Analysis and Recommendations on Dispatching Orders in the Balancing Market

December 10, 2020

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.