Balancing market in Russia - Fingrid

Balancing market in Russia - Fingrid

Balancing market in Russia - Fingrid


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FINALFeb 28, 2013Organization of the <strong>Balanc<strong>in</strong>g</strong> Electricity Trade <strong>in</strong> <strong>Russia</strong>The balanc<strong>in</strong>g <strong>market</strong> of electricity <strong>in</strong> <strong>Russia</strong> is an after<strong>market</strong> to the day-ahead <strong>market</strong>. It is a real-time<strong>market</strong> organized by the System Operator (SO) of <strong>Russia</strong> with the ma<strong>in</strong> objective of m<strong>in</strong>imiz<strong>in</strong>g the costs ofdeviations of actual electricity consumption and production from the planned day-ahead <strong>market</strong> tradeschedule. The auctions of participants’ offers <strong>in</strong> the balanc<strong>in</strong>g <strong>market</strong> are held by the SO twelve timesdur<strong>in</strong>g the day of actual delivery of electricity. In the balanc<strong>in</strong>g <strong>market</strong> auctions, the SO utilizes the sameconcept of bid-based, security constra<strong>in</strong>ed economic dispatch with nodal prices which is employed <strong>in</strong> theday-ahead electricity <strong>market</strong> of <strong>Russia</strong>. The nodal prices obta<strong>in</strong>ed <strong>in</strong> result of optimization <strong>in</strong> the balanc<strong>in</strong>g<strong>market</strong> auctions are called “<strong>in</strong>dicators of balanc<strong>in</strong>g <strong>market</strong>”. Similar to the day-ahead <strong>market</strong>’s nodal pricesthey also <strong>in</strong>clude the costs of marg<strong>in</strong>al energy, marg<strong>in</strong>al losses and transmission congestions.Price offers of <strong>market</strong> participantsAs opposed to the day-ahead <strong>market</strong> auctions <strong>in</strong> which customers are allowed to make their price bids, theshort-term electricity demand <strong>in</strong> the balanc<strong>in</strong>g <strong>market</strong> is forecasted by the SO, and customers with nondispatchableload are not allowed to bid <strong>in</strong>to the auctions. In addition, the bids of generators that theyhave posted earlier to the day-ahead <strong>market</strong> are utilized by the SO for the second time <strong>in</strong> the balanc<strong>in</strong>g<strong>market</strong> auctions. Nevertheless, producers and customers with regulated consumption have right to modifytheir price offers by send<strong>in</strong>g to the SO “quick” price tak<strong>in</strong>g offers for change of their production andconsumption amounts. The offers must be submitted to the SO at the latest on 90 m<strong>in</strong>utes before the nextbalanc<strong>in</strong>g <strong>market</strong> auction takes place. When submitt<strong>in</strong>g a price tak<strong>in</strong>g offer, a producer must specify theamount of electricity to which he is will<strong>in</strong>g to <strong>in</strong>crease or decrease his production irrespective of prices thatwill be formed <strong>in</strong> the balanc<strong>in</strong>g <strong>market</strong> auction. Similarly, a customer with regulated consumption mustspecify the amounts to which he is will<strong>in</strong>g to <strong>in</strong>crease or decrease his consumption irrespective of thefuture auctions prices. The modified offers are then utilized by the SO to establish optimal productionschedule of generators sufficient to meet the forecasted demand over a next two hours horizon.Those generators which stay off-l<strong>in</strong>e after the unit commitment procedure, can be turned on <strong>in</strong> thebalanc<strong>in</strong>g <strong>market</strong> <strong>in</strong> case there is a need for their production <strong>in</strong> real-time optimal power dispatch for thesystem. In accordance with the <strong>market</strong> regulations, uncommitted generators can optionally submit theirday-ahead <strong>market</strong> price offers to the commercial operator. The offers, however, should conta<strong>in</strong> additional<strong>in</strong>formation about start-up costs of the respective generation units. These offers are not taken <strong>in</strong>to accountLappeenranta University of TechnologySatu Vilja<strong>in</strong>en, Mari Makkonen, Olga Gore, Dmitry Kuleshov

It is important to note that, ow<strong>in</strong>g to different prices charged to <strong>market</strong> participants for deviations <strong>in</strong>production and consumption at their nodes, the total f<strong>in</strong>ancial obligations and requirements of <strong>market</strong>participants <strong>in</strong> the balanc<strong>in</strong>g <strong>market</strong> do not co<strong>in</strong>cide. If a positive imbalance takes place i.e. the totalf<strong>in</strong>ancial obligations of <strong>market</strong> participants exceed their total requirements, the excess is distributed amongthose <strong>market</strong> participants whose deviations were caused by external <strong>in</strong>itiatives and among the customerswhich carefully plan their consumption. If a negative imbalance takes place i.e., the total f<strong>in</strong>ancialobligations of <strong>market</strong> participants are less than their total requirements, the deficit is collected from those<strong>market</strong> participants whose deviations were caused by their <strong>in</strong>ternal <strong>in</strong>itiatives.Lappeenranta University of TechnologySatu Vilja<strong>in</strong>en, Mari Makkonen, Olga Gore, Dmitry Kuleshov

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