Environmental Engineering Reference
In-Depth Information
50
45
40
SSP
SBP
35
30
25
20
15
10
5
0
0
6
12
18
24
Figure 7.14
Average daily half -hour system sell and system buy prices for March 2002
systems. These contracts must be notifi ed at least 1 hour
1
ahead of actual time, known as
gate
closure
. Instead of suppliers dealing in CFDs and EFAs to hedge an agreed volume against
pool prices, they now trade in
physical
volumes at a fi xed price. Any difference between the
physical volume contracted and actual volume generated or supplied is
cashed - out
at prices
set within the balancing market.
Suppliers and generators typically strike contracts on different timescales. A month or more
ahead of actual delivery they will strike
bilateral contracts
, which are straight contracts
between two parties for a given volume of electricity at a given price. This accounts for 90%
of the volume of wholesale electricity bought and sold. Suppliers and generators may not be
able to predict their demand or output exactly months ahead, so around a day ahead they buy
and sell chunks of power on a
power exchange
. This is much like a stock exchange for power,
where 'chunks' of power are bought and sold anonymously. This can be done up to gate
closure, as mentioned above. Around 5% of electricity is traded in this way. The remaining
5% is traded through the cash-out or imbalance market.
The Imbalance Market
If a supplier's actual demand in a half-hour is higher than it has contracted for ahead of gate
closure, then the supplier must pay the system operator to top-up this defi cit at the system
buy price (SBP). If the supplier's actual demand is lower than it has contracted for it is paid
the system sell price (SSP) for the spill excess. This
imbalance market
is therefore known
generally as a
top-up and spill market
. The principle is identical for a generator, whereby it
will need to pay the system buy price for any defi cit in the contracted generation output and
will be paid the system sell price for any generation excess above the contracted output. The
system sell price is in general lower than the average bilateral contract price between the
supplier and generator. The system buy price is in general higher than the average bilateral
contract price between the supplier and generator.
Figure 7.14 shows the SSP and SBP for each half-hour average over the month March
2002. The SSP is around £ 10.70/MW h (
16.10/MW h) for this month, and the SBP is £23.70
€
1
This was initially 3.5 hours ahead at NETA 'Go-Live' but was reduced to 1 hour ahead in July 2002.
