08.09.2026
When a few percent error in the consumption forecast can turn into millions in losses, the issue of imbalance pricing ceases to be a purely technical one. For suppliers and traders, it is a question of financial stability, competition, and the ability to operate in the market in wartime.
This is exactly what the participants of the Energy Club online meeting will talk about on September 10, dedicated to the mechanism of imbalance pricing and the search for temporary solutions that could reduce the disproportionate financial risks of market participants. The initiator of the continuation of the discussion was the Energy Club member company ENERGY 365 LLC, which proposes to return to the 80/120% price corridor mechanism relative to the “day-ahead” market price and consider compromise options for its application.
On the eve of the meeting, Energy Club journalist Olena Karpachova spoke with Yurii Pidlisnyi, head of ENERGY 365 LLC. In the interview, he explained why the company considers the current imbalance pricing mechanism to be excessively risky, how the asymmetry between positive and negative imbalances manifests itself in practice, and what the actual calculations for 2026 show. Separately, Yurii Pidlisnyi explained how the 80/120% corridor can work, why he considers its application to the first 5% of the imbalance to be a compromise option, and in confirmed military or emergency cases – up to 10%, and what solution could become the basis for a consolidated market position and a repeated appeal to the National Energy Regulatory Commission of Ukraine.
– Mr. Yurii, why did ENERGY 365 initiate the continuation of the discussion of the imbalance pricing mechanism? What practical problem do suppliers and traders face today?
– We initiated the continuation of the discussion because the NEURC response actually concerned only one element of the previous proposal – the universal binding of payments for imbalances to the corridor of 80/120% of the RDN price. At the same time, the Regulator did not refute the problem itself, did not assess the stated actual price deviations and their impact on the financial stability of participants, did not respond to the promptness of market information and did not propose an alternative precautionary mechanism. Therefore, it is too early to consider the discussion over.
The practical problem is simple: even a moderate forecast error can create a loss that exceeds the supplier’s entire margin. In wartime conditions, the risk is further exacerbated by emergency shutdowns, shelling and sudden shutdowns of enterprises. After the IDR gates are closed, it is no longer possible to adjust the nearest position, and for subsequent periods, participants often lack operational information to assess systemic risk. We do not deny the responsibility of the SRB, but we believe that it should be proportional to the real possibility of managing this risk.
– What is the main asymmetry of the current mechanism? Can you explain with a simple example what happens to a market participant in the event of a positive and negative imbalance?
– According to the current formula, the payment price for a positive imbalance is determined based on the lower of the two values – the DAM price and the system imbalance price – with a coefficient of 0.95. For a negative imbalance, the higher of these two prices is taken and a coefficient of 1.05 is applied. Therefore, in a surplus system, the participant’s excess volume can be paid for almost at zero price, while in a deficit system, the insufficient volume can cost several times more than the DAM.
Two actual examples from 2026 clearly demonstrate the scale of this asymmetry. On May 7, 2026, in the settlement period 16:00–17:00, the DAM price was at a minimum level of 10 UAH/MWh, however, during the system deficit, the payment price for negative imbalance reached 17,849.96 UAH/MWh. In the opposite situation, on March 17, 2026, in the period 06:00–07:00, the DAM price was a maximum of 15,000 UAH/MWh, but during the system surplus, the payment price for positive imbalance was only 0.01 UAH/MWh. We understand that the price should reflect the state of the system. The issue is not in the difference itself, but in its extreme scale, when the same physical error creates a fundamentally different and often disproportionate financial result.
– What exactly does the proposed 80/120% corridor imply in relation to the day-ahead market price and how should it work in practice?
– The 80/120% corridor does not replace the current formula and does not set a fixed price. If the price calculated according to the Market Rules is within the corridor, it is applied without changes. The adjustment occurs only when the price of a positive imbalance falls below 80% of the DAM price or the price of a negative imbalance exceeds 120% of the DAM price.
In practice, this means: for a positive imbalance, the larger value between the current price and 80% of the DAM is applied, and for a negative one, the smaller value between the current price and 120% of the DAM. Our main proposal is to temporarily apply this approach to the entire volume of imbalance on themartial law period. If the Regulator does not support universal application, a limited option is possible – to protect at least the first 5% of the imbalance, and in confirmed military or emergency cases – up to 10%.
– Does this proposal mean the abolition of market participants’ liability for their own imbalances or the introduction of a fixed price? What incentives for quality forecasting will be maintained?
– No. The participant will continue to bear a tangible financial consequence: a positive imbalance can be paid for 20% cheaper than the RDM, and a negative one – cost 20% more. In addition, the current market price is fully preserved inside the corridor. Therefore, the corridor limits only the extreme part of the risk, and does not eliminate liability.
The incentives to forecast consumption, work on the IDR, use balancing groups and adjust the position in a timely manner remain. In the compromise model, they are even stronger: the corridor is valid only for the first 5% of the deviation, and the entire volume above this threshold is calculated according to the current formula. Therefore, large or deliberate imbalances do not receive protection. The purpose of the proposal is not to make the imbalance profitable, but to prevent an ordinary residual error or an unforeseen military event from turning into a catastrophic loss.
– The NEURC noted that the universal binding of the value of imbalances to the DAM price may not comply with the provisions of the legislation. How do you assess the Regulator’s position and how do you propose to refine the mechanism taking into account its comments?
– We respect the Regulator’s position and agree that the mechanism should not destroy the market signal or create an incentive to deliberately remain in an imbalance. At the same time, the NEURC response does not contain a quantitative analysis that would show that the 20% discount and 20% premium are insufficient to maintain discipline. There was also no separate response to the proposals for modeling on historical data, safeguards for balancing energy applications, prompt publication of aggregated indicators, and the impact of information restrictions during wartime.
Therefore, we do not believe that the rejection of the initial universal design automatically closes the issue. The main position remains the temporary corridor of 80/120%. At the same time, the NEURC’s comments can be taken into account by limiting the protected volume: apply the corridor to the first 5% of the imbalance, up to 10% – only in confirmed war, emergency or force majeure events, and leave the current formula beyond these limits. This directly responds to the objections to the application of the “for all cases” mechanism and at the same time provides real protection against disproportionate losses.
– “ENERGY 365” proposes to consider a compromise option: to apply the corridor to the first 5% of the imbalance, and for confirmed military, emergency or forced events – up to 10%. Why was this approach chosen?
– Five percent is not an attempt to establish a universal forecast quality standard for all participants. This is a clear working threshold that protects only the first layer of the usual residual error of a heterogeneous consumer portfolio. Everything that exceeds this level, as a general rule, remains under the influence of the current mechanism. Therefore, the participant is not exempted from liability for significant deviations.
The threshold of up to 10% is proposed only for documented circumstances that the participant could neither properly foresee nor timely compensate for: emergency shutdown, forced limitation, damage or forced shutdown of the consumer’s facility. In wartime, such events can double the normal portfolio error in a short time. This design is a compromise: it reduces the financial impact of the uncontrolled part of the risk, but does not protect against large commercial errors or deliberate imbalances.
– The company’s simulations show a significant difference between the financial consequences of the current model and the model with the 80/120% corridor. What do these calculations demonstrate and what risks to competition and market liquidity arise if the mechanism is not changed?
– We analyzed the actual hourly prices of the DAM and imbalance payments for the Unified Energy System of Ukraine and normalized the result to a notional monthly portfolio of 10,000 MWh. According to the available data for 2026, with an error of 5%, i.e. 500 MWh, the average monthly loss under the current scheme is about UAH 1.582 million, or 15.82 kopecks/kWh of the total supply volume. With an 80/120% corridor, it would decrease to approximately UAH 381 thousand. The difference is about UAH 1.2 million per month. With an error of 10%, the corresponding figures are UAH 3.164 million and UAH 763 thousand.
This is a neutral model: it does not take into account that real portfolios may have a larger error and an unfavorable time correlation with the system. Therefore, actual losses may be even higher. When the costs of imbalances exceed the market margin, suppliers are forced to add an additional premium to the price, refuse customers with a complex profile, or reduce activity. In the long term, this means less competition, higher market concentration, more expensive electricity for the consumer, and the removal of circulatingfunds that could support liquidity and settlements in the market.
– What practical result do you expect from the upcoming Energy Club meeting? What solution could market participants, the National Commission for the Regulation of Energy and Public Utilities of Ukraine, NEK “Ukrenergo” and JSC “Market Operator” jointly develop?
– We expect not another exchange of general positions, but agreement on a specific design of a temporary solution. The basic option is a corridor of 80/120% for the period of martial law. A compromise option is its application to at least the first 5% of the imbalance and up to 10% in confirmed military or emergency cases. In parallel, it is necessary to determine a list of aggregated, security-neutral information that can be published more quickly so that participants can assess the direction of systemic risk and adjust still open positions on the IDR.
The result of the meeting should be an agreed market position, a specific formulation of a temporary regulatory norm and a repeated appeal by the Energy Club to the National Commission for the Regulation of Energy and Public Utilities of Ukraine with calculations. Our goal is to preserve the responsibility of the CSR and market incentives, but to remove the disproportionate extreme part of the risk, which in wartime conditions has already become a threat to the financial stability of suppliers and competition.
This discussion is actually not only about 80/120% or the formula for calculating imbalances, but also about the boundary between market responsibility and risk that the participant is physically unable to control. The market should punish for a bad forecast or deliberate imbalance, but should it punish equally harshly for shelling, an emergency shutdown, a forced shutdown of the enterprise or a situation where the participant no longer has the opportunity to adjust its position?
It is this question that Energy Club proposes to seek an answer to together with the market, the regulator and operators. After all, the purpose of the proposed mechanism is not to weaken responsibility and not to make imbalance safe for the participant, but to separate the manageable risk from the one that becomes unpredictable in wartime conditions.
Whether the 80/120% corridor, protection of the first 5% of the imbalance or another model will become such a compromise, a professional discussion should show. But the principle behind it is much broader: a stable energy market is not one where the participant never makes a mistake, but one where the price of a mistake remains tangible, but does not become destructive for the participant himself and the entire market.
