KEY MESSAGES
- Eurelectric welcomes the opportunity to comment on ENTSO-E’s assessment of the Imbalance Settlement Harmonisation Methodology (ISHM). Imbalance prices constitute a key economic signal for market participants active on the wholesale electricity markets.
- While we appreciate the report prepared by ENTSO-E and Compass Lexecon, Eurelectric calls for a more comprehensive analysis, fully considering the impact of different imbalance price designs on market dynamics in the coupled wholesale markets.
- Eurelectric supports ENTSO-E’s aim to align the definition and interpretation of key elements playing into the determination of imbalance prices. Yet, we believe that a more ambitious level of harmonisation is both feasible and desirable.
- Indeed, a higher degree of harmonisation is instrumental in creating an internal electricity market where market participants compete on the same terms. This also requires consistent transparency practices and a convergence towards similar IT infrastructures.
- For this reason, Eurelectric believes that a future framework for imbalance settlement harmonisation should work towards a single imbalance price, based on balancing energy prices solely and calculated as the volume-weighted average of the different balancing products. Only the current possibility of applying dual pricing under criteria in force should remain possible and, in any case, it should be regularly assessed in scope and time by the NRA.
- Eurelectric encourages TSOs to ensure clear and consistent principles for the calculation of the Value of Avoided Activation (VoAA). More clarity is also required on the proposed triggering conditions for the use of VoAA in the imbalance price calculation.
- Finally, we strongly encourage TSOs to swiftly come forward with a consistent proposal for the volumes considered in the calculation of the imbalance price, in dialogue with stakeholders. Such proposal should limit the influence of unrepresentative activated bids that do not reflect overall balancing energy costs.