Passive Balancing through Intraday Trading

Transmission System operators actively balance the electricity system by sending a dispatch signal to suppliers of balancing reserve. When market participants take an intentional imbalance position that is opposed to the system imbalance, they can also reduce the required dispatch of balancing reserves. This is called passive balancing. The German imbalance price system incites this behavior, even though it is legally prohibited. This paper examines whether passive balancing prevails in Germany and how it affects the system stability. Our analysis indicates that market participants react on the latest published system balance by taking an intraday position that is opposed to the expected system balance. This behavior has a positive impact on system balancing. Intraday trading close to delivery reduces both the required demand of balancing energy and high system balances up to 13% without causing a critical overshoot of the system