Balancing electricity market

Operation of the balancing electricity market in simulation period

According to order No. 269 dated 30 November 2007 issued by the acting Minister of Energy and Mineral resources of the Republic of Kazakhstan, the balancing market has been operating since 1Q 2008 in simulation mode, i.e. without real cash settlement of electricity transactions on the balancing market. The simulation period of operation is needed for all wholesale electricity market participants to perfect the mechanism of interaction on the balancing electricity market (BEM); estimate the actual amount of electricity generation and consumption imbalances in Kazakhstan UPS; update the amount of adequate capacity reserves; and determine the price range for the balancing electricity. As a result the balancing electricity market’s simulated operation was extended until July 1, 2022.

In accordance with Article 13.6 of the Electric Power Industry Law and Clause 4 of the Balancing Electricity Market Regulations (hereinafter referred to as ‘the Regulations’), every participant to the wholesale electricity market of Kazakhstan UPS must also be a participant to the BEM.

In accordance with the Regulations, the participant to the wholesale electricity market may choose to act as a balance provider of its own electricity generation/consumption imbalances on BEM, or assign this responsibility for financial settlement of electricity imbalances to other wholesale electricity market participant by concluding a corresponding contract.

The BEM in the simulation mode operates in accordance with the requirements of the Regulations, including the role of the System Operator to balance electricity generation and consumption; conduct physical and financial settlement of energy imbalances under the contracts concluded between the wholesale electricity market participants and the System Operator, except for actual payments for electricity purchased and sold on the balancing market under the contracts concluded with the financial settlement centre.

During the simulation mode, a balance provider must conclude the contracts for the financial settlement of electricity imbalances with the wholesale electricity market participants, who chosen not to act as Balance Providers and assigned this responsibility to such balance provider.

During the simulation mode, the System Operator and the settlement centre shall deliver training for the personnel of the wholesale energy market entities: balance providers, as well as employees of KEGOC’s MES branches, with respect to the principles and methods of working with the BEM software, including how to: submit planned electricity generation / consumption data to devise the daily schedule; apply for participation in the regulation; access to the information database of the System Operator to know actual hourly electricity generation / consumption for each BEM participant.

To test the monitoring of the balancing electricity contracts as a part of the BEM software test during the simulation mode, the parties to the contracts: the balance providers and the financial settlement centre, execute reconciliation statements for the electricity purchased and sold on the balancing market; issue invoices for payment upon the accounting period marked 'Test'.

The information on hourly imbalances for each balance provider and balancing electricity cost indicators shall help the wholesale market participants to optimize business processes associated with generation/consumption of electricity in the wholesale electricity market. The simulation mode has shown that each balance provider has access to an analytical information needed to plan costs and revenue for the forthcoming period. The access to information database of the BEM system of the System Operator is provided in the following manner:

  1. Each participant of the balancing market shall register in the information database of the system. To do that he shall provide the System Operator (CO) with the necessary contact information, including: the registered address, the name and position of the person responsible for receiving and sending the data, e-mail, contact phone numbers.
  2. All the participants, who provided the contact information, can then send daily schedules by e-mail to the SO. Also, the participants receive a template for the preparation of the daily schedule.
  3. The access to the system's web interface (account name, access password) shall be provided to the participants after they have signed a electricity balancing management contract with the SO, and balancing electricity sale contract with the financial settlement centre, and activated their account in the system.
  4. In the system the registered participants can view their own daily schedules, actual hourly electricity generation / consumption, the amount of imbalances (their own and of those who assigned them the responsibility of a balance provider), and the price of hourly imbalances.

Frequently asked questions regarding introducing BEM in Kazakhstan

What is the principle of the balancing market operation?

Briefly, the model of the balancing market is as follows:

  1. The financial settlement between the market participants under the concluded bilateral electricity sale contracts shall be carried out with respect to the amounts stated in the daily schedule (as may be amended);
  2. The System Operator shall identify the market participants that deviated from the specified daily schedule;
  3. The System Operator shall receive hourly bids from the market participants that want to purchase or sell electricity at prices specified on the balancing market;
  4. The physical settlement of all deviations in the daily schedules shall be carried by the System Operator by injecting the operational capacity reserves or unloading of the operating generation units, and also by using the possibilities of demand side regulation of consumers;
  5. The financial settlement centre, after receiving information from the System Operator about the market participants involved in the imbalance settlement, shall complete the settlements on non-profit basis with the participants at the balancing market prices;
  6. To maintain the required capacity reserves in Kazakhstan UPS the System Operator shall purchase the reserve power capacity availability services from the energy producers.

What will happen to the power control services market when the balancing market is launched?

Now the deviations in the daily schedule are covered by the adjustments of the daily schedule which is completed by purchasing the additional amounts electricity and power regulation services provided by KEGOC (variable component) and the Central Asian power systems (basic component).

After the balancing market is launched, KEGOC will stop provision of power regulation services to the market participants. All the daily schedule deviations will be settled on the balancing market. However, it still will be possible to adjust the daily schedule and purchase power regulation services for the base load component from the Central Asia power systems.

How will the actual hourly daily schedule deviations be estimated in the absence of the integrated commercial metering system on the wholesale market?

The actual hourly daily schedule deviations could be measured in several ways depending on the metering equipment available at the market participant:

  1. If all the commercial metering points are equipped with microprocessor-based devices, then the deviations will be measured in accordance with their readings: however, the format and method of data transmission shall be agreed with the System Operator;
  2. if the metering points are not completely equipped with the metering microprocessor-based devices, the System Operator will use a load profile devised for the settlement period based on the indications of the existing microprocessor-based meters, and it will be applied to the total amount of consumption/generation of a market entity for the settlement period. The calculation algorithm, the format and method of data transmission shall be agreed with the System Operator.
  3. If there are telemetry data, the System Operator shall prepare a load profile based on this data, and it will be applied to the total amount of consumption/generation of the market participants for the settlement period. The calculation algorithm, the format and method of data transmission shall be agreed with the System Operator.
  4. In the absence of telemetry, the load profile could be devised from the statistical information, seasonal measurements conducted on hourly basis, or other parameters of the wholesale electricity market operation state;
  5. If consumer has no load profile agreed with the System Operator, to determine the hourly consumption values, the latter shall use a typical load profile with a similar consumption structure, or the data of hourly test measurements annually conducted at the consumer’s.

It should be noted however that the load profile is used as common practice to determine the hourly consumption values on all existing balancing markets. For example, in Sweden, about 40% of consumers operate on the balancing market using the load profile because installation of a commercial metering system is too expensive.

How will the financial settlement of imbalances be carried out?

Financial settlement of electricity imbalances is carried out under a contract for the provision of services for organizing balancing with balance providers, while the purchase and sale of balancing electricity are carried out by the settlement centre under a balancing electricity sale contract with balance providers.

The electricity imbalance for a balance provider is calculated as the algebraic sum of the actual amount of received (delivered) electrical energy within an hour of the amount specified for that hour in the daily schedule agreed with the System Operator (including the previously agreed adjustments thereto). Every 10 days, the System Operator shall make a list of imbalances for each balance provider including amount and sign (+/-) for each hour, the price of balancing electricity for each hour, the total amount of debit and credit for the calculated ten-day period. The final settlements are made between the settlement centre and balance providers for a billing period (month), on the basis of the actual balance of generation and consumption of electricity in the wholesale electricity market of Kazakhstan and monthly statements of mutual imbalance settlements.