USAID ESP analyzed the situation on the Balancing market with the material difference between debits and credits of the uplift account UA-1 and developed a set of recommendations to mitigate the gap between costs of balancing energy and imbalances:
- PSPs should not get the down-regulation orders for switching to pumping mode. Otherwise, it is a clear abuse of market position. UkrHydroEnergo must buy required energy in market segments, preferably bilaterally from EnergoAtom, which has off-peak energy after PSO obligations. Downregulation orders for pumping should be considered only as exceptions in emergency cases.
- Specific requirements on using PSPs by the dispatchers should be addressed in the Grid Code.
- Ukrenergo should develop a clear procedure for Out-of Merit Order List (OMOL) dispatch orders. The procedure must be approved by NEURC and include all acceptable cases categorized and explained.
- To eliminate the attractivity of the BPM, day zone upregulation bidding caps should be linked to actual DAM prices while night zone upregulation caps might stay linked to DAM bidding caps.
- In order to avoid abuses by producers during the quarantine, increasing downregulation bidding cap up to 80-90% of actual DAM prices should be considered.
- After a more detailed analysis, several other options can be considered for pricing of balancing energy for MOL and OMOL orders to avoid abuses and decrease total balancing cost, hence uplift UA-1 account size. Each past month and case should be carefully analyzed for a permanent solution.