Nordic Imbalance Settlement Model

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(2)

A Balance Responsible Party is a party that has a valid imbalance settlement contract proving financial security and identifying balance responsibility with ISR. Balance Responsibility means obligations to ensure that a balance exists between the supply and withdrawal and for the purchase and sale agreements it has entered into.

Balancing Market The entirety of institutional, commercial and operational arrangements that establish market-based management of the function of Balancing within the framework of the European Network Codes.

Delivery Hour / Day A time period of delivery during which the Market Participants delivers the power in-feed or withdrawals to the system Distribution System

Operator DSO

A Distribution System Operator is the distribution grid owner with the responsibility to distribute electricity from producers to its customers. The DSOs have the responsibility to meter production, consumption, exchange and report the metered data to the involved stakeholders. This responsibility also includes closed distribution system operator.

Frequency Containment

Reserves FCR

Frequency Containment Reserves means the Operational Reserves activated to contain System Frequency after the occurrence of an imbalance.

Frequency Restoration

Reserves FRR

Frequency Restoration Reserves means the Active Power Reserves activated to restore System Frequency to the Nominal Frequency and for Synchronous Area consisting of more than one LFC Area power balance to the scheduled value.

Imbalance Adjustment

An energy volume representing the Balancing Energy from a Balancing Service Provider and applied by the Connecting TSO for an Imbalance Settlement Period to the concerned Balance Responsible Parties, for the calculation of the Imbalance of these Balance Responsible Parties.

Imbalance Settlement

Responsible ISR

A party that is responsible for settlement of the difference between the contracted quantities and the realised quantities of energy products for the Balance Responsible Parties in a Market Balance Area.

Key Performance

Indicator KPI

KPIs are utilized to measure the performance of different market participants. KPIs are a transparent way to display how TSOs, DSOs, BRPs and REs carry out their respective responsibilities.

Market Balance Area MBA A Market Balance Area is an area that provides (exchange) schedules that represent a basis for monitoring of imbalances. The Elspot price is always the same within a MBA.

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Terminology 2/2

Term Abbreviation Explanation

Market Participants MP Market Participants are the main stakeholders in the settlement: the TSOs, DSOs, BRPs and REs. These enter into transactions in one or more wholesale energy market.

Metered data - Metered (metering) data is, in this Handbook, used as a general term for all the data that the market participants meter, collect and report to ISR for imbalance settlement purpose.

Metering Grid Area MGA

A Metering Grid Area is a physical area where consumption and / or production and exchange can be metered. A MGA can include both production and consumption but also only one of these. It is delimited by the placement of meters for period measurement for input to, and withdrawal from the area. It can be used to establish the sum of consumption and production with no period measurement and network losses. MGAs are decided on national level. One company is responsible for all metering points within one MGA. Nord Pool Spot NPS The Nordic energy exchange and the company that organizes the physical electricity market in the Nordic countries. Operates in

Norway, Denmark, Sweden, Finland, Estonia, and Lithuania.

Power Exchange PX A power exchange is a sales forum or marketplace used by energy producers.

Production Unit PU A Production Unit is a generator or a set of generators within the same power plant in one MGA. Regulation Object RO

A Regulation Object is a set of one or more generators and stations within a MBA decided by the respective Transmission System Operator (TSO) and the BRP. One RO can only include production of a certain technology (wind, hydro, nuclear, etc.). There can only be one BRP per RO.

Retailer RE

A Retailer sells electricity to an end user. It sells and buys electricity directly from a producer, another retailer or via NordPoolSpot. A RE has an agreement with a BRP. In Finland a RE may have an agreement with a BRP, or with another RE who has an agreement with a BRP (chain of open supplier).

Replacement Reserves RR Replacement Reserves means the reserves used to restore/support the required level of FRR to be prepared for additional system imbalances. This category includes operating reserves with activation time from Time to Restore Frequency up to hours.

Service Provider SP

A Service Provider is a party that provides operational balance management and settlement services for the market participants e.g. BRPs, REs and DSOs. According to what services the SP provides to the market participant, the SP performs the corresponding tasks towards ISR and the imbalance settlement system.

Transmission System

Operator TSO

A Transmission System Operator has the responsibility for both the security of supply and the high-voltage grid. They also carry the ultimate responsibility on the imbalance settlement according to the national laws. In this document TSO refers to following Nordic TSOs: Statnett, Fingrid, and Svenska Kraftnät.

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Consumption per MGA per RE on hourly basis used in imbalance settlement. Consumption is divided into the following consumption types:Grid losses, Interruptible consumption, Industry consumption over 50 MW, Pumps and Pumped Storage Production Production per PU on hourly basis used in imbalance settlement. Production is divided into following production types hydro,

wind, nuclear, gas turbine/diesel production, solar, wave, combined heat and power

MGA Exchanges The exchange of energy sum that occurs between Metering Grid Areas adjacent to each other. Measured in the border points and reported hourly.

MGA Exchange

Trade The MGA Exchange Trade represents sold or bought MGA exchange between two REs in different MBAs

PX Market Trade PX Market Trade is the electricity trade concluded on the Nord Pool Spot – Elspot (day-ahead) or Elbas (Intraday)

PX Market Flows

PX Market Flows consists of two parts: Elspot- and Elbas flows. Elspot flow is the planned flow between two MBAs and resulting from day-ahead market trades. Elbas flow is net planned flow between the two MBAs resulting from intraday market trades.

Bilateral Trade An electricity trade that has been agreed upon between two market participants on hourly basis.

Production Plans BRPs reported plans for production, on RO basis. Imbalance

Adjustment

Imbalance Adjustment means the correction applied to the position of a Balancing Service Provider or a BRP by TSO for the calculation of the Imbalance Volume

MGA Imbalance Sum of reported input to, and withdrawals (including network losses) from one MGA. The sum is zero when reported values are correct.

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Reporting Roles, Responsibilities and Schedule

-Overview

• Every participant in the electricity wholesale market will have to

apply for acceptance into the settlement structure from the ISR.

• The participants themselves are responsible for registering and

verifying that their information is up-to-date.

• Responsibilities regarding the settlement structure information

management are explained in the following tables.

• The settlement structure information is required to be registered

according to the defined gate closure times.

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Structure Information Reporting

RE BRP ISR DSO TSO Nord Pool Spot

1

2

8

5

6

10

7

9

3

4

10

N

14 days before the delivery day

3 days before the delivery day

N

tbd

N

What is reported 1 MECs for consumption

2 MECs for production 3 MECs for MGA exchange

4 MGA Structure

5 Bilateral Trade Structure 6 Regulation Objects

7 RE - BRP Structure 8 MGA - MBA Structure 9 Regulation Objects

10 Market Participant Validity

1

2

8

5

6

7

9

3

4

10

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Executive Summary

Nordic Imbalance Settlement Model

Settlement Structure Management

• Metered Data by Types

• Production Metering

• Consumption Metering

Metering

Settlement Data Reporting

Imbalance Settlement

Invoicing

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Metered Data by Types

• There are three different main types for metered data (or types of

metering points)

• Metered consumption • Pumped (only in

Norway)

• Pumped storage (only in Norway) • Interruptible (only in Sweden) • Industry over 50 MW (only in Sweden) Hourly Metered Consumption from the MGA

Consumption Metering Points

• Profiled consumption • Pumped (only in Norway) Hourly Metered Consumption from the MGA

• Metered grid losses • Profiled grid losses

Hourly Metered Consumption from

the MGA Hourly Metered

Input to the MGA from Production Production Metering Points Hourly Metered Exchange with Adjacent MGAs Exchange Metering Point to Other MGAs

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Production Metering

• All production metering in the Nordic Imbalance Settlement Model is based on netted metering

– Netted metering is defined as metered production after own consumption used for power generation has been subtracted

• The definition of own consumption has not been harmonized and the following information about

the national principles has been provided

– In Finland the legislation for own consumption of the production plant can be found in the document "Kauppa - ja teollisuusministeriön asetus voimalaitosten omakäyttölaitteista". The document can be found at:

http://www.finlex.fi

– In Sweden there is no legislation describing own consumption of the production plant.

– In Norway the definition of own consumption of the production plant can be found in the document "Forskrift om elsertifikater" in chapter 3 § 16 "Bestemmelser om måledata og korreksjonsfaktor" .

• An industry site that also has its own production units are not allowed to net the production with

their consumption

• Until legislation in Finland, Norway and Sweden have been harmonized, the Nordic Imbalance

Settlement Model will handle both gross and net metered production, which can be metered,

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Net Metering for Production

• Net metering has been implemented

so that both generator and own

consumption of the production unit

are metered by the same meter

• In the case in the picture, the meter is

a so called two-way meter and it is

possible to measure energy in both

directions

• If production energy exceeds the own

consumption, it is reported as

production

• If there is no production during the

hour the own consumption will be

reported as consumption and handled

in the consumption balance

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Gross Metering for Production

• Gross generation is defined as the

sum of the electrical energy

production by all the generating sets

concerned, measured at the output

terminals of the main generator

• In the picture, meter 1 is for

production metering and meter 2 is

the metering of own consumption

• Meter 1 will be the reported

production of the PU

• Metered values from Meter 2 will be

aggregated together with other

meters that the RE has in this MGA

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Households with both Production and Consumption

“Prosumers” and Industry with Consumption

• Net metering of PUs with own

consumption and an additional

consumption (C) may be set up

according to the picture on the right

• No meter 2 is required for sites with

main fuse up to 3x63A in Finland

• The additional consumption (C) (e.g.

a factory) may not be netted with the

production

• Only netting behind meter 2 is

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Consumption Metering

• The DSO should, in an hourly settled meter point, meter values at

each shift of hour

• The DSO is recommended to perform data acquisition as soon as

possible after the delivery day

• The handling of consumption metering will be done in accordance

with existing national rules

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performed per BRP and includes data from the parties in the BRP's balance hierarchy, using relations in the structure information (e.g. BRP’s responsibility over REs). Production plans Production Production imbalance adjustment Production Imbalance Power 2-price model Production Production plans Consumption Trades Consumption imbalance adjustment Consumption Imbalance Power 1-price model Volume fee Consumption

Production Imbalance

Consumption Imbalance

• The consumption imbalance settlement volumes are calculated based on received settlement data. • The calculation is

performed per BRP and includes data from the parties in the BRP's balance hierarchy, using relations in the structure information (e.g. between MPs; BRP’s responsibility over REs).

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Calculation of Production Imbalance Settlement

Production imbalance per BRP per MBA Metered production per BRP per MBA Planned production per BRP per MBA Production imbalance adjustment up per BRP per MBA

Production plans per BRP per RO FCR per type and RO Metered production per PU Production imbalance adjustment down per BRP per MBA

RR per type and RO FRR per type

and RO

Input from market participants Calculation result Aggregated value

Source

DSO BRP Balancing market Balancing market Balancing market

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Consumption Imbalance Settlement

Consumption imbalance per BRP per MBA Planned production

per BRP per MBA Consumption per BRP per MBA Calculated MGA imbalance per BRP per MBA Production plans per BRP per RO Metered consumption per RE per MGA Preliminary profiled consumption per RE per MGA

Bilateral trades per BRP per MBA Elspot trade per

RE per MBA Elbas trade per

RE per MBA Calculated MGA imbalance per BRP per MGA Metered production per PU MGA exchange

per MGA per adjacent MGA

Bilateral trades per counterpart

per MGA

Elspot trade per BRP per MBA Elbas trade per

BRP per MBA Consumption imbalance adjustment up Preliminary profiled onsumption per BRP per MBA MGA exchange trade per MGA per

adjacent MGA

MGA exchange trade per BRP per

MBA

FCR per type and RO

Input from market participants Calculation result Aggregated value BRP DSO DSO

Source

DSO DSO NPS NPS BRP Balancing market

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Example of the Imbalance Settlement

• As a result of the BRP`s production imbalance

calculation (65 - 50 + (-10)) there is a 5 MWh

surplus in the BRP´s production imbalance.

• The BRP sells 5 MWh imbalance power to the

ISR.

Production imbalance

[MWh]

Production plan 50

Metered production 65

Imbalance adjustment (up regulation, sale to

TSO) -10

Production balance imbalance calculation

Imbalance calculation Metered production [MWh] Production plan [MWh] Imbalance adjustment [MWh] Imbalance [MWh] Delivery hour 65 -50 -10 5

Production Imbalance

Consumption Imbalance

• As a result of the BRP´s consumption

imbalance calculation (50 + (-20) + (- 45))

there is a -15 MWh deficit in the BRP´s

consumption imbalance

• The BRP buys 15 MWh from the ISR

Consumption imbalance

[MWh]

Production plan 50

Bilateral trades (purchase) 5

Elspot trades (sale) -25

Metered Consumption -10

MGA imbalance -30

Profiled consumption -5

Consumption balance imbalance calculation

Imbalance calculation Production Plan [MWh] Bilater + Elspot Trades [MWh] Metered consumption MGA imbalance Profiled consumption [MWh] Imbalance [MWh] Delivery hour 65 -50 -10 5

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Imbalance Settlement with Missing Data

• The calculation of imbalances is performed in the imbalance settlement IT

system independent of whether all the settlement data has been received or

not.

– For MECs from which data hasn’t been received the value 0 is used in the

calculation but empty settlement data is not changed from void to 0 in the

database.

• If the values have not been received by the gate closure (13 days after the

delivery day) the final calculations are to be performed with the value 0.

– If the calculation was done with not all settlement data available, the market

participant in question is notified about this in the Online Service. The notification

includes information on what settlement data was missing.

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Management of Imbalance Errors after Gate Closure

• There will be no corrections of the imbalance settlement made by the ISR

after the invoice of a settlement period has been created and submitted.

Exceptions are

– if the ISR has committed errors or

– due to extraordinary circumstances (force majeure or similar)

• Handling of imbalance errors after invoicing is done bilaterally between the

contracting parties

• Subsequent bilateral correction of imbalance settlement is outside of the

ISRs scope, but harmonized standards and procedures have been

developed by the industry together with the regulators

• The proposal of the handling of balance errors from Finnish Energy

Industries can be viewed in the handbook in Appendix 2

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• The production imbalance sale price (ISR sales to BRPs) shall be the down-regulating price of the hour. If no down-regulation has been regulated or if the hour has been defined as an up-regulation hour, Elspot price shall be used as the production imbalance sales price. • The production imbalance purchase price (ISR purchase from BRPs) shall be the up regulating price of the hour. If no up-regulation has been regulated or if the hour has been defined as a down-regulation hour, Elspot price shall be used as the production imbalance purchase price.

If both up-regulation and down-regulation has been regulated during the delivery hour, the hour shall be defined as an up-regulation hour or down-regulation hour depending on which direction more energy has been regulated. If there has been no regulation or if there has been equally much regulation in both directions, the price of imbalance power is regulating market power main price.

Production imbalance purchase price (EUR/MWh) per MBA

Main direction of imbalance adjustment per MBA

Up regulation price (EUR/MWh) per MBA

Down regulation price (EUR/MWh) perMBA

Spot price (EUR/MWh) per MBA

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2-price 1-price U p -r e g u la ti n g h o u r N o re g u la ti o n s D o w n -r e g u la ti n g h o u r U p -r e g u la ti n g h o u r N o re g u la ti o n s D o w n -r e g u la ti n g h o u r Up-regulating price 100 50 50 100 50 50 €/MWh Spot Price 50 50 50 50 50 50 €/MWh Down-regulating Price 50 50 20 50 50 20 €/MWh Balance provider’s

Two-price and One-price System

• In the two-price system, separate prices are calculated for the purchase and sales of

imbalance power

–

The sales price of imbalance power in the production balance sold by TSO to the balance

responsible party is the up-regulating price of the hour

–

The purchase price of imbalance power in the production

balance purchased by TSO from the balance responsible

party is the down-regulating price of the hour

–

If no regulation has been carried out or if the hour has been

defined as a down or up-regulating

hour, the spot price is used as the

sales or purchase price, respectively

• In the one-price system, the purchase

and sales prices of imbalance power

are identical

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Fee Structure – Overview

• The fees will cover the national cost base which encompasses costs for operating the ISR as well

as costs for reserves

• The fees will be invoiced from the market participants depending on the market area they operate

in

– The fees for production and consumption vary between the different countries as the cost bases are national – The production and consumption fees are set by each TSO considering the national cost base

– The weekly fee will be harmonized but the imbalance fee might vary between the Nordic countries

• The fees can be changed with one months’ notice if necessary

– However, the goal is to keep the fees fixed for at least one calendar year at the time, if possible

• TSOs are responsible for calculating and setting the fees and notifying ISR to reduce or increase

the fee levels

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Fee Structure – Fees

Fee

Unit

Description

Weekly fee EUR/Week

• Contributes to financing the imbalance settlement performed by the ISR • Applicable for all BRPs active in the week for which the invoice is sent • Calculated per country (EUR/Week)

• Maximum fee for one BRP active in all market balance areas in the Nordics will be three times the weekly fee

Peak power reserve fee

EUR/MWh (in Sweden)

• A supplementary fee for the Peak Power Reserve (EUR/MWh) will be charged on the BRP’s metered consumption, excluding network losses for networks requiring licenses • Charged on working days between 06.00-22.00 CET, between 16th of November and

15th of March

• If the fee generates a surplus or trading profit for Svenska Kraftnät’s compared to the costs for the Peak Power Reserve during the winter period, a settlement will be made subsequently, no later than 30th of June

Currency fee EUR • Possible for the BRPs to choose settlement in NOK or SEK for an additional fee, which is

to cover ISR's currency risk

Consumption

fee EUR/MWh

• For financing the national cost base for reserves

• Calculated per hour for BRP’s consumption during the delivery hour as EUR/MWh (per MBA per country)

Production fee EUR/MWh

• For financing the national cost base for reserves

• Calculated per hour for BRP’s production during the delivery hour as EUR/MWh (per MBA per country)

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Invoice

• The BRP will receive one electronic invoice for each country it is active in from the ISR

• The invoice will contain the volumes (MWh) and amounts (EUR) per market balance area

• The invoice is a combination of fees and amounts

Production imbalance settlement volumes

Elspot price per MBA (EUR/MWh) Production imbalance sales price (EUR/MWh)* Production imbalance purchase price (EUR/MWh)

Production fee (total MWh produced per

country, EUR)

Consumption fee (total MW h consumed per country, EUR) Consumption imbalance price (EUR/MWh) Up-regulating price

per bidding area (EUR/MWh) Consumption imbalance fee (EUR/MWh) Weekly fee (EUR/week) Currency fee (EUR/MWh) Down-regulating price per bidding area

(EUR/MWh)

OR

Production imbalance amounts

per BRP per MBA

Production fees per BRP per

MBA

Consumption imbalance amounts

per BRP per MBA

Consumption fees per BRP per

MBA

Consumption imbalance fees per

BRP per MBA

Weekly fee per BRP per country Currency fee per BRP per country Consumption imbalance settlement volumes * BRP sales to SR OR OR Input from market parties Volume Amount Calculation result Source Balancing market Balancing market NPS

Nordic Imbalance Settlement Model

Contents

Executive Summary

Nordic Imbalance Settlement Model

Settlement Structure Management

Metering

Settlement Data Reporting

Imbalance Settlement

Invoicing

Contents

Executive Summary

Nordic Imbalance Settlement Model

Settlement Structure Management

Metering

Settlement Data Reporting

Imbalance Settlement

Invoicing

Communication

Collateral Management

Market Behavior Reporting

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Description of the Handbook Contents, Chapters 1-6

Chapter

Contents

Description of the Handbook Contents, Chapters 7-11

Chapter

Contents

Terminology 1/2

Terminology 2/2

Contents

• General Background

• Benefits

• Essential Changes

Executive Summary

Nordic Imbalance Settlement Model

Settlement Structure Management

Metering

Settlement Data Reporting

Imbalance Settlement

Invoicing

The Purpose and Objectives of the Nordic Imbalance

Settlement

Objectives

• Imbalance settlement between different

MBAs with as similar principles as possible

through one ISR

• Design and provide similar operational

preconditions for BRPs regardless of an

MBA

• Harmonize common rules and standards

for information exchange

• Contribute to the implementation of a

common Nordic retailer market

• Be a forerunner in imbalance settlement

issues on the European level

Purpose

• A common imbalance settlement solution

is supported by the governments and

regulators in the Nordic countries

• Harmonizing the imbalance settlement in

Finland, Norway and Sweden is regarded

as an important step towards a fully

functional common end user market

• Common imbalance settlement is

therefore a prerequisite for a common end

user market

• Imbalance settlement is a natural

monopoly and a necessary function in a

commercial based electricity market

General Background

•