Nodal Pricing Applied to Imbalance Settlement: Issues for Implementation in Zonal Markets

This paper aims at analyzing the particular but really important issue of balancing market: the definition of the imbalance prices in relation to the imbalance settlement, i.e. the financial settlement mechanism aiming at charging or paying Balance Responsible Parties (BRPs) for their Imbalances for each Imbalance Settlement Period. It is important to deepen this aspect because nowadays in the existing energy markets there are different approaches in order to calculate imbalance prices, and clearly a right imbalance price definition is necessary for a correct cost reflective allocation between BRPs of costs of real time energy. In any electricity market, the imbalance settlement is a crucial point of the whole market chain and its regulation would impact on the strategies adopted by market operators in the markets before the real time. As the imbalances deal with the physical delivery of the energy, for a correct settlement it is important to reflect all the network constraints that affect the balancing energy exchanges. For this reason in this paper we focus on the application of nodal pricing to the imbalance settlement, taking into account issues for the implementation in zonal markets.