ENTSOG Implementation and Monitoring Report 2017 - Balancing Network Code

Regarding the cross-border cooperation be- tween TSOs when establishing any new STSP, only Latvia reported having done it in accord- ance with to Art. 7.7 of BAL NC compared to 1 October 2016. From 1 July Implicit Capacity Allocation (ICA) mechanism was launched, and it made available gas exchange (Get Baltic) for all system users in the three Baltic States. By using ICA mechanism users have access to day

ahead products from neighboring countries connecting Lithuania, Latvia and Estonia. System users can buy gas deliveries for day ahead with transportation to destination (from one system to another) included in price of the product (gas + transportation). By implementing ICA, they also made available within day prod- ucts within TSO system (no ICA for within day products).

2.2.3 Incentives

According to the provision of Article 11(1) of NC BAL, the NRA can incentivise the TSO to under- take balancing actions efficiently or to maximise the undertaking of balancing actions through trade in STSP. Four countries (AT, ES, IT and UK-GB) indicated that an incentive mechanism was implemented. Austria stated physical balancing of TSOs is done primarily by the usage of Linepack. Incentive mechanisms for each Balance Group imbalance are installed to keep network (Linepack) stable in an intended period. If necessary, the MAM is entitled to procure volumes at the VTP for rebalancing imbalances on behalf and account for each Balancing Group. Spain stated that according to their NRA’s Circular implementing the Balancing Network Code, the incentives scheme is based on the performance of Enagás in its role of Technical Manager of the System. It takes into account the market options available to the transmission system operator for the selection and use of balancing actions and it is subject to periodical review by the National Authority for Markets and Competition.

Italy stated that the incentive mechanism meas- ures introduced aimed at the improvement of the information to the market and the efficiency of the TSO balancing actions. In particular, per- formance indicators have been defined by the Italian NRA according to the following three mechanisms:

1. Offtakes forecast at the redelivery transport points (D-1 forecast vs. actual);

2. Efficient TSO balancing actions for the gas day D: difference between the TSO prices (max. buy/min. sell) vs. WAP (Weighted Average Price); 3. Residual balancing for the Gas Day D (use of Linepack and, only if necessary, operation storage within a predefined range). UK-GB stated that to ensure the GB TSO does not incur excessive costs for the industry, the NRA incentivises the GB TSO to balance and trade efficiently through Residual Balancing incentives.The TSO is incentivised in two ways: 1. To minimise the price spread of its balancing actions (to restrict the impact of such actions on the market price); and 2. To minimise the change in the Linepack volumes between the start and end of the day. By seeking to resolve any system imbalances of the relevant day, the costs of such are targeted to those responsible for the imbal- ance.

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