ENTSOG BAL NC Monitoring Report 2016

Table 2.5: Incentive mechanism for TSOs to optimise their balancing actions

COUNTRY

SHORT EXPLANATION OF HOW THE MECHANISM WORKS AND INCENTIVISES THE TSO TO

OPTIMISE THEIR BALANCING ACTIONS.

Physical balancing of TSOs has to be done primarily by the usage of linepack. If necessary the Market

Area Manager procures volumes at the VTP to the best achievable market price according to his GTC.

According to the NRA’s Circular implementing the Balancing Network Code, the incentives scheme is

based on the performance of Enagás in its role of Technical Manager of the System. It takes into

account the market options available to the transmission system operator for the selection and use of

balancing actions and it is subject to periodical review by the National Authority for Markets and

Competition.

The incentive mechanism introduces measures aimed at the improvement of the information to the

market and the efficiency of the TSO balancing actions. In particular, performance indicators have

been defined by the Italian NRA according to the following three mechanisms:

UK-GB

1) Network offtakes forecast (forecast vs. actual)

2) Efficient TSO balancing actions (difference between SMPbuy SMPsell vs. SAP)

3) Residual balancing (use of linepack and operation storage within a predefined range)

To ensure the GB TSO does not incur excessive costs for the industry, the NRA already incentivises

the GB TSO to balance and trade efficiently through ‘Residual Balancing’ Incentives. The TSO is

incentivised in two ways:

(1) To minimise the price spread of its balancing actions (to restrict the impact of such actions on

the market price); and

(2) To minimise the change in the linepack volumes between the start and end of the day.

By seeking resolve any system imbalances on the relevant day the costs of such are targeted to

those responsible for the imbalance.

Image courtesy of Terranets

ENTSOG BAL NC Monitoring Report 2016 |