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, without real cash payments for the electricity purchased on the balancing market. The simulation period of operation is needed for all wholesale electricity market participants to develop a mechanism of interaction on the balancing electricity market (BEM); estimate the actual extension of electricity generation-consumption imbalances in Kazakhstan UPS; update the amount of adequate capacity reserves; and determine the price range for the balancing electricity.

Order No676 dated 30 November 2015 of the Ministry of Energy of the Republic of Kazakhstan "'On amendments and additions to some orders of the Minister of Energy of the Republic of Kazakhstan" extends the operation of the balancing market in simulation mode until 1 January 2019.

In accordance with Clause 6, Article 13 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 balancing electricity market (BEM).

Also, in accordance with the Regulations, the participant to the wholesale electricity market may independently act as a Balance Provider of its own electricity generation/consumption imbalances on the balancing electricity market, or assign the responsibility for financial settlement of electricity imbalances to another wholesale electricity market participant by concluding a respective agreement.

In the simulation mode the balancing market operated 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 by the wholesale electricity market participants with the System Operator, except for actual payments for electricity purchased and sold on the balancing market, under contracts concluded with the Settlement Centre.

During the simulation mode, the Balance Provider must conclude contracts for the financial settlement of electricity imbalances with the wholesale electricity market participants, who do not independently act as the Balance Providers and assign this responsibility to such Balance Provider.

During the simulation mode, the System Operator and Settlement Centre conduct trainings for the wholesale electricity market participants - the Balance Providers, as well as KEGOC MES branch employees on the principles and methods of work performance with the software system of the balancing market, including: transmission of data on the planned electricity production/consumption  to generate  daily schedules, applications for participation in the regulation, access to the database of the System Operator, the generation of the actual values of hourly electricity production/consumption o for each balancing electricity market participant.

To test the software of the balancing market system during the simulation mode within the framework of the balancing electricity sale contracts between the Balance Providers and Settlement Centre, the parties will issue reconciliation certificates of electricity purchase and sale on the balancing market; issue invoices for payment regarding the results of the accounting period marked 'Test'.

The information on hourly imbalances for each Balance Provider and balancing electricity cost indicators will help the wholesale market participants to optimize business processes associated with generation/consumption of electricity in the wholesale electricity market. According to the outcome of the simulation mode, each Balance Provider has an analytical information needed to plan expenditure and revenue for the forthcoming period. The access to information database of the BTM of the System Operator is provided in the following manner:

1. Each BEM participant shall be registered in the information database of the system. To do that it shall provide to the System Operator (hereinafter referred to as SO) the necessary contact information including: Registered address; full name and position of an employee responsible for receiving and sending the data; e-mail; contact telephone numbers.

2. All the participants, who provided the contact information, can then send daily schedules by e-mail to SO. In addition, 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) is provided to the participants after they sign the contracts with the SO for balancing of electricity generation-consumption in Kazakhstan UPS, the Settlement Centre for purchase and sale of balancing electricity, and activate their account in the system.

4. Participants, who has received access to the system, are able to view their daily schedules that they have filed in, actual hourly values of the electricity production/consumption, value of imbalances (their own and of the entities they provide), price of hourly imbalances.

The most frequently asked questions in connection with the launch of balancing electricity market in the Republic of Kazakhstan.

What is the principle of the balancing market operation?

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

1. The settlement between the market participants under the concluded bilateral electricity purchase contracts is carried out for the amounts stated in the daily schedule (as may be amended);

2. The System Operator identifies market participants that have deviations from the specified daily schedule;

3. The System Operator receives hourly applications from the market participants that want to purchase or sell electricity at prices specified on the balancing market;

4. The settlement of all deviations in the daily schedules (physical settlement of imbalances) is carried by the System Operator by injecting the operational capacity reserves or unloading of the operating units, and also by using the possibilities of regulating consumers to change the amount of their electricity consumption;

5. The Settlement centre, after receiving information from the System Operator about the market participants involved in the imbalance settlement, performs settlements on non-profit basis with the participants at prices prevailing on the balancing market (financial settlement of imbalances);

6. To maintain the required capacity reserves in Kazakhstan UPS the System Operator will purchase the reserve power capacity availability services from the energy producers.

What will happen to the power control services market with the launch of the balancing market?

At present, the deviations from the daily schedule are covered by the adjustments of the daily schedule by ordering additional electricity at energy sources and power regulation services provided by KEGOC (variable component) and the Central Asian power systems (basic component).

With the launch of the balancing market, KEGOC will stop provision of power regulation services for the market participants. All the daily schedule deviations will be settled on the balancing market. However, it will be still possible to adjust the daily schedule and purchase the 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 of the wholesale market?

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

1.  If all the commercial metering points are equipped with microprocessor-based metering devices, then the deviations will be estimated in accordance with the meter indications; however the format and method of data submission 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 prepare a load profile for the settlement period based on the indications of the existing microprocessor-based meters, and it will be applied to the total value of consumption/generation of a market entity for the settlement period. It is necessary to agree the calculation algorithm, the format and method of data submission with the System Operator.

3. If there is telemetry data, the System Operator will prepare a load profile based on this data, and it will be applied to the total value of consumption/generation of the market participants for the settlement period. It is necessary to agree the calculation algorithm, the format and method of data submission with the System Operator.

4. In the absence of telemetry, the load profile could be prepared on the basis of the statistical information, seasonal measurements conducted on hourly basis, and other parameters of the wholesale electricity market participant operation.

5. If consumer has no agreed load profile, the System Operator to determine the hourly consumption values of a consumer will use a typical load profile with a similar consumption structure, or the data of hourly control measurements annually conducted at the consumer.

It should be noted that the load profile is used 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 of the costly installation of a commercial metering system.

How will the financial settlement of imbalances be carried out?

Financial settlement of electricity imbalances is carried out by the System Operator under the contract for provision of balancing services with balance providers, at that the balancing electricity purchase and sale transactions are carried out by the Settlement Centre under the contract for purchase and sale of balancing electricity with balance providers.

Electricity imbalance  is calculated for the balance provider as an algebraic sum of the actual amount of the received (supplied) electricity during an hour from the value specified for that hour in the approved daily schedule of the System Operator (according to agreed adjustments). Each ten days the System Operator generates imbalance settlement statements for each Balance Provider, which indicates the amount and the sign of imbalance for each hour, the price of balancing electricity for each hour, the total amount of the debit and credit for ten-day billing period. Following the billing period (month) the final settlements between the Settlement Centre of the system operator and the balance providers are carried out on the basis of the actual electricity generation and consumption balance on the wholesale electricity market of the Republic of Kazakhstan and monthly imbalance settlement statements.

Settlement Centre of the System Operator

In accordance with the Regulations the Settlement Centre is a subsidiary of the System Operator that carries out transactions on purchase and sale of balancing electricity on the balancing market on behalf of the System Operator.

Order No.94 dated 21 May 2013 defines EnergoInform as a Settlement Centre on the balancing electricity market to carry out balancing electricity purchase-sale transactions on behalf of the System Operator.

As of 1 January 2018, the Settlement Centre concluded more than 208 contracts for the purchase/sale of balancing electricity with the balance providers, including KEGOC and Financial Settlement Centre for Support to Renewable Energy Sources.

The Balance Provider regularly receives reconciliation reports on purchase and sale of electricity on the balancing market, and invoices for payments based on the results of the billing period, which are indicated as 'Test'. Balance Providers that have access to SIEMENS system of electricity balancing market may also issue test invoices to the Settlement Centre for the electricity supplied by them to the balancing electricity market during the billing period.

Every months the Settlement Centre on a regular basis monitors the impact of the balancing electricity cost on the prime tariff of power supply and transmission organizations and submits this information to KEGOC and KOREM.

The Settlement Centre publishes and updates all analytical information regarding the balancing electricity market operation in simulation mode on the website of EnergoInform.