Balancing market discrepancy cost hike for green aggregators

Renewable energy production discrepancies in the balancing market will, from now on, result in higher costs for green aggregators and, subsequently, RES producers, market sources have told energypress.

Renewable energy facilities operating with feed-in premium and feed-in tariff arrangements have, as of November, 2022, assumed full balancing-market responsibilities, which essentially means they bear the cost of any discrepancies in declared RES production and actual RES production.

An upper limit that remained valid until the end of 2023 mitigated these costs, but they will now rise as the cap is being removed, the sources noted. RES producers can expect the cost of balancing market discrepancies to rise from 1 euro per MWh to between 2 and 3 euros per MWh, they added.

This cost needs to be kept at sustainable levels as, otherwise, it can greatly impact the earnings of green aggregators and, by extension, RES producers, market sources stressed.

Green aggregators hit by price cap, big non-compliance penalties

Green aggregators, believing their balancing costs are excessive, causing cash-flow problems and creating additional cost passed on to customers, have called for intervention and revisions from power grid operator IPTO and RAE, the Regulatory Authority for Energy.

RES units operating under incremental support contracts have assumed full balancing responsibilities for their electricity generation since November 30, when Greece entered Europe’s cross-border intraday XBID continuous market, through coupling with Italy and Bulgaria.

However, the implementation of a cap on the day-ahead and intra-day markets has created broader risks for green aggregators, including overestimating RES generation levels.

In such an event, the overestimation’s discrepancy is initially compensated based on the clearing price of the day-ahead market, or price cap, and then priced at the balancing market’s deviation price, which is not capped and may be many times over the day-ahead market level, a financial setback for green aggregators.

New non-compliance charges introduced on December 1 as a result of the cap represent an additional problem for green aggregators as they can lead to exceptionally high penalties, reaching levels well over those of balancing costs.

Heightened market activity ahead of demand-response service launch

Preparations are in full swing for the introduction of a demand-response service into the wholesale electricity market, expected to be launched in the coming weeks, initially in the balancing market, followed by other energy exchange markets.

Although this is still a relatively new service in Europe and internationally, strong interest is being expressed by participants in Greece, sources have informed.

Companies wishing to take part in the demand-response service need to take care of three key issues as part of their preparation.

Firstly, they must successfully integrate an appropriate operating system and become familiar with it, by no means an easy matter, according to the same sources.

Secondly, companies need to recruit and train appropriate personnel for this service.

A third step interested parties will need to take to complete their preparation process is to convince partners of the importance and value of the demand-response service.

According to market estimates, providers are not confronting solid resistance, but some degree of skepticism does exist, which is no surprise given the service’s novelty aspect.

According to market officials closely following the overall process, power grid operator IPTO has prepared well and is currently in the process of settling certain pending issues, including configuration of web services facilitating communication between participants and the operator.

Demand-response tool to enter day-ahead, intraday markets

The demand-response mechanism is the latest tool being prepared for entry into Greek energy exchange markets, within the next few weeks, as a move intended to contribute to the system’s balancing and proper functioning, energypress sources have informed.

Besides its basic use in the balancing market, the demand-response mechanism’s coverage will now also be extended into the energy exchange’s day-ahead and intraday markets.

The Hellenic Energy Exchange and power grid operator IPTO, the two authorities handling the procedure, have made progress on the matter.

The energy exchange has already forwarded its related proposal for necessary day-ahead market and intraday market revisions to RAE, the Regulatory Authority for Energy, while IPTO plans to do likewise within the next few weeks.

IPTO has already made technical adjustments to its systems for the demand-response mechanism’s integration in the day-ahead market and intraday markets, while test runs are now being carried out.

Energy ministry plans intraday, balancing market intervention

The energy ministry plans to make two interventions in the intraday and balancing markets in order to rectify side effects detected in the day-ahead market.

The measures to be taken will, amongst other objectives, seek to boost trading volume and revenues in the intraday market.

The side effects, prompted by a cap implemented in the day-ahead market, first appeared July 1, the first day of a temporary mechanism for partial returns of day-ahead market revenues.

 

 

RAE proposes €67m return from power producers to suppliers

RAE, the Regulatory Authority for Energy, has proposed a legislative revision that would facilitate a return of 67 million euros, by electricity producers – expect RES producers – to suppliers, an amount representing unpaid balancing-market earnings between November, 2020 and February, 2021, during the launch of the target model.

The amounts that would be returned to suppliers concern two categories, companies that had passed on excessive costs to customers, as well as companies that had not passed on excessive costs to their customers.

According to information obtained by energypress, two retailers, power utility PPC and Volterra, had not passed on excessive costs to their customers. In this case, money to be returned will go straight into the company coffers of these two firms.

Returns for companies that had passed on excessive costs to customers will be injected into the Energy Transition Fund as support for subsidies offered to consumers.

 

 

Redispatching system to be fully launched in early June

RAE, the Regulatory Authority for Energy, plans to offer no further extension to an ongoing trial run distinguishing between balancing energy and redispatching-related energy in the balancing market, and is set to approve a full launch of the system for early June, when the latest dry-run extension expires.

The trial stage began on December 1 and has been extended twice, the latest ending May 31. The trial run is not producing financial results but is limited to flagging quantities activated as a result of load changes.

Officials have noted that prospective changes promised by the redispatching system’s introduction, including in balancing market prices, should not be seen as a foregone conclusion.

 

Balancing market participation for demand response delayed

The demand response mechanism’s participation in the balancing market is headed for a delay that could require about four more months, despite a Market Reform Plan target that had set the launch for early February.

This estimate is based on the time still needed for the completion of a series of preliminary steps.

These include a legal framework for green aggregation concerning demand response, still needing approval.

Meanwhile, progress has been made on other Market Reform Plan revisions, such as terms distinguishing between balancing energy and redispatching.

Also, a term limiting physical delivery by independent vertically integrated energy suppliers to 20 percent of bilateral agreements has been lifted since the beginning of the year. RAE, the Regulatory Authority for Energy, also plans to soon lift this limit for PPC, the power utility.

The intraday market entry of traders faces delay as, according to sources, terms for transboundary trade concerning intraday markets that have not been coupled have not been finalized with market operators and grid transmission authorities in Albania, North Macedonia and Turkey.

Balancing market entry imminent for demand response

The imminent approval by RAE, the Regulatory Authority for Energy, of a legal framework for demand-response green aggregators represents a first step towards the entry of a second category of players into the balancing market.

RAE president Athanasios Dagoumas made reference to the prospect this week during a speech delivered at an Ecomobility conference staged by HAEE, the Hellenic Association for Energy Economics.

“One of the first revisions to be made in 2022, early on, too, concerns demand response participation [in the balancing market],” the RAE head told the conference.

Demand-response green aggregators will offer balancing services to the grid through appropriate consumption adjustment of load portfolios managed by them.

The energy ministry and RAE are aiming to include the demand response system into the balancing market within the year’s first quarter, sources told energy press.

 

 

 

Balancing market’s redispatching trial run extended by further two months

An ongoing trial run distinguishing between balancing energy and redispatching-related energy in the balancing market will be extended by a further two months, RAE, the Regulatory Authority for Energy, has announced.

The dry-run had begun on December 1 and was initially planned to run for a period of about one month. But it has now been decided that the procedure will need to run until February 28 so that its formula, developed by power grid operator IPTO, can be tested over a greater period of time.

The trial run does not produce financial results but is limited to flagging quantities activated as a result of load changes.

According to the Market Reform Plan, the balancing market’s redispatching procedure is scheduled to be launched on March 31, 2022.

RES unit full balancing responsibility from early ‘22

Greece’s entry into Europe’s cross-border intraday XBID continuous market, through coupling with Italy and Bulgaria, will be delayed until the end of 2022, several months beyond a March 8, 2022 date that had been set.

However, this deferral should not prompt any change in the plan for the assumption, from early 2022, of full balancing responsibility by RES units for discrepancies they cause, in other words, projects with FiP contracts, as this will limit electricity amounts activated for balancing purposes and, as a result, balancing costs, RAE, the Regulatory Authority for Energy, has noted.

The energy ministry is now expected to prepare revisions separating the two launch dates.

 

 

 

Balancing market redispatching set for trial run next month

A process distinguishing between balancing energy and redispatching-related energy in the balancing market will start at the beginning of December, on a trial basis, following approval by RAE, the Regulatory Authority for Energy, of a related formula prepared by power grid operator IPTO.

The operator, who commissioned Grant Thornton as the technical consultant for this project, is currently conducting final checks on its information systems ahead of next month’s launch, energypress sources informed.

Dry runs, not impacting financial results, will be staged initially to test the results of the planned distinction between balancing energy and redispatching.

This trial-run period will also enable balancing service providers (electricity producers) to familiarize themselves with the change and make adjustments to their strategies for offers submitted.

The dry run is expected to last about one month before its results are assessed to determine if the plan can be fully implemented under actual market conditions.

 

Ministry seeks extension for demand response system

The energy ministry has decided to seek an extension, from the European Commission, of a demand response system beyond its September 30 expiry date as a commitment for the demand response mechanism’s participation in the balancing market does not appear feasible.

According to some sources, the ministry has already submitted an application for the continuation of the current demand response system until June, 2022.

The demand response system compensates major-scale electricity consumers when the TSO asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Sector officials believe the system needs to be maintained given the tougher grid conditions expected this coming winter.

The industrial sector’s drastic cutback on energy consumption last summer was crucial in the effort made for energy sufficiency during the extended heatwave and grid problems caused by wildfires.

A market reform plan submitted by Greece to the European Commission keeps open the prospect of new, more realistic mechanisms for demand, exclusively, as a means of ensuring the grid’s smooth functioning. Germany and France have also included similar considerations in their market reform plans.

RAE adopts new redispatching system, producers fear cost increases

RAE, the Regulatory Authority for Energy, has decided to move ahead with an energy balancing and redispatching plan in accordance with a formula prepared by power grid operator IPTO following a meeting yesterday between representatives of ESAI, the Hellenic Association of Independent Power Producers, and IPTO.

Public consultation was also staged by RAE on the IPTO formula, prepared by the operator after being commissioned by the authority.

ESAI has expressed concern about the new plan, warning that changes to the current system could increase, rather than contain, balancing costs in the wholesale electricity market, amongst other dangers.

Natural gas-fired electricity producers noted that balancing market revisions decided on ought to have undergone an extensive trial period before being implemented.

 

Ministry committee set to deliver energy-storage framework plan

Facilities operating purely as energy storage stations will be placed under one category for licensing and regulatory purposes, while a separate category will be established for operations combining storage and RES stations, according to a proposal being prepared by a special committee assembled by the environment and energy ministry.

Also, all electricity markets, such as the day-ahead, intraday and balancing markets, will be open to all energy storage units, regardless of category, according to sources.

Units operating as energy storage stations, alone, are likely to receive licenses through an existing framework already used to grant licenses to natural gas-fired power stations, sources informed.

RAE has resorted to this existing framework as a solution to offer production licenses to a number of companies that have lodged applications for large-scale battery facilities.

The committee, set to stage its final session tomorrow, is expected to present a finalized proposal early next week to authorities, including political officials, RAE, the Regulatory Authority for Energy, energy market operators, and the energy exchange.

The energy ministry, placing great emphasis on energy storage as part of the country’s decarbonization strategy, intends to forward the committee’s framework plan for public consultation at the end of June. The ministry plans to submit a related draft bill to Parliament by October 31.

Medium-voltage suppliers seek higher-priced deal revisions

A sharp rise in medium-voltage energy costs over recent times, resulting from higher wholesale prices, threatens to damage the competitiveness of Greek manufacturers, Antonis Kontoleon, president of EVIKEN, the Association of Industrial Energy Consumers, has told energypress.

Rallying CO2 emission right prices as well as persistently higher prices in the day-ahead and balancing markets have prompted electricity suppliers to seek revised medium-voltage agreements as protection against loss-incurring sales.

Electricity suppliers, maintaining business to business agreements with medium-voltage consumers have increased – by 20 percent compared to just recently – their number of requests forwarded for new supply agreements.

More crucially, suppliers are asking their customers to accept upward price revisions.

In many cases, suppliers have forwarded letters to customers informing that they will no longer be able to service existing supply agreements unless prices per KWh are raised.

Low-voltage consumers also face increased electricity bill costs following the activation, by suppliers, of cost-protection clauses.

Independent suppliers have activated wholesale price-related clauses, incorporated in their supply agreements, while power utility PPC has triggered, for the first time, a CO2 emission rights cost-related clause.

RAE, the Regulatory Authority for Energy, has summoned PPC’s administration to offer an explanation on this decision, at a meeting today. The authority is also expected to soon summon independent suppliers.

IPTO to challenge RAE’s €5m fine for west corridor line delay

Power grid operator IPTO will legally challenge a 5 million-euro fine imposed by RAE, the Regulatory Authority for Energy, for delays in the development of a “west corridor” transmission line in the Peloponnese, from Patras to Megalopoli, operator sources have informed energypress.

The authority’s decision is legally baseless and does not serve interests for optimal functionality in the energy market, the sources noted.

The RAE fine imposed on IPTO encourages local reaction in general and is detrimental to the effort being made for swift development of infrastructure projects around Greece, the operator’s sources added.

IPTO has never kept concealed delays it has faced to develop a small fraction of work remaining for the west corridor’s completion as a result of resistance raised by a regional monastery in the Kalavryta area, the operator sources asserted.

As soon as legal action was taken, late last year, against this project’s completion, IPTO informed RAE in writing about the initiative’s repercussions on the development plan, the sources said.

Also, IPTO does not accept any responsibility for balancing market cost increases, which have risen since last November’s target model launch, and will support its position by providing facts and evidence to RAE as well as other Greek and European authorities, the sources told.

 

Target model tweaks to determine end of balancing market measures

The amount of time still needed before RAE, the Regulatory Authority for Energy, can lift balancing market measures designed to contain related surcharge costs by limiting offers of market participants will depend on the progress of a road map for structural interventions to the target model.

The road map, being prepared by RAE in collaboration with power grid operator IPTO, is expected to be ready within June.

It will offer a time frame for the implementation of all structural interventions planned and needed to promote rational behavior in wholesale electricity markets.

Restrictive measures were introduced on February 13 for an anticipated three-month period.

 

Target model non-compliance cost formula effective, IPTO notes

A new target model formula calculating discrepancy cost is proving effective as, in most cases, it is impacting the finances of electricity producers and suppliers when they deviate from distribution orders and loading plans, power grid operator IPTO has noted.

As a result, the discrepancy cost formula should, for the time being, continue to apply for both electricity producers and suppliers as it appears to be offering a balancing incentive, the operator has recommended.

IPTO’s proposal has been forwarded to public consultation, taking place until May 7, for a scheduled reassessment of factors concerning non-compliance charges following the target model’s recent launch.

Balancing market entry for RES, demand response by end of ’21

RAE, the Regulatory Authority for Energy, is planning the balancing market entry of all energy sector players offering flexibility to the grid by the end of this year, a prospect seen as a key factor in lowering balancing market costs.

As a result, RES players, through green aggregators representing them, will participate in the balancing market by the end of 2021, along with the demand response mechanism.

The addition of RES producers promises to intensify competition in the balancing market, which, combined with the demand response mechanism’s participation, will contribute to a further de-escalation of balancing market surcharge costs.

Wind and solar energy farms will have a place in the balancing market. Other RES technologies, such as biogas units, are linked to operating aid contracts with fixed tariffs.

The demand response mechanism’s participation in the balancing market promises to enhance the system’s flexibility, in terms of demand, while the entry of RES producers will make electricity production even more flexible.

Authorities gearing up for intraday market entry of traders

Authorities are picking up the pace on moves needed to also enable traders to begin participating in Greece’s intraday electricity market, one of the new wholesale markets emerging with the target model’s recent introduction.

The Greek energy exchange will forward its proposal for necessary market regulation amendments to RAE, the Regulatory Authority for Energy, within the next two months, energypress sources informed.

These revisions will take finalized shape through ongoing discussions between the energy exchange, as operator of the intraday market, power grid operator IPTO, managing international grid interconnections, and RAE.

The authorities are seeking to establish an optimal formula for the intraday market entry of electricity traders.

The talks, until now, have indicated that intraday day interconnection rights will not be required for transboundary trade between intraday markets that have not undergone coupling.

Therefore, traders will be able to participate in the intraday market by utilizing the amount of daily interconnection rights they have secured and not used for transboundary transactions in the day-ahead market.

The addition of traders to the intraday market promises to boost its liquidity, currently low. This will help liberate market players by offering them greater flexibility, limiting the pressure on the balancing market.

Foreign firms seeking local demand response service roles

Major European companies with considerable interests in energy exchanges abroad are now seeking to represent local industrial producers for demand response services in Greece’s balancing market.

Two major international players, currently assembling new related divisions in Greece, have already approached Greek producers to take on their representation.

Demand response system entry into Greece’s new balancing market is expected to begin within 2021, barring unexpected developments.

Once launched, foreign representatives will be able to assume demand-response, green-aggregator roles in Greece, offering balancing services to the system.

Power grid operator IPTO, in its effort to ensure grid stability, will be able to utilize the flexibility major-scale electricity consumers are capable of offering.

Market coupling with Bulgaria expected by early May

Market coupling to unify the Greek and Bulgarian day-ahead markets, representing a second step for the participation of Greek wholesale electricity markets in a pan-European unification of markets through the target model, is planned for late April or early May, sources have informed.

The forthcoming step was preceded by market coupling between Greece and Italy, unifying, as of December 15, the day-ahead markets of the two countries through a single price coupling algorithm, EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm). It calculates energy allocation, net positions and transboundary electricity prices.

Greece’s market coupling with Bulgaria promises to create an even broader trading platform for market participants, sector officials noted. Besides bilateral contracts for energy imports and exports, market coupling will also facilitate automatic energy flow from the higher-priced country to the lower-priced country.

To date, Greece has clearly been an energy importer in its transboundary energy trading relationship with Bulgaria. It remains to be seen if this will be maintained under the new conditions.

Once market coupling of the Greek and Bulgarian day-ahead markets has been accomplished, Greece’s next step towards unification with European energy markets will be to link its intraday market with that of Italy, a step expected by next summer, through the implementation of complementary regional intraday auctions (CRIDA).

Further ahead, a third step, balancing market coupling through two European platforms, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), is planned for the second half of 2022.

 

Balancing market cost falls to €10.99/MWh a week into measures

Balancing market measures recently introduced by RAE, the Regulatory Authority for Energy, have produced tangible results for market participants, judging by clearance price figures between February 15 to 21, the first full week since the measures were imposed.

However, market players were quick to point out that last week’s market conditions were shaped by unusual factors not making possible a safe assessment of the results produced by the measures. They were launched on February 13.

Extreme snowstorms affected electricity supply in many parts of the country and a technical breakdown at the Koumoundourou substation serving the wider Athens area required a full-scale response from the country’s electricity production units.

Between February 15 and 21, the balancing market cost registered 10.99 euros per MWh, down from 12.36 euros per MWh a week earlier, according to data provided by IPTO, the power grid operator.

The regulatory authority needed to intervene following a sharp rise in balancing market costs since November’s launch of the target model’s new markets.

Redispatching formula RAE’s next balancing market step

After imposing balancing-market restrictions for producer offers, as of February 13, RAE, the Regulatory Authority for Energy, is now planning further measures needed to fully rectify this market’s irregularities, including, most imminently, a formula to remunerate units for redispatching activities.

Redispatching, or unit loading changes made for security or grid sufficiency reasons during the Integrated Scheduling Process (ISP) stage, has often been implemented by power grid operator IPTO at units belonging to the Peloponnese system, as energy restrictions exist concerning the maximum amount of energy injections permitted for these units, due to the existing 150-kV system’s transmission capacity limitations, combined with increased penetration of RES units in the area.

However, a formula has yet to be established to distinguish between energy activated for balancing purposes and energy activated for other purposes.

RAE is seeking a complete and permanent formula to deal with issues concerning system restrictions, especially a mechanism under which units participating in dispatching will be remunerated.

As part of the effort, the authority, on the one hand, has asked power grid operator IPTO to propose a formula distinguishing energy activated for balancing purposes and energy activated for other reasons, and, on the other, offer recommendations for effective integration and application of these provisions in the balancing market code.

RAE is aiming to adopt the new measures as soon as possible. For the time being, a measure suspending the ability of players to submit negative-price offers for energy balancing is in place until a 400-kV line linking Megalopoli, Peloponnese with the main grid is launched.

Balancing market costs remained slightly elevated for a four successive week, IPTO data showed.

Day-ahead market prices unusually low despite crisis conditions

Though the balancing market and its various problems since November’s launch of new target model markets may have been the focus of attention of late, irregularities have also troubled the day-ahead market, necessitating a closer look, officials have stressed.

This need was first pointed out by Alex Papalexopoulos, one of the architects of the country’s electricity system, who observed that the day-ahead market has shown signs of offers being systematically submitted at levels below actual cost. He said market dumping was taking place, referring to offers submitted by lignite-fired units.

These concerns have now also been raised by Dinos Benroubi, head of energy supplier Protergia’s electricity and gas divisions, as well as Antonis Kontoleon, the chief official at EVIKEN, Greece’s Association of Industrial Energy Consumers.

At a time of crisis, high electricity demand and calls on industrial producers to hold back on energy consumption, day-ahead market prices remain very low and full-scale electricity exports are taking place towards Italy, Kontoleon noted during a panel discussion at Athens Energy Dialogues, a conference held yesterday.

Protergia’s Benroubi took the issue a step further by noting that RAE, the Regulatory Authority for Energy, must implement a monitoring mechanism for the day-ahead market, as, despite serving as a base for the target model’s functioning, it is displaying irregularities.

RAE wants measure of balancing market distortion cost

RAE, the Regulatory Authority for Energy, has requested power grid operator IPTO to calculate the financial impact of balancing market distortion costs since November’s launch of new target model markets.

RAE has since decided to impose restrictions on balancing market offers. These are expected to be published in the government gazette today or tomorrow, enabling their implementation three days after the date of publication.

RAE estimates it will have implemented the balancing market restrictions by the end of this week.

It remains to be seen if RAE’s request towards IPTO for a measure of the higher balancing market costs incurred by suppliers will result in retroactive returns for affected parties dating back to the early-November launch of the target model.

Non-vertically integrated electricity suppliers, severely impacted by the increased balancing market costs that resulted in higher wholesale market prices, are demanding retroactive rebates.