Following our recent debates about intraday markets and implicit auctions, we want to link back to the period post ID gate closure and focus on balancing markets. Article 5 of the proposed new regulation on the internal electricity market envisages that "Marginal pricing shall be used for the settlement of balancing energy. Market participants shall be allowed to bid as close to real time as possible, and at least after the intraday cross-zonal gate closure time.
This offers opportunities to better align and eventually converge procedures pre- and post-gate closures and better integrate system operation and markets, but also raises many questions on how to integrate such an approach with the current setting. At the FPM meeting we would like to discuss the situation from the perspective of regional initiatives (i.e. pilot or reference projects in more recent terms) as well as in a set of European countries to better understand these challenges and opportunities.
For regional initiatives the context has changes - while in our discussions in 2016 it was clear, that each initiative was pursuing convergence towards pre-existing structures of the participating countries, this had been criticized for the risks it creates for lock-in with regional market models that are not compatible for other parts of Europe, resulting in fragmentation rather than integration. The proposal of EU Commission for marginal imbalance pricing with bids close to real time, provides guidance on one of the key questions that was still unresolved in the debates a year (see for example FPM summary from The Hague). Is there now a prospect that regional initiatives will strive to develop a blue-print that is suitable for all of Europe? How is this supposed to happen?
For national power market design, the Winter Package has too often only been assessed for its impacts on bidding zone design. All the more important to consider is the implications of marginal pricing and real-time bids to balancing markets in the context of the existing market designs of different EU member states. We want to explore how it could address existing challenges and what other implications it would have for power market design at the example of selected countries. Is the winter package fully coherent with the EB GLs and the other set of codes?
Topics: Energy economics