Nordic Balance Settlement, cornerstone to a common Nordic power retail market
The EU has many visions, more or less realistic ones. One vision is the creation and establishment of an European common retail market for electricity. On the way to this goal there are many obstacles to be removed. It begins with the insufficient political will, continues with fragmented legislation and ends with technical problems. Norway, Sweden and Finland however are convinced that all these barriers are surmountable. Their goal: To start in 2015 their own common power retail market with many positives (legal and technical harmonisation and long term savings) and a few negatives (high start up costs). And their hope: To present an effective and workable example to the up to now hesitant partners in the EU.
All for one and one for all
Even though the Nordic region may look like a reasonably integrated power market, the differences between the three parties are still comprehensive and wide ranging and an obstacle on the way to Nordic harmonisation. At the end Sweden, Norway and Finland will get the Nordic Balance and reconciliation Settlement (NBS). The three countries Transmission System Operators (TSOs), which keep at the same time the role as national Settlement Responsible (SR), become the equal shareholders of the Nordic Settlement Responsible, which should be organised as a separate legal and eventually independent entity. In Sweden, the TSO is Svenska Kraftnät, in Norway Statnett and in Finland Fingrid. At the beginning, the Nordic SR will be heavily dependent on services provided by the TSOs, however, the actual working plan says "Nordic SR shall in the first two years make a plan describing how the provision of these services from the TSOs shall be terminated within a period of three to five years of operation" and replaced by an independent Nordic SR system. At the beginning, these services should comprise personell, at least ten persons, among them at least two national SR experts from each TSO and IT-Settlement System experts. As Fingrid has been chosen as main host, the Nordic Settlement Responsible unit (SR) will at least at the beginning be housed in Finland. However, the legal structure of SR will be as such that the unit, for which they are still searching for a name, could be established in each of the three countries.
The Nordic SR will have the following responsibilities:
Its main task is to perform the balance settlement and to invoice the BRPs (Balance Responsible Party). The BRPs, there are approximately 29 in Finland, 35 in Sweden and 90 in Norway, are responsible for a working electricity market in their regions. Furthermore, the SR will set the collateral levels (economic security) and monitor whether the BRPs are following the laws and regulations.
|NBS will be a reference model within the EU|
Harmonisation of data is essential
By introducing NBS, one of the major preconditions is the harmonisation of the Automatic Meter Reading (AMR) in the three countries. According to the working group, "the AMR status at end-user level varies throughout the Nordic countries. There are significant differences in how data are recorded (i.e. what kinds of registers are used, hourly or monthly energy data), how metered data are collected and used in the balance settlement and finally different invoicing process". In Finland, by the end of the year 2013 almost 90% of the consumption energy will be recorded by using hourly metered data and all these energy data will be collected every day and submitted to the balance settlement. In Sweden, to the contrary, the system is currently based on monthly meter collection for customers below the limit 63 Amp. However, many of the installed meters are able to collect hourly metered data. There are plans to adjust the system. In Norway new regulations from June 2011 requires AMR for all electricity metering and daily reporting of hourly meter data the day after delivery day. The deadline for implementation is December 31, 2016.
The working group concludes: "Due to the fact that the level of AMR is different in each Nordic country, the NBS model is in this respect a compromise as the model needs to suit all countries AMR-systems." The regulators are asked to agree on a harmonisation of the AMR structure, since "the present different rules are an obstacle to 'deep' Nordic harmonisation".
Furthermore the regulators in NordREG are asked to make their contribution to establish a common standard for data communication. Currently, each country has its own standard when it comes to balance settlement and these are not compatible with each other.
|There are significant differences in how data are recorded|
Also common principles for calculation and final settlement have to be found. It is suggested a one-price system for consumption imbalances and two-prices for production imbalances. The preliminary settlement is set for daily collection with corrections for up to eight days, whilst the final settlement is due after nine days. Corrections after D+9 must be done bilaterally between the Distribution System Operators (DSO), the local and regional net owners, and the BRPs. This solution was a crucial point for the Danes to step aside in autumn 2011. Henrik Hornum from the Danish Energy Association explains to EER: "The NBS project was locked already before we decided to participate or not, in the decision on how to handle corrections of meter data. After nine days, after the day of operation, corrections will not be accepted by the NBS. In reality corrections after nine days will anyway occur. This means that DSOs will have to deal with these corrections in a bilateral way with all the market players (BRPs). This bilateral way of handling corrections is from our point of view very inefficient (and expensive) compared to just letting NBS run the balance settlement again with corrected data."
For the NBS project the first important step has been done. The design phase has been finalised and the implementation period has started. Until mid 2013 the regulatory changes are expected to be accomplished and the industry preparation commence. The test period is planned for the end of 2014 and the beginning of 2015 with the intention to start the Nordic SR sometime in 2015.
The name of the game: closer integration
The parties involved in this project, from the governments and the regulators to the national SRs, do not see only economical and material advantages like increased competition among BRPs and lower costs for retailers and producers, increased quality of settlement and invoicing, increased innovation and reduced costs of balance settlement and increased transparency, they also pay a lot of attention to the idea of ever closer integration in this part of Europe.
|Fruitful international cooperation that works for the best of the customers|
One aspect, not to be ignored, is the possibility for NBS to become a reference model within the EU for the development of integrated power markets. Worthwhile to note, despite the fact that Norway not even is a member of EU and only Finland has the Euro, the three NBS parties decided to use Euro as the common currency.