Imbalance Netting
European Union Electricity Market Glossary

 

 


 

 

According to Article 3(2)(128) of the Network Code on System Operation the 'imbalance netting process' is a process agreed between Transmission System Operators (TSOs) that allows avoiding the simultaneous activation of Frequency Restoration Reserve (FRR) in opposite directions, taking into account the respective FRCEs as well as the activated FRR and by correcting the input of the involved FRPs accordingly.

 

In the above definition:

 

- ‘frequency restoration control error’ or ‘FRCE’ means the control error for the FRP which is equal to the ACE of a LFC area or equal to the frequency deviation where the LFC area geographically corresponds to the synchronous area (Article 3(2)(43) of the Network Code on System Operation),

 

- ‘frequency restoration process’ or ‘FRP’ means a process that aims at restoring frequency to the nominal frequency and, for synchronous areas consisting of more than one LFC area, a process that aims at restoring the power balance to the scheduled value (Article 3(2)(42) of the Network Code on System Operation),

 

- ‘area control error’ or ‘ACE’ means the sum of the power control error (‘ΔP’), that is the real-time difference between the measured actual real time power interchange value (‘P’) and the control program (‘P0’) of a specific LFC area or LFC block and the frequency control error (‘K*Δf’), that is the product of the K-factor and the frequency deviation of that specific LFC area or LFC block, where the area control error equals ΔP+K*Δf (Article 3(2)(19) of the Network Code on System Operation).

 

 

Network Code on System Operation

 

Article 146
Imbalance netting process


1.   The control target of the imbalance netting process shall aim at reducing the amount of simultaneous counteracting FRR activations of the different participating LFC areas by imbalance netting power interchange.


2.   Each TSO shall have the right to implement the imbalance netting process for the LFC areas in the same LFC block, between different LFC blocks or between different synchronous areas, by concluding an imbalance netting agreement.


3.   TSOs shall implement the imbalance netting process in a way which does not affect:
(a) the stability of the FCP of the synchronous area or synchronous areas involved in the imbalance netting process;
(b) the stability of the FRP and the RRP of each LFC area operated by participating or affected TSOs; and
(c) operational security.


4.   TSOs shall implement the imbalance netting power interchange between LFC areas of a synchronous area in at least one of the following ways:
(a) by defining an active power flow over a virtual tie-line which shall be part of the FRCE calculation;
(b) by adjusting the active power flows over HVDC interconnectors.


5.   TSOs shall implement the imbalance netting power interchange between LFC areas of different synchronous areas by adjusting the active power flows over HVDC interconnectors.


6.   TSOs shall implement the imbalance netting power interchange of a LFC area in a way which does not exceed the actual amount of FRR activation necessary to regulate the FRCE of that LFC area to zero without imbalance netting power interchange.


7.   All TSOs participating in the same imbalance netting process shall ensure that the sum of all imbalance netting power interchanges is equal to zero.


8.   The imbalance netting process shall include a fallback mechanism which shall ensure that the imbalance netting power interchange of each LFC area is zero or limited to a value for which operational security can be guaranteed.


9.   Where a LFC block consists of more than one LFC area and the reserve capacity on FRR as well as the reserve capacity on RR is calculated based on the LFC block imbalances, all TSOs of the same LFC block shall implement an imbalance netting process and interchange the maximum amount of imbalance netting power defined in paragraph 6 with other LFC areas of the same LFC block.


10.   Where an imbalance netting process is implemented for LFC areas of different synchronous areas, all TSOs shall interchange the maximum amount of imbalance netting power defined in paragraph 6 with other TSOs of the same synchronous area participating in that imbalance netting process.


11.   Where an imbalance netting process is implemented for LFC areas which are not part of the same LFC block, all TSOs of the LFC blocks involved shall comply with the obligations in Article 141(5) regardless of imbalance netting power interchange.


Agency for the Cooperation of Energy Regulators (ACER) in its Recommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing proposed that the Regional Integration Model (RIM) for the imbalance netting process should be composed of single Coordinated Balancing Area (CoBA) covering the whole Continental Europe synchronous area.

 

This proposal considers that imbalance netting in other synchronous areas is already implicitly implemented.

 

The Continental-wide coverage should ensure the necessary consistency between CoBA proposed for automatic Frequency Restoration Reserve (FRR) and manual FRR and the CoBA for imbalance netting.

 

An increased utilisation of imbalance netting has been recently observed in Europe. 

 

Imbalance netting currently covers an important share of the needs of balancing energy in several European markets.

 

Pursuant to data referred to in the ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2014, November 2015 (p. 213), in the Netherlands imbalance netting avoided almost 50% of the electricity system's needs of balancing energy in 2014 (the same figure is quoted by the ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity Markets in 2015, September 2016 (p. 59) for the year 2015).

 

In the Nordic region, where balancing energy markets are currently integrated, imbalance netting across borders is currently used to balance the electricity systems.

 

However, it should be noted that the Nordic electricity systems are balanced as one single responsibility area and, the cross-border exchange of balancing energy cannot be easily disentangled from imbalance netting across borders and from system imbalance at the (national) TSOs level.

 

Annual Report of the ACER and CEER on the Results of Monitoring the Internal Electricity and Gas Markets in 2016 (Electricity Wholesale Markets Volume) published in October 2017 confirms (p. 54) that in 2016 the utilisation of imbalance netting continued to be the most successfully applied tool to exchange balancing services across borders.

 

In 2016 the imbalance netting covered an important share of the needs of balancing energy in several European markets:

 

- in Latvia, the Netherlands and Germany, imbalance netting avoided 84%, 57% and 57%, respectively, of the electricity system’s balancing energy needs in 2016,


- in the Nordic region, the combined application of imbalance netting and cross-zonal exchange of balancing energy covered around 80% of the electricity system’s balancing energy needs in 2016.

 

The application of imbalance netting and exchange of balancing energy was estimated in the said Report of October 2017 at approximately 19% of their potential in 2016 for a selection of 15 borders where sufficient information was available.

 

Although this value indicated a significant improvement (almost doubled) compared to the previous year, it was still relatively low when compared to the level of efficiency recorded in the preceding day-ahead (86%) and intraday (50%) timeframes in 2016.

Article 15(2) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD) stipulates that when cross-zonal capacity is available after the intraday cross-zonal gate closure time, TSOs must use the cross-zonal capacity for the exchange of balancing energy or for operating the imbalance netting process.

 

 

European platform for the imbalance netting process

 

 

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing in Article 22 envisages the procedure for establishing the European platform for imbalance netting process - see box below.

 

 

 

 

Article 22
European platform for imbalance netting process


1.   By six months after entry into force of this Regulation, all TSOs shall develop a proposal for the implementation framework for a European platform for the imbalance netting process.


2.   The European platform for the imbalance netting process, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the imbalance netting process function and the TSO-TSO settlement function. The European platform shall apply a multilateral TSO-TSO model to perform the imbalance netting process.


3.   The proposal in paragraph 1 shall include at least:
(a) the high level design of the European platform;
(b) the roadmap and timelines for the implementation of the European platform;
(c) the definition of functions required to operate the European platform;
(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;
(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure:
(i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform;
(ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as supports the objectives of this Regulation;
(iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;
(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;
(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;
(h) the description of the algorithm for the operation of imbalance netting process function in accordance with Article 58.

 

4.   By six months after the approval of the proposal for the implementation framework for a European platform for the imbalance netting process, all TSOs shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).


5.   By one year after the approval of the proposal for the implementation framework for a European platform for the imbalance netting process, all TSOs performing the automatic frequency restoration process pursuant to Part IV of Regulation (EU) 2017/1485 shall implement and make operational the European platform for the imbalance netting process. They shall use the European platform to perform the imbalance netting process, at least for the Continental Europe synchronous area.

 

 

 

 

 

IMG 0744

    Documentation    

 

 

 

 

 

Network Code on System Operation (Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission system operation), Article 3(2)(128), Article 146

 

Network Code on Electricity Balancing (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - NC EB), Articles 22

 

ACER’s ecommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing

 

ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Gas Markets in 2016, Electricity Wholesale Markets Volume, October 2017, p. 54 

 

ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity Markets in 2015, September 2016

 

ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2014, November 2015, p. 213

 

 

 

 

 

 

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    Links    

 

 

 

ENTSO-E website on imbalance netting

 

LFC Areas

 

 

 

 

 

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Last Updated on Saturday, 13 January 2018 16:23
 

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