Imbalance Netting Cooperations

Abbreviation Explanation
ACE Area Control Error
Balancing or Imbalance Energy  Energy activated to compensate the imbalance of a Control Area
aFRR Automatic Frequency Restoration Reserve
IGCC International Grid Control Cooperation
INC Imbalance Netting Cooperation
LFC Load Frequency Control
TSO Transmission System Operator

One of the main responsibilities of a TSO is to ensure and maintain the physical balance between electricity generation and consumption in its respective control area by activating balancing energy. Substantial potential for efficiency can be exploited when the activation of balancing energy is coordinated and optimized between different control areas.

One possibility for this optimization is the netting of demand for balancing energy between control areas. Until January 2019, APG was part of two imbalance netting cooperation: First, the participation within IGCC as well as its continuous extension allowed APG to increase its overall imbalance netting potential. Second, the INC was created and extended in 2013 and 2016, respectively, to cover the control areas of APG, the Slovenian TSO ELES, and the Croatian TSO HOPS. The INC was integrated into the IGCC in February 2019. This means that the IGCC consists of a total of 17 active TSOs with additional TSOs joining in 2020. The IGCC will then evolve into the European Platform for Imbalance Netting (see Figure 1).

Both cooperations clearly demonstrate the potential of such an optimisation.

IGCC

Figure 1: Principle – Cross-border optimisation through Imbalance Netting Cooperations

Technical description

In an imbalance netting cooperation the activation of aFRR is optimized by netting the aFRR demand of all participating control areas. I.e. counter-activations of aFRR shall be avoided. This cross-border optimization takes place whenever aFRR needs to be activated in one control area in order to compensate for a lack of energy and when at the same time aFRR needs to be activated in another participating control area to compensate for a surplus of energy.

The core element of imbalance netting is the optimization module, which is used before aFRR is activated (see Figure 2). For this, the deviations (ACE) of each participating control area are submitted to the optimization module. These signals are then netted in real time, taking into account additional restrictions and limitations. Finally, the resulting correction signals are submitted to the respective control areas and their load frequency controllers.

If a TSO participates in more than one imbalance netting cooperation, the resulting residual ACE is submitted to a subsequent netting module, which allows for additional optimization steps. Each load frequency controller will then receive only the residual signal including all corrections. The optimization as well as the data submission is performed within seconds.

 

SRR_Koop5EN

Figure 2: Real-time model of data flows in an Imbalance Netting Cooperation

Limitations

The optimization is constrained by the amount of cross-zonal transmission capacity which is still available after intraday gate closure time so as not to endanger the security of supply (see Figure 2). In addition, the imbalance netting potential can be limited in order to not exceed the demand for aFRR within a control area. These restrictions ensure that imbalance netting does not interfere with markets other than the market for aFRR.

Economical background: opportunity and settlement prices

After the physical imbalance netting takes place, settlement prices need to be calculated for the final TSO-TSO settlement of cross-border energy exchanges. This financial settlement is based on opportunity prices calculated individually by all participating TSOs; these prices are again based on the respective aFRR pricing models.

  • APG determines the opportunity price per time unit based on volume-weighted average prices of activated aFRR, separately for imports and exports.

  • Further information on opportunity prices of the participating TSOs in IGCC can be found here: https://www.entsoe.eu/network_codes/eb/imbalance-netting/

The settlement prices are calculated separately for each 15-minute interval, resulting in the final basis for the settlement process, together with the exchanged volumes per TSO. The settlement prices are determined in a transparent and fair manner for all participating TSOs. They are determined as the average of all TSOs’ opportunity prices, weighted by the respective exchanged volumes per TSO.

Within the IGCC an additional re-distribution of benefits resulting from the netting takes place. In order to avoid negative benefits for individual TSOs, their settlement prices are adjusted accordingly; consequently, benefits of other TSOs have to be shortened. This re-distribution ensures that all participants have an incentive to remain part of the imbalance netting cooperation. I.e. this set-up is designed to avoid the systematic discrimination of participants.

 

Publication of data

Similar to the publication regarding aFRR, the publication of the imbalance netting correction signals (increase or reduction activation of aFRR) takes place immediately after each 15-minute interval here. The components are displayed in the same graph in different colors, separately for positive and negative activation. The data is also available via a CSV download.

The final correction signals and settlement prices are published monthly (resolution: 15 minutes) on APG's website here.