What's a balancing manager?
The electrical system is complex. Beyond the physical infrastructures of production, networks, and metering lies a delicate contractual structure, often bewildering to the uninitiated.
The role of the balancing manager sits at the crossroads between physical and contractual elements. As the name suggests, they are financially responsible for the balance of a collection of physical elements in the electrical system (production assets, delivery points, etc.).
To become a balancing manager, one must sign a contract with RTE and with each distribution network manager they wish to be active on (it often stops at Enedis for simplicity). The balancing manager can then attach consumers (withdrawal points), production assets (injection points), and also declare transactions (purchases and sales on exchanges, delivery of ARENH, etc.).
Indeed, the balancing manager who attaches a withdrawal point in their perimeter will necessarily have to purchase or produce the electricity consumed by that point. If they do not, they will be in imbalance and will face financial consequences.
Why such an organization? To maintain the stability of the electrical system, an almost perfect equality between injections and withdrawals must be maintained in real-time. For this to be possible, each market player must be financially incentivized, at their level, to take the necessary steps to ensure this balance.
How is the imbalance and its cost calculated?
Imagine a balance perimeter like a balance sheet, calculated by RTE at thirty-minute intervals. On one side, you have the volume of injections: production, purchases (exchanges or OTC), imports, and ARENH. On the other side, you have the volume of withdrawals: consumption, sales, and exports.
Like assets and liabilities in a balance sheet, the two amounts must be equal. If this is not the case and injections exceed withdrawals, the balancing manager is in a positive imbalance. To balance the sheet, RTE will buy the amount of energy in imbalance from the balancing manager at the price of positive imbalances. Conversely, if injections are less than withdrawals, the balancing manager is in a negative imbalance. To balance the sheet, RTE will then sell the amount of energy in imbalance to the balancing manager at the price of negative imbalances.
The price of imbalances changes every half hour based on the cost for RTE to physically balance the electrical system. Indeed, RTE frequently needs to activate reserves to maintain real-time supply-demand balance. The cost of these reserves is therefore “redistributed” through the calculation of the imbalance, with balancing managers who have generated an imbalance leading to the activation of reserves bearing the cost.
On average, the price of negative imbalances is higher than the spot price, and the price of positive imbalances is lower than the spot price; being in imbalance thus creates additional costs for the balancing manager. However, this is not always the case: if the balancing manager, by chance or design, generates an imbalance that helps the system (a positive imbalance when the system is in energy deficit, for example), the balancing manager may even achieve a profit.
Calculating the volume of the imbalance is a challenging task. Indeed, distribution network managers must compile all aggregated metering data to calculate the energy withdrawn. For small consumers, this process can take time because the final calculation can only be performed once all meter readings for the relevant period have been completed. In practice, a balancing manager's imbalance is initially calculated in M+1, then recalculated in M+3, M+6, M+12, and finally during the temporal reconciliation, the final step of the process, in A+2.
Timeline de calcul et de facturation de l'écart : le cauchemar des comptables
How can one minimize the imbalance?
The volume of production or consumption linked to a balance perimeter is partly random. To buy or sell on the markets ahead of the half-hour of consumption/production, one must be able to anticipate these fluctuations. A significant part of a balancing manager's job, therefore, involves forecasting production and consumption within their perimeter to make the corresponding purchases/sales. This task is challenging and is becoming increasingly so.
Do you need a balancing manager, or are you a balancing manager looking to minimize your imbalance?
For more information or any additional questions, please contact us at the following email address: sales@augmented.energy