Imbalances in the Electricity Market: How to Limit Disproportionate Price Risks and Preserve Balancing Incentives

Energy Club will hold an online meeting dedicated to the mechanism for setting imbalance prices in the electricity market and the search for possible temporary solutions to reduce disproportionate financial risks for market participants under martial law.

The basis for continuing the professional discussion was the appeal of Energy Club member company LLC “ENERGY 365,” which proposed to re-examine the issue of a temporary imbalance price corridor of 80/120% relative to the day-ahead market price, as well as possible alternative and compromise mechanisms for its application.

Participants will discuss whether the current model provides a sufficient balance between the responsibility of the parties responsible for balancing and the real capabilities of participants to manage their positions amidst sudden changes in consumption, emergency and wartime restrictions, closure of BRP gates (gates for Responsible Parties for Balance), and limited operational information about the system status.

Particular attention will be paid to the proposed 80/120% corridor mechanism, the possibility of applying it to the entire imbalance or only to a portion of the deviation, as well as the relationship between imbalance prices and balancing electricity prices. Following the discussion, Energy Club plans to determine whether there are grounds for forming a consolidated position of market participants and a subsequent appeal to the NEURC (National Energy and Utilities Regulatory Commission).

Discussion Questions

1. Is the current level of financial consequences of imbalances proportional to the actual capabilities of market participants to forecast and adjust their positions, especially under martial law?
2. Can a temporary 80/120% corridor relative to the DAM price be an effective safeguard against extreme price deviations without weakening the responsibility of BRPs (Responsible Parties for Balance) and balancing incentives?
3. Which model might be the most balanced: applying the corridor to the entire imbalance volume or only to the first 5% of deviation, with a possible expansion to 10% in documented wartime or emergency cases?
4. Is it necessary to simultaneously introduce similar safeguards for price bids for balancing electricity alongside limiting extreme imbalance prices, in order not to create additional financial imbalances in the system?
5. What operational information do suppliers and traders lack today for more effective imbalance management, and is it possible to accelerate the publication of aggregated data on system balance, balancing activations, and imbalance prices?
6. What practical solution can form the basis of a consolidated market position and a repeated appeal by the Energy Club to the NEURC?

Moderator

Iryna Dmytrotsa

Expert in energy project development and business planning, Head of Operational and Regulatory Policy at Ukrainian Distribution Grids JSC (April 2024 - November 2025)

Speaker

Yuriy Pidlisny

Head of Energy 365 LLC