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. Cooperation in this context allows several TSOs to better coordinate and optimize this activation.

One possibility for this optimization is the netting of demand for balancing energy between several control areas which is called “imbalance netting”. Until January 2019 APG was part of two imbalance netting cooperation agreements: the participation in the IGCC which is continuously expanded considerably increased APG’s netting potential. The Imbalance Netting Cooperation (INC) between APG, the Slovenian TSO ELES and the Croatian TSO HOPS which was created in 2013 and expanded in 2016, was integrated into the IGCC in February 2019. In 2020 additional members are going to join IGCC, which means that IGCC will have 23 active members  and thus becomes a true European Platform for Imbalance Netting (see Figure 1).

  

Figure 1: Participation Status with the IGCC (Status: November 2020)

Technical Description

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

The core element of imbalance netting is the optimization module, which is applied before aFRR is actually 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. This optimization and data transfer is performed within seconds.

 

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

Limitations

The optimization is constrained by the volume of cross-zonal transmission capacity which is still available after intraday gate closure time so that the security of supply is not jeopardized (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 settlement prices need to be calculated for the final TSO-TSO settlement of cross-border energy exchanges. This financial settlement is based on 15-minute intervals and aims at a fair distribution of the overall cost savings. The TSO-TSO settlement model is based on opportunity prices calculated individually by all participating TSOs based on the aFRR pricing models in the various control areas.

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

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 calculated in a transparent and fair way 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. To avoid negative benefits for individual TSOs their settlement prices are adjusted and, consequently, positive benefits of other TSOs have to be reduced. This re-distribution ensures that all participants have an incentive to remain part of the imbalance netting cooperation and that systematic discrimination of participants is avoided.

 

Publication of data

Similar to the publication regarding aFRR, the information about the imbalance netting correction signals (increase or reduction activation of aFRR) is published immediately after each 15-minute interval and can be found here. The components are displayed in the same graph in different colors, separately for positive and negative activation. The data is also available as CSV-file.

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