Information on the balancing energy price

German Imbalance Settlement Price (reBAP)

Since February 2020, the following model description has been used to determine the reBAP in accordance with stipulation BK6-12-024 of the Bundesnetzagentur (German Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway):

Model description of the reBAP calculation since 01.02.2020

Within the framework of the further development of the imbalance price system, the above-mentioned model will be used to implement Bundesnetzagentur’s stipulations BK6-12-024 of October 25th, 2012 and BK6-19-217 of December 11th, 2019 in terms of billing and in order to improve balancing group management.

General information on the imbalance price

In order to guarantee the secure operation of the grid at any time, each (commercial) electricity producer & consumer must provide a quarter-hourly forecast of the electrical energy to be injected or withdrawn from the grid on the following day. Unforeseen deviations in the forecast or power plant outages lead to a deviation, which also leads to a deviation in the respective balancing group (BG). To compensate this and to ensure that the electricity demand is equal to ('in balance with') total electricity supply, the transmission system operators (TSOs) must use balancing energy.

The imbalance price, also known as reBAP (uniform imbalance price across control areas in Germany), determines on the balancing group side the price of the energy used to balance the system. In a perfectly balanced system without any forecast deviations within the individual balancing groups and thus without the use of balancing, this value would therefore amount to 0 €/MWh. Therefore, the reBAP is not understood as a penalty for forecast deviations of the balancing groups, but rather represents the price of the activated reserves to balance the system. This can lead not only to costs, but also to revenues, if the prices for activating these reserves are negative or a balancing group has deviated from its forecast in a system-supporting manner.

Historic development

Until May 2009, there was an individual imbalance price per load frequency control area in Germany.

In June 2010, a uniform nation-wide compensation energy price was introduced. With the full cooperation of the German TSOs in the national Grid Control Cooperation (GCC), the determination of the imbalance price was also standardized throughout Germany (BK6-08-111). This represents an average volume-weighted energy price, which is calculated for every quarter hour based on the costs and revenues of the activated balancing energy and the system imbalance. Due to the symmetrical pricing system and the netting of positive and negative volumes and costs, small GCC imbalances in the denominator can lead to high prices. In order to avoid high prices in case of small imbalances, the imbalance price is capped at the highest settled balancing energy price for aFRR and mFRR. These cost cannot be charged to the balance responsible parties directly and are therefore turned over as an additional price component. Depending on the sign of the GCC imbalance, this is a price premium or discount that remains constant over the month.

Over the years, the following noteworthy adjustments and improvements have also been made to the imbalance price system:

As of December 2012, the reBAP was further developed in accordance with stipulation BK6-12-024, the main changes being the coupling of the reBAP to the hourly intraday exchange price index ("incentivizing component"). In order to incentives balance responsible parties more to be balanced or to support the system, a surcharge or discount on the reBAP was introduced if 80 % of the positive or negative balancing capacity contracted in Germany has been activated ("scarcity component"). In addition, the above-mentioned stipulation made it possible to include the costs from price capping, which could not be passed on until then, together with the additional revenues in the grid fees.

A turnover mechanism was integrated as of October 2013, which regulates the handling of price corrections following the publication of the reBAP. Due to the complexity of determining the individual input variables of the reBAP, errors can occur in the reBAP calculation. Therefore, the correction mechanism has been developed. This mechanism provides for the additional or reduced revenues resulting from error corrections to be offset in the reBAP of the following month(s). An additional component is used for offsetting, which represents a price increase or decrease that remains the same over the month in terms of amount every quarter of an hour. In order to prevent miscalculations from having a significant impact on the reBAP, the corresponding limit for the correction within a month was set at a maximum of +/- 3% of the regular costs for balancing energy of the respective month. Moreover, this value may not exceed +/- 3 €/MWh.

The industry compromise has been implemented on 01.05.2016. It provides an additional limitation of imbalance prices to avoid price peaks in the case of low GCC imbalances. Within the scope of the coordination of an industry compromise between the balance responsible parties and the TSOs, an additional capping step (AEP20) has been developed and approved by the Bundesnetzagentur. The aim has been to introduce a further cap to avoid high balancing energy prices for GCC imbalances between -125 MWh and +125 MWh or -500 MW and +500 MW remaining after the AEP2 calculation step. The limitation is implemented as a linear increasing or decreasing function depending on the NRV balance. To determine the limiting function, the volume-weighted average price of the hourly product of the respective hour from continuous intraday trading on EPEX Spot is provided with a premium or discount between 100 and 250 €/MWh.