German grid agency increases incentive for market players to balance power grid

Following severe strains on the German power grid on three days in June 2019, the Federal Network Agency (BNetzA) has approved a new concept for calculating the balancing energy price, which is charged when energy is provided to balance the power grid. This is the last of several measures the agency has taken to ensure a balance of supply and demand in the grid. The new concept gives market players a stronger financial incentive to provide the right amount of electricity needed to balance the power grid. The price for a market player using electricity from the balancing energy market will in the future be based on a new price index calculated by transmission system operators (TSO) instead of hourly trading prices on the power market. Market players will also have to pay a surcharge if they supply less electricity than promised.

Following strains on the grid in June, the BNetzA has found that five companies were in breach of their contractual obligations as balancing group managers during supervisory proceedings. The agency is also conducting preliminary investigations into possible market manipulation. It aims to find out whether some market participants have deliberately sold electricity at very high prices on the intraday market without the intention of actually procuring or generating this electricity – a situation that could lead to imbalances on the grid.