Clashes continue over Bulgaria’s electricity balancing market

The Bulgarian electricity balancing market has once again been caught in a cross-fire between renewable producers, traders, state-owned utility NEK and grid operator ESO, because of alleged price irregularities and a lack of transparency.

The Bulgarian Wind Energy Association (BGWEA) claimed on Wednesday that the market, launched in June, is still not functioning properly and anomalous prices are causing severe revenue loss for wind power producers. BGWEA also deemed the methodology for balancing price calculation by ESO as not transparent.

In addition, NEK is allegedly correcting renewable production forecasts, especially in overnight hours. Yet as a coordinator of a specialised balancing group which includes renewable producers, NEK is distributing balancing costs across the group members which are higher than the actual costs, BGWEA suspected.

In its statement the lobby group quoted renewable producers’ imbalance settlement prices for certain hours in August as high as Bulgarian Lev (Lv) 108,195.10/MWh (€55,306/MWh).

In the end of August, market participants warned that the lack of transparency over how ESO calculates the electricity balancing market prices leads to price anomalies ( see EDEM 22 August 2014 ). Energy regulator SEWRC acknowledged the issue and allowed for a change in the methodology to be applied to balancing prices for August.

ESO calculates one average surplus and one average shortage price for the whole month, which is then used to set the average prices for the month ahead.

Back in July, private suppliers also accused NEK of changing the daily renewable electricity production schedules which was violating electricity balancing market rules. NEK denied any wrongdoing at the time ( see EDEM 1 July 2014 ).

Improved market conditions

Ever since SEWRC allowed the changes in the price methodology, the balancing market has reached normal prices, according to a representative of the Association of Traders with Electricity in Bulgaria (ATEB).

“ATEB made a big effort to stabilise the balancing market. We lobbied the regulator to make the changes and we succeeded. The August prices are normal,” the ATEB representative said.

He explained that there were still some anomalous prices appearing for certain hours, but these were excluded by ESO and were not taken into account when calculating the final monthly prices.

The average balancing price for August for shortage was Lv 228.76/MWh and the price for surplus was Lv 10.54/MWh, according to the source.

To compare, the July equivalents stood at Lv 444.355/MWh and Lv -0.965/MWh, according to information from SEWRC.

ESO could not confirm the August balancing settlement prices to ICIS on Wednesday, with a spokeswoman saying that the TSO was not allowed by law to make these public, but that ESO expected that the law may change soon.

The spokeswoman could not comment on the accusations from BGWEA immediately either, but said that ESO will come out with an official statement on the matter as soon as possible.

“We [ESO] don’t want to be part of the relations between NEK and third parties. ESO is working within the set [balancing trading] rules,” she remarked.

NEK’s position

A NEK spokeswoman could not comment on the concrete accusations in BGWEA’s statement on Wednesday, but noted that this is not the first time the utility has clashed with the renewable producers. The main problem that NEK faces is the obligation by law to buy all renewable electricity for which the company simply does not have the money, she noted.

“If they [renewable producers] don’t like our services, they should go on the free market,” she said.

SEWRC was not available for immediate comment on the matter at the time of writing.

However, the regulator has recently announced plans to implement changes to the existing electricity trading rules and invited all market stakeholders to comment by 30 September.

Traders welcomed the invitation as a sign that the market was going in the right direction, although they noted that the whole procedure would take a long time before any changes are officially approved and implemented.

“Probably the main changes would concern the balancing market. The rest of the rules seem to be working OK,” one Bulgarian trader said. Irina Peltegova