Imbalance settlement price

Energy imbalances give rise to financial compensation between RTE and the Balance Responsible Parties (BRPs). The “energy” section of the Balancing-Imbalances account (BIA) is home to these financial transactions. It is intended that balance is achieved by applying a coefficient, “k”.

Calculation of the imbalance settlement price (ISP)


The principles governing calculation of the imbalance settlement price make it possible to introduce a financial incentive on imbalances and reflect the cost of balancing activities conducted by RTE to balance France's power system.

For each half-hourly interval, the ISP (without taxes) is calculated on the basis of the balancing trend, the volume-weighted average price (VWAP) and the sign (+ve or -ve) of the BRP's imbalance.

The imbalance is said to be positive (or negative, as the case may be) if the balance (injection – extraction) inside the BRP's perimeter is positive (or negative). When the imbalance is positive (or negative), the BRP is paid (or charged) by RTE.

Price matrix


If the VWAP is positive or zero:

Upward trend of the French electrical system and
positive or zero VWAPu
Downward trend of the French electrical system and
positive or zero VWAPd
Positive imbalances VWAPu*(1-k) Note 1 VWAPd*(1-k)
Negative imbalances VWAPu*(1+k) VWAPd*(1+k) Note 2

If the VWAP is negative:

Upward trend of the French electrical system and
negative VWAPu
Downward trend of the French electrical system and
negative VWAPd
Positive imbalances VWAPu*(1+k) Note 1 VWAPd*(1+k)
Negative imbalances VWAPu*(1-k) VWAPd*(1-k) Note 2

Updated on: 04/16/2018

  • VWAPu/d: upward/downward Average Weighted Price (see Average weighted price section Balancing Mechanism (BM) rules)
  • The trend is described as upward if the overall imbalance of the French electricity system is negative or nil, and downward otherwise. More details on calculating the trend in the French electricity system trends section Balancing Mechanism (BM) rules.
  • Note 1: The Positive Imbalance Settlement Price cannot be greater than the Negative ImbalanceSettlement Price
  • Note 2: The Negative Imbalance Settlement Price cannot be less than the Positive Imbalance Settlement Price

Revision of the value of “k” coefficient and calculation of “k'” with their imbalance settlement price


The “k” coefficient is a parameter that is defined ex-ante for the purpose of balancing the income and expenditure sides of the Balancing-Imbalances account's energy section, on the basis of historical data. Until 31 December 2018, its value has been 0.08 and from 1 January 2019, its value will be 0.05.

It may be revised once or twice per calendar year. RTE submit all revisions to the CRE, French national regulation agency for approval.

For a given calendar year, Y, the k coefficient is then re-assessed in Y+2 to obtain an ex-post k' value which then enables the BIA to reach its final target balance set by CRE (in practice, zero is the target balance). Imbalance invoices for BRPs are recalculated retrospectively using the k' value. The recalculation gives rise to repayments to BRPs of the difference between the final “M+12” imbalance invoices and the recalculated imbalance invoices.

RTE provides BRPs with a forecast of the repayment due for a year Y (estimated value of k') before the end of February Y+1.

History of « k » and « k' » coefficient values


Year

« k »

« k' »

PRE(k)

PRE(k')

2019 0.05  
2018 0.08 0,0573025 (estimated)    
2017 0.08 -0,0005182
zip.zip zip.zip
2016 0.08 -0.0196316 zip.zip zip.zip
2015 0.08 0.1013322 zip.zip
2014 0.08 0.2267183 zip.zip
2013 0.08 0.1982891 zip.zip
2012 0.08 0.1277557 zip.zip
2011 From 1 July: 0.08
Up to 30 june: 0.12
0.0158848 zip.zip

Updated on: 09/03/2018

The “energy” section of the Balancing-Imbalances account


The BIA's “energy” section records the income and expenditure from BRP and balancing mechanisms. It thus enables subsequent (1) repayment to BRPs of excess receipts, or (2) charging of BRPs for negative balances after the last recalculation of imbalances.

Successive monthly balances of the BIA's “energy” section are also valued by RTE and the BRPs, for retention before the full-year balance is repaid.

Initially, the “energy” section of the BIA included financial transactions relating to:

  • balancing
    • activations, excluding congestions handling and reconstitution of ancillary services when the trend is upward
    • penalties for breaches
    • compensation for breaches of services terms and conditions of use
  • settlement of imbalances
  • operating procedures to achieve a balanced account.

On 1 April 2016, RTE instigated a review of how balancing-related financial transactions are handled. This resulted in imbalance netting and secondary frequency restorations energy valuations being included within the BIA financial transactions at the commencement of v.8 of the MA-RE rules in April 2016.

  • RTE's joining of the IGCC (International Grid Control Cooperation) initiative in February 2016 neutralises activation of secondary reserves between several zones when the needs expressed are in opposite directions (imbalance netting). This brings about substantial gains for BRPs, because it incorporates (1) the financial balance (costs and income avoided) relating to secondary balancing activations avoided at the spot price in France, and (2) the financial balance relating to energy trading with other TSOs participating in IGCC.
  • The integration of secondary frequency restoration energies, hitherto paid for by RTE via the Public System User Tariff, TURPE (Tarif d'Utilisation du Réseau Public d'Electricité). Imbalances are in fact billed to those BRPs showing an imbalance for the BIA, while payment for activated frequency restoration energy was borne by RTE. These arrangements would potentially generate a transfer of millions of euros annually between imbalanced BRPs and RTE.

Since 1 January 2017, one of the goals of changing the BRP balancing mechanism rules is to include all costs and income related to electricity system balancing energy in the BIA.

Another objective is to improve the financing on balancing costs relating to capacity.

The changes on 1 January 2017 include:

  • Inclusion of imbalances at borders and of synchronous areas' physical catch-ups: activities related to primary frequency restoration and the secondary reserve activation period can mean physical flows differ from trade flows, generating imbalances at borders. Previously, the valuation of imbalances at synchronous borders and the associated compensation were not borne by the same account: imbalances were not allocated to any BRP and RTE paid for all physical catch-ups (via the CRCP Compte de Régulation des Charges et Produits). Henceforth, compensation associated with imbalances will be allocated to the BIA. RTE will evaluate physical catch-ups at the spot price, and transfer that value to the BIA. When compensation between TSOs becomes financial, RTE will transfer the valuation of invoices issued to the BIA.
  • Integration of primary frequency restoration energy
  • Deduction of additional adjustment costs to reconstitute margins: this change is caused by a CRE resolution on Public System User Tariff TURPE 5. Additional margin costs are now shared across the system's users.
  • Deduction of additional adjustment costs for ancillary services, regardless of the trend: additional ancillary services costs are now borne indirectly by those actors at the origin of the need to reconstitute ancillary services.

Summary table (income and expenditure currently operationally in place)


BIA before 1 April 2016 BIA between 1 April and 31 December 2016 BIA since 1 January 2017
Imbalance settlement Imbalance settlement Imbalance settlement
Adjustments and counter-adjustments after deduction (or addition) of additional costs from upward (or downward) adjustments activated to handle congestion and reconstitution of ancillary services when the trend is upward. Adjustments and counter-adjustments after deduction (or addition) of additional costs from upward (or downward) adjustments activated to handle congestion and reconstitution of ancillary services when the trend is upward. Adjustments and counter-adjustments after deduction (or addition) of additional costs from upward (or downward) adjustments activated to handle congestion or reconstitution of ancillary services or margins.
Balancing mechanism penalties and compensations Balancing mechanism penalties and compensations Balancing mechanism penalties and compensations
  Frequency restoration energy (secondary reserve) Frequency restoration energy (primary and secondary reserves)
  Imbalance netting Imbalance netting
    Physical catch-ups

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