Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing defines an imbalance settlement period (ISP) as the time unit for which the imbalance of the balance responsible parties is calculated (Article 2(10)).
The so-called 'Winter Energy Package' uses the same definition (Article 2(2)(n) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD)) and Article 2(15) of the Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast).
The length of the imbalance settlement period impacts on:
- imbalance pricing methodology (i.e. single or dual);
- balancing processes required (use of replacement reserves or not);
- balancing energy products (e.g. scheduled, pure energy products or only direct activated power products); and
- volume calculation (request or metered).
An important rule that can’t be overestimated is that Nominated Electricity Markets Operators (NEMOs) must “provide market participants with the opportunity to trade in energy in time intervals which are at least as short as the imbalance settlement period for both day-ahead and intraday markets” (Article 8(2) of the Regulation (EU) 2019/943).
Pursuant to the initial ENTSO-E’s draft Electricity Balancing Network Code (NC EB) the harmonisation of the imbalance settlement period within and between synchronous areas was envisioned no later than two years after the NC EB entry into force.
The stepwise approach was envisioned through a proposal of all Transmission System Operators (TSOs) submitted for approval to all national regulatory authorities (NRAs) based on a cost-benefit analysis.
According to the said ENTSO-E draft code the imbalance settlement period was maximally 30 minutes, however, each TSO had the right to develop a proposal to deviate from the decision on the harmonisation of imbalance settlement periods on the base of specific cost-benefit analysis.
However, the Agency for the Cooperation of Energy Regulators (ACER) proposed some amendments to the ENTSO-E vision of the imbalance settlement period.
Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing
Article 53
Imbalance settlement period
1. By three years after the entry into force of this Regulation, all TSOs shall apply the imbalance settlement period of 15 minutes in all scheduling areas while ensuring that all boundaries of market time unit shall coincide with boundaries of the imbalance settlement period.
2. The TSOs of a synchronous area may jointly request an exemption from the requirement laid down in paragraph 1.
3. Where the relevant regulatory authorities of a synchronous area grant an exemption from the requirement laid down in paragraph 1 upon a joint request of the TSOs in the concerned synchronous area or at their own initiative, they shall perform, in cooperation with the Agency and at least every three years, a cost-benefit analysis concerning the harmonisation of the imbalance settlement period within and between synchronous areas.
ACER's Recommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing called NC EB explicitly defined the length of the of the harmonised imbalance settlement period.
The ACER asssessed an harmonised duration equal to 15 minutes as a natural choice for the imbalance settlement period, since 30 minutes, was used, at the date of Recommendation's issuance, only by three EU Members States, whereas 15 minutes was used in eight Member States.
ACER proposed such harmonised settlement period should be applied by 1 July 2019.
Also acording to Article 7(4) of the said Proposal for a Regulation on the internal market for electricity of 30 November 2016 the imbalance settlement period was set 15 minutes in all control areas, but the deadline that was proposed then was 1 January 2025.
Pursuant to Article 53 of the aforementioned Commission Regulation (EU) 2017/2195 of 23 November 2017 by three years after the entry into force of the said Regulation (i.e. by 18 December 2021), all TSOs shall apply the imbalance settlement period of 15 minutes in all scheduling areas while ensuring that all boundaries of market time unit shall coincide with boundaries of the imbalance settlement period. The TSOs of a synchronous area may jointly request an exemption from the respective requirement.
This rule is referred to in Recital 13 of the Regulation (EU) 2019/943, which explains this harmonisation is intended to support intraday trading and foster the development of a number of trading products with the same delivery windows.
However, in Article 8(4) of the said Regulation (EU) 2019/943 has finally adopted the rule that:
- by 1 January 2021, the imbalance settlement period must be 15 minutes in all scheduling areas, unless regulatory authorities have granted a derogation or an exemption (derogations may be granted only until 31 December 2024),
- from 1 January 2025, the imbalance settlement period must not exceed 30 minutes where an exemption has been granted by all the regulatory authorities within a synchronous area.
The specific example of the use of the imbalance settlement period in the broader electricity market infrastructure is the requirement of Article 20(g) of the Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast), which, among the functionalities of smart metering systems, stipulates that such devices must enable final customers to be metered and settled at the same time resolution as the imbalance settlement period in the national market.
Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast)
Recital 13
[...] Article 53 of Regulation (EU) 2017/2195 also provides for the harmonisation of the imbalance settlement period at 15 minutes in the Union. That harmonisation is intended to support intraday trading and foster the development of a number of trading products with the same delivery windows.
Article 8(2)
NEMOs shall provide market participants with the opportunity to trade in energy in time intervals which are at least as short as the imbalance settlement period for both day-ahead and intraday markets.
Article 8(4)
By 1 January 2021, the imbalance settlement period shall be 15 minutes in all scheduling areas, unless regulatory authorities have granted a derogation or an exemption. Derogations may be granted only until 31 December 2024.
From 1 January 2025, the imbalance settlement period shall not exceed 30 minutes where an exemption has been granted by all the regulatory authorities within a synchronous area.
Documentation
Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast), Article 2(15), Article 8(2), Article 8(4), Recital 13
Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast), Article 20(g)
Electricity Balancing Network Code (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing), Article 2(10), Article 53
Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD), Article 2(2)(n), Article 7(4)
ACER's Recommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing
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