On March 4, Energinet switched to quarterly balancing of the electricity grid, and on March 19, a new imbalance pricing model came into effect. Energinet assesses that the changes fundamentally strengthen the system's robustness and the integration of renewable energy, but at the same time acknowledges that it has become up to 400 percent more expensive to have imbalances, and that adjustments are required to dampen the most inappropriate price fluctuations.
- The transition to balancing every 15 minutes is, in all modesty, one of the biggest changes to the electricity markets in the Nordic region ever. The change means that we can better integrate solar and wind into the electricity system while maintaining a high level of security of supply. Not just in Denmark, but across the Nordic region. And in the long term, the change will also mean lower electricity prices for consumers, because we will be more precise in balancing the electricity grid, says Kia Marie Jerichau, Deputy Director of Energinet's Business and Market, in a press release.
Energinet has had a dialogue with the industry about the new model, and it has been shown that it has brought with it some inexpediencies, which they are working to mitigate, including the large price fluctuations.
- We hear the players' criticism and do everything we can to meet their wishes and create some conditions that do not give them unreasonable fluctuations in expenses. At the same time, it is important to emphasize that it is the players' own bid prices that are reflected in the imbalance price, says Kia Marie Jerichau.
On June 2, Energinet introduced a deadband of 25 MW, which means that minor imbalances are no longer activated. According to Energinet, this has already had an effect: The proportion of time with imbalance prices has fallen from 100 percent to around 90 percent in DK1 and 80 percent in DK2.
- We are well aware that the deadband alone does not fix all the inadequacies in the new model, but it is a place to start. The algorithms have been a bit too strict, so they have now been adjusted. And together with the deadband, we hope that it creates a better correlation between the size of the system imbalance and the size of the imbalance price, says Kia Marie Jerichau.
Energinet emphasizes that the company is not allowed to make money in the balancing market. On the contrary, there has been a minor undercoverage in the first two months of operation. According to Energinet, the higher prices are due to increased costs for balancing. Therefore, the basic principle of the new model, that those who create imbalances must also pay to correct them, will remain unchanged.
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