clearing prices, to be applied in all scheduling areas. In such a case, harmonised maximum and minimum balancing energy prices shall take into account the maximum and minimum clearing price for day-ahead and intraday timeframes pursuant to Regulation (EU) 2015/1222.

3. The proposal pursuant to paragraph 1 shall also define a methodology for pricing of cross-zonal capacity used for exchange of balancing energy or for operating the imbalance netting process. Such methodology shall be consistent with the requirements established under Regulation (EU) 2015/1222, and:
(a) reflect market congestion;
(b) be based on the prices for balancing energy from activated balancing energy bids, determined in accordance either with the pricing method pursuant to paragraph 1(a), or if applicable, the pricing method pursuant to paragraph 5;
(c) not apply any additional charges for the exchange of balancing energy or for operating the imbalance netting process, except a charge to compensate losses if this charge is also taken into account in other timeframes.

4. The harmonised pricing method defined in paragraph 1 shall apply to balancing energy from all standard and specific products pursuant to Article 26(3)(a). For specific products pursuant to Article 26(3)(b), the concerned TSO may propose a different pricing method in the proposal for specific products pursuant to Article 26.

5. Where all TSOs identify inefficiencies in the application of the methodology proposed pursuant to paragraph 1(a), they may request an amendment and propose a pricing method alternative to the pricing method in paragraph 1(a). In such case, all TSOs shall perform a detailed analysis demonstrating that the alternative pricing method is more efficient.

Article 55

Imbalance price

1. Each TSO shall set up rules to calculate the imbalance price, which can be positive, zero or negative, as defined in Table 2:
Table 2

Table 2

Payment for imbalance

2. The rules pursuant to paragraph 1 shall include a definition of the value of avoided activation of balancing energy from frequency restoration reserves or replacement reserves.

3. Each TSO shall determine the imbalance price for:
(a) each imbalance settlement period;
(b) its imbalance price areas;
(c) each imbalance direction.

4. The imbalance price for negative imbalance shall not be less than, alternatively:

(a) the weighted average price for positive activated balancing energy from frequency restoration reserves and replacement reserves;

(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy from frequency restoration reserves or replacement reserves.

5. The imbalance price for positive imbalance shall not be greater than, alternatively:

(a) the weighted average price for negative activated balancing energy from frequency restoration reserves and replacement reserves;

(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy from frequency restoration reserves or replacement reserves.

6. In the event that both positive and negative balancing energy from frequency restoration reserves or replacement reserves have been activated during the same imbalance settlement period, the imbalance settlement price shall be determined for positive imbalance and negative imbalance based on at least one of the principles pursuant to paragraphs 4 and 5.