Handbook

New versions of the Handbook will be published on a regular basis. The market participants will be informed about the updated Handbook on the web site and by newsletter that the market participants can subscribe to on www.eSett.com.

A Customer Committee is established to provide a dialogue between eSett and stakeholders. The Customer Committee consists of market representatives and a TSO representative from each NBS Country. In addition, the energy market authorities responsible for regulation approval and execution from all NBS countries can participate in the meetings. All the major changes to the NBS model will be discussed in the Customer Committee before they are implemented. Therefore, the Customer Committee has an important role in the development of the NBS model. The changes and updates to the NBS model will be recorded in the NBS Handbook.

The normal update cycle of Handbook will be twice a year, once in the spring and once in the autumn. However, eSett reserves the right to carry out small updates and clarifications to the NBS Handbook when these changes have an urgent nature and they are clearly seen to be beneficial to the market and/or when the update adds clarity to the processes described in the Handbook. All change will be summarised in the change log available at the end of this document (see Chapter 12).

In addition to the Handbook the following sources include information which is to be taken into account by the market participants are:

• Common rules in the electricity law and secondary legislations in Denmark, Finland, Norway and Sweden as referred to in Chapter 1.4 Regulation

• User Guide for XML documents for NBS; a detailed user guide for the ENTSO-E and ebIX® XML documents used in the Nordic Balancing System, available at https://ediel.org/

• BRS (Business Requirement Specification for Data Exchange in Nordic Balance Settlement); a technical specification for the ENTSO-E and ebIX® XML documents used in the Nordic Balancing System, available at https://ediel.org/

• NBS XML schemas and examples on https://ediel.org/

• NBS related acknowledgements are according to NEG UserGuide Acknowledgements at https://ediel.org

• Communication guidelines for the Imbalance Settlement System at https://www.esett.com/customers/data-communications/

• BRP Agreements at https://www.esett.com/customers/agreements/

The main function of the Nordic Imbalance Settlement Model is the common imbalance settlement. eSett performs imbalance settlement and manages invoicing and collaterals towards the Balance Responsible Parties (BRP) and Balance Service Providers (BSP) on behalf of the Transmission System Operator (TSO) in each country. All matters directly related to system operations, for example procurement of balancing services, are outside the scope of the Imbalance Settlement Model. The Imbalance Settlement Model will take all necessary volumes into account when calculating the imbalance and furthermore, eSett is responsible for invoicing of the balancing services as part of imbalance settlement.

The model includes several benefits for the electricity market. The Nordic Imbalance Settlement is the platform for common imbalance settlement in Denmark, Finland, Norway and Sweden. This means that a BRP always has a single interface (eSett) and one set of rules when settling its imbalances in the Nordic electricity market. The main reason for establishing a common imbalance settlement solution is the creation of a competitive end user market. Increased competition and reduced margins for the electricity providers will give rise to socioeconomic efficiency gain.

Competition through a common Nordic retail market is considered essential in order to ensure high quality services at the lowest price, to stimulate innovation and to maximise social welfare in the Nordic region.

In general, the Nordic Imbalance Settlement Model will lower the threshold of acting as a BRP since the model enables common access to all four countries. In addition, the operational procedures of a BRP are simplified. It makes it easier for a retailer to enter the market. It also reduces costs as more BRPs are competing and the price for handling an RE’s balance could therefore be lower. Besides, a RE can more easily choose to act as a BRP rather than an RE.

The Nordic Imbalance Settlement Model gives an incentive to improve the quality of meter data as the DSOs must notify and be responsible for data errors after the imbalance settlement period is closed. Improved data quality will not only improve the quality of imbalance settlement but, also the settlement and invoicing of end customers as both BRPs and REs get access to the same meter data.

A larger market with a common set of rules will make it more attractive to invest in innovation. BRPs, BSPs and REs will face a larger potential for innovative solutions, especially for the core IT systems and new payment and credit management solutions. This will also make the vendor market more attractive as the offers from  various service providers will cover a larger market.

A common Nordic approach to imbalance settlement procedures will have more influence on EU development than if there were several different Nordic solutions. NBS will, in the long run, lower the operational costs of imbalance settlement because one organisation with one common IT solution will be more efficient than several separate ones. NBS will also make the related costs more transparent as these will be separated from cost elements at each respective TSO. Such transparency is a condition for operational cost efficiency.

The national legislation and regulations per each respective country are presented in this chapter.

The Nordic Imbalance Settlement model follows the settlement principles as per Title V of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017R2195

eSett is owned by Energinet, Fingrid, Svenska kraftnät and Statnett. The company will act and operate in the role of Imbalance Settlement Responsible. It must be noted that the national regulations stipulate that each national TSO is still ultimately responsible for balancing operations and imbalance settlement.

The company’s working language is English but customer service is also provided in Swedish, Norwegian and Finnish. eSett’s relations to the market participants are illustrated in Figure 1.

Figure 1. Relations between eSett and the market participants.

The Nordic Imbalance Settlement Model ensures a transparent and common imbalance settlement and equal treatment of market participants. The main objective of the Nordic Imbalance Settlement Model is to perform imbalance settlement across participating countries with the same principles and based on a single balance. The model provides harmonised and necessary procedures for imbalance settlement:

• Settlement structure defines how the information about the imbalance settlement structure and hierarchy (relations) is collected and managed, e.g. information about a new Metering Grid Area (MGA) or the contact information of a market participant. See Chapter 3, Settlement structure management
• Metering defines the different data types and the basis of the settlement data metering. See chapter 4, Metering
• Reporting data handles the imbalance settlement data reception, validation, storing and reporting by eSett. See chapter 5, Settlement data reporting
• Settlement handles the  imbalance settlement calculations, quality assurance and publishing of results. See chapter 6, Imbalance settlement
• Invoicing handles eSett’s invoicing of BRPs, based on realised imbalances and BSPs based on balancing services. See Chapter 8 Invoicing
• Reporting includes the creation, distribution and publishing of various reports and files provided by eSett. Reporting is also done through the Online Service, the Messaging Service and the Information Service that are provided to market participants. See Chapter 5, Settlement data reporting
• Collateral management includes control of the BRPs’ collateral demands, as defined and calculated by eSett, as well as follow-up of the placed collateral deposits in comparison to demands. See Chapter 9, Collateral and risk management
• Communication presents different communication channels and an arrangement of the communication in Nordic Imbalance Settlement model. It also includes the creation, distribution and publishing of various reports and files provided by eSett. Reporting is also done through the Online Service, the Messaging Service and the Information Service that are provided to market participants. See Chapter 10, Communication
• Market behaviour monitoring is based on the analysis of the BRPs’ imbalances. These are analysed by calculating a set of KPIs, which show the BRPs market performance (e.g. quality of reported data, reporting frequency, relative imbalances, absolute imbalances and imbalance costs per unit). The quality of DSOs reporting will also be monitored. See Chapter 11, Market behavior reporting

All functions in the settlement model are described in Figure 2 below.

Figure 2. The Imbalance Settlement Model functions.

The main stakeholders (i.e. market participants) in the Nordic Imbalance Settlement Model along with the related roles and responsibilities are presented in the sections below. The validity of a market participant (i.e. the time frame within which the market participant is considered to be active in the market) shall be set after the required documents have been received by eSett. There are gate closures before a new market participant can be active in the Nordic market and they are presented in Table 6 in this document.

The Nordic Imbalance Settlement Model utilises a combined Nordic calendar, which consolidates the public national holidays from all involved countries. You can find the calendar on eSett’s homepage and in Appendix 2, Nordic Calendar. No invoicing shall be performed during a public holiday and they will be taken into account in the terms of payment in settlement related invoicing.

As an example, if a certain day is considered as a public holiday in Sweden, it will also be considered a public holiday in all involved countries.

The Nordic Imbalance Settlement Model will be operated in Central European Time (CET)/Central European Summer Time (CEST) and a 24-hour clock (10 o´clock in the evening will be written as 22:00) in operation (for example in invoicing and imbalance settlement), which is required to be supported by all market participants acting with eSett. The Nordic Imbalance Settlement Model will also use winter and summer time change, last Sunday in March will have 23 hours and last Sunday in October will have 25 hours.

The settlement structure management (e.g. retailer balance responsibility, RBR) will be complied with national legislations. In Finland, the settlement structures will be managed in Eastern European Time (EET)/Eastern European Summer Time (EEST) and in Sweden the settlement structures are managed in Swedish Normal Time (SNT). In Denmark and Norway Central European Time (CET)/Central European Summer Time (CEST) is used.

Participating as a BRP in the electricity market settled by eSett requires a valid Balance Agreement between the BRP and the respective TSO, as well as valid Imbalance Settlement Agreement between BRP and eSett. Similarly, participating as a BSP in the electricity market settled by eSett requires a valid agreement on providing balancing services between the BSP and the respective TSO, as well as a valid Balancing Service Settlement Agreement between BSP and eSett unless the BSP already has a valid Imbalance Settlement Agreement for the same business entity.

The scope of the imbalance settlement agreement and balancing service settlement agreement are limited to issues regarding the settlement and invoicing of imbalances and balancing services. The TSO agreements regulate balance management, provision of balancing services and related issues.

Figure 5. BRP and BSP agreements.

As before, a BRP or BSP must comply with the TSOs requirements if they are providing reserves in the balancing markets.

In addition, BRPs and BSPs need to hold a bank account(s) in an approved settlement bank, i.e. a bank which has been approved by eSett to be used in the settlement. See chapter 8.4 for the required banking setup and related agreements.

This chapter shall clarify the different options the market participants have when organising themselves for the imbalance settlement model. As previously mentioned, the purpose of the imbalance settlement model is among other things meant to lower the barriers for operating in more than one country. However, national laws and the imbalance settlement system set certain requirements and limitations under which the market participants are expected to act. Company data model ties important concepts together by connecting the country, company, market participant role, collaterals, invoices, balance account, agreements, coding scheme and the related market participant code. In principle, there are three different ways to act in several countries and these possibilities are demonstrated in the following with the help of an illustrative table, which presents the case of a BRP. This chapter refrains from favouring any of the presented options and it is thus left for each company to consider and choose an option they deem to be most suitable for themselves.

Table 1. Company data model in NBS.

The first option in the above table describes a situation where two separate companies with their own business IDs are established, or already exist, in order to operate the BRP roles in two different countries. In practice, this set-up means that both of the market participant roles will have their own collaterals, separate invoices, and their own settlement accounts with eSett, one agreement with both TSOs and eSett depending on the countries the BRPs operate in, and finally, their own separate market participant codes, which are used, e.g. for messaging. In this case, these codes may follow the local coding schemes when operating only in one country. The agreements here are the Imbalance Settlement Agreement with eSett and the Balancing Agreements with TSOs. In this option, the companies are registered in different countries.

The second option is based on only one company having two separate BRP roles. This results in two separate collaterals, invoices, settlement accounts, agreements and market participant codes.

In order to prevent a situation where it is necessary to place several collaterals, the third option could be considered. This option gives the possibility to organise the company structure based on only one company and one BRP role, which operates in more than one country. However, differences in legislation between countries set limitations to this scenario in case the company is active in Norway. Due to Norwegian legislation, it is mandatory that in this option the company is registered in Norway since it is required that BRPs acting in Norway are locally registered companies.

One market participant role results in one set of collaterals as they are role-specific. In this scenario, the company will receive as many invoices as there are countries where the BRP operates since the invoice is always country-specific. The number of required settlement accounts depends on the number of currencies used, which means that if the BRP uses one common currency it is sufficient to have only one settlement account. For agreements, the same applies as to collaterals: they are role-specific. Logically, one BRP role requires only one market participant code as long as it is not any of the national codes, but either the EIC or GS1 code. However, it is mandatory to use Norwegian GS1 codes for market participant roles related to Norwegian companies.

Up-to-date structural information is essential for managing the reporting and other imbalance settlement functions. The settlement structure contains the information related to different market participants: TSOs, DSOs, BRPs, BSPs and REs, and information on the relationship between the market participants.

Information regarding the BRPs’ responsibility for an RE in all MGAs, and the specific period of time, is essential to enable correct reporting of data and calculation of imbalances. One common and public overview with this information is therefore developed and maintained in eSett’s imbalance settlement system.

Every entity of structural information has a validity period. The given start and end date define the period of time during which the specific entity is considered to be active. The end date is not required when creating a new structure, but it shall be entered when the end date has been confirmed.

A description of the structure elements and their relations are available in Figure 6.

A detailed description of the interface and the process of managing the structural information will be provided as a User Guide in the Online Service.

Figure 6. An illustrative example of the structure elements and their relations.

Information about the settlement structure is related to different types of roles (RE, BRP, DSO and TSO). One company may have multiple roles, and each of these roles shall be presented by a separate Market Participant operating in the electricity market. It is also possible for a company to have multiple market participants with the same role. In the Nordic Imbalance Settlement Model, there is always a connection between the structure information and specific market participants, being valid for a specified period of time. The roles are defined and described in the Table 3 below.

Table 3. The Market Participants in the Nordic Imbalance Settlement Model

In order to organize the settlement information in a structured way, the structure information is also related to a market entity (ME). These are used to further specify the areas where consumption, trade and exchange occur, including also the power generator and regulation object. The defined MEs and the corresponding descriptions are shown below in Table 4.

Table 4. Market Entities in the Nordic Imbalance Settlement Model

A large amount of settlement information is exchanged between market participants within the Nordic imbalance settlement. The information is organised into so called Market Entity Connections (MEC). The MECs are central in the imbalance settlement structure as they facilitate reporting of all the time series with settlement data.

MECs are different kinds of connections either between market participants (e.g. bilateral trades between parties) or between market participants and market entities (e.g. market participant’s metered consumption in MGA or market participant’s production per Production Unit). MEC’s time series data is the core of the imbalance settlement. Table 5 explains the MECs utilised in the Nordic Imbalance Settlement Model.

Table 5. Market Entity Connections in the Nordic Imbalance Settlement Model

eSett receives structure information from market participants containing imbalance settlement structure information that should be added, updated, or closed in the imbalance settlement system. The structure information is entered via the Online Service and validated by eSett. When the settlement structure has been updated, eSett publishes the settlement structure to market participants in the Online Service.

Every participant in the electricity wholesale market will have to apply to eSett for acceptance into the settlement structure. The participants themselves are responsible for registering and verifying that their information is up-to-date. Responsibilities regarding the settlement structure information management are explained in the following sub-chapters.

There are three different main types of metered data (or types of metering points) utilised in the Nordic Imbalance Settlement Model. The identified metering data types are the following:

• Exchange metering point to other MGAs:
  • Metered exchange with adjacent MGAs
• Production metering points:
  • Metered production per PU
  • Metered merged production within the MGA
• Consumption metering points:
  • Metered consumption from the MGA, divided into following subtypes:
    • Metered consumption
    • Pumped (only in Norway)
    • Pumped storage (only in Norway)
    • Interruptible (only in Sweden)
    • Industry over 50 MW (only in Sweden)
    • PU Own consumption (only in Finland). Production units own consumption can be separated from the metered consumption by using this type
  • Profiled consumption, divided into following subtypes:
    • Profiled consumption
    • Pumped (only in Norway)
    • PU Own consumption (only in Finland).
  • Losses, may be divided into following subtypes:
    • Metered grid losses
    • Profiled grid losses
    • Flex-settled losses (Only in Denmark)
  • Metered flex-settled consumption (Only in Denmark)

Losses shall be calculated in Finland as stated in chapter 5.4.2.4 and it’s not required to separate losses for both metered and profiled losses (metered shall be used and reported to eSett).

The different consumption types are explained in more details in chapter 5.4.2.4.

It is to be noted that a number of country specific types of consumption metering points shall be utilised in the Nordic Imbalance Settlement Model as highlighted above.

eSett do not regulate how the estimation of missing measurement values shall be done. Practices differ between the countries today. Below information about the national principles has been provided.

The Finnish Energy industry´s directions of how the missing values shall be estimated or replaced are presented in the document “Tuntimittauksen periaatteita 2016”. The document can be found at https://energia.fi/energiasta/energiamarkkinat/sanomaliikenne/ohjeet_ja_suositukset.

The Swedish directions on how the missing values shall be estimated or replaced are presented in “Elmarknadshandboken”. The document can be found at http://elmarknadshandboken.se/Dokumentation/Texter/NEMHB.pdf.

The Norwegian Elhub project has described the requirements for quality assurance that shall be performed by the DSO before reporting to Elhub. These requirements are presented as standards for validation, estimation and change of metered values. The Norwegian name of the document is “Standard for Validering, Estimering og Endring (VEE) av AMS måleverdier” and can be found at https://elhub.no/

The Danish market regulation D1 “AFREGNINGSMÅLING OG AFREGNINGSGRUNDLAG” describes handling of and demands for estimation of missing values. The document can be found at Energinet’s homepage with Market regulations: https://energinet.dk/regler/el/elmarked/.

The MGA exchange meters measure the energy flows between the adjacent Metering Grid Areas. The meters measure the exchange in the border points. The DSOs are responsible for the MGA exchange meters (e.g. reporting the values to the imbalance settlement).

The MGA exchange means exchange of energy sum that occurs between adjacent Metering Grid Areas. These sums shall be used in eSett’s imbalance settlement. Both DSOs of the adjacent MGAs shall report the sums to the imbalance settlement, or the DSOs can agree that one of them shall report the sums.

All production metering in the Nordic Imbalance Settlement Model is based on netted metering. Netted metering is defined as metered production after own consumption used for power generation has been subtracted. Until legislation in Denmark, Finland, Norway and Sweden have been harmonised, the Nordic Imbalance Settlement Model will handle both gross and net metered production, which can be metered, aggregated and reported in accordance to principles defined below.

An industry site that also has its own production units are not allowed to net the production with their consumption. Production and consumption should be metered and reported separately to eSett’s imbalance settlement.

The definition of own consumption has not been harmonized. Information about the national principles has been provided below:

• In Finland the legislation for own consumption of the production plant can be found in the document “Kauppa – ja teollisuusministeriön asetus voimalaitosten omakäyttölaitteista”. The document can be found at: http://www.finlex.fi.
• In Sweden there is no legislation describing own consumption of the production plant.
• In Norway the definition of own consumption of the production plant can be found in the document “Forskrift om elsertifikater” in chapter 3 § 16 “Bestemmelser om måledata og korreksjonsfaktor”.
• In Denmark rules for settlement metering of production in various cases, including handling of own consumption, is described in Market regulation D1 chapter 5 in combination with the document “RETNINGSLINJER FOR UDFØRELSE AF MÅLINGER TIL BRUG FOR NETTOAFREGNING”. Both documents can be found at Energinet’s homepage with Market regulations: https://energinet.dk/regler/el/elmarked/.

The DSO should, in a settled meter point, meter values at each shift of imbalance settlement period. The DSO is recommended to perform data acquisition as soon as possible after the delivery day.

The handling of consumption metering will be done in accordance with existing national rules.

There are not yet harmonized rules, but the main principles for the handling of energy storages are the same
for all countries in the Nordic Imbalance Settlement. There are some national differences that are specified
below.

The main principle is that an energy storage will be registered with two metering points; one for consumption
for when the energy storage is charging, and another for production for when the energy storage is
discharging. Netting between charging and discharging is not allowed for energy storages. A production plan
is required for the discharging always in Denmark and Sweden, and also in Finland and Norway if the energy
storage capacity is 1 MW or higher.

In Denmark, Norway and Sweden there are no specific rules for the metering of energy storages. It is
handled according to the rules for Production metering (discharge) and Consumption metering (charge).
Netting with other metering points is not allowed for energy storages.

The specific rules for Finland have been described in detail in chapter 4.6.1.

Table 8 compiles the cases for handling of energy storages in imbalance settlement per country and type.

Table 8. Handling of energy storages in different countries.

 

All reporting in the Nordic Imbalance Settlement Model shall be performed in accordance to the specification laid down in the market model for data exchange document Business Requirement Specification for Data Exchange in NBS (BRS). The latest version of the document can be found at the following address: https://ediel.org/.

This obligation is regulated as follows:

• Sweden: Regulated in the EDIEL-agreement between Market participants and Svk.
• Finland: Responsibilities are regulated in the secondary law and market participants should follow the instructions given by the TSO and instructions/procedures agreed in the energy field.
• Norway: Responsibilities are regulated in the secondary law and market participants should follow the instructions given in the Ediel User guide
• Denmark: Responsibilities for reporting are regulated in Danish electricity market regulations.

The reporting shall be performed with the accuracy, signs and units in according to the description below. For information on the reporting time periods and gate closures see chapter 5.3.

In cases where service providers are used to report e.g. metered values on behalf of a DSO, it is to be noted that the formal responsibility still remains with the DSO in accordance to national legislation.

The figures below illustrate the reporting data flows and are divided into: Reporting before delivery day, Reporting after delivery day and Reporting after the imbalance settlement is closed.

Figure 10. Reporting before delivery.

Figure 11. Reporting after the delivery (1-13 days)

Figure 12. Reporting after the imbalance settlement has been closed (13 days)

Table 9 below shows how eSett reports information to the market participants and the communication channel.

Table 9. Information types

The Nordic Imbalance Settlement Model utilises the Nordic calendar in all reporting schedules (CE(S)T).

The basis for the reporting schedule for DSOs is a 13-day period, during which the settlement data must be reported to eSett. The DSOs will report the meter data at the latest at 10.00 on the second day after the delivery day. Based on the reported data, eSett will conduct a preliminary imbalance settlement. The DSOs are then able to update the data until 12.00 on the 13th day after the delivery day, which is considered the final reporting day. During the next working day after the final reporting day, eSett will perform and publish the final result of imbalance settlement in the Online Service and in the Information Service.

In Norway, Norwegian DSOs report all their measurements to Elhub. They will then report all aggregated time series to eSett.

Based on Finnish legislation, the DSOs in Finland are able to report delivery day settlement data in EET/EEST until 00:00 EE(S)T on the 12th day after the delivery day.

Due to Swedish secondary legislation the DSOs in Sweden are able to report delivery day settlement data until the 13th day at 00:00 SNT after the delivery day.

In Denmark, Danish DSOs will report all their measurements to Energinet DataHub. They will then report all aggregated time series to eSett.

An illustrative picture of the settlement data reporting schedule for one delivery day is presented in Figure 13. In the figure, metered data for the Sunday in week 1 shall be reported at the latest on the second day after the delivery day, i.e. on Tuesday in week 2. Updates must be reported at the latest 13 days after the delivery day, i.e. on the Saturday in week 3 in the illustration below. The data may be reported daily for each day or just the changed values. By the end of Sunday in week 2, the data for Monday in week 1 is considered as final and may not be reported on Monday in week 3. By the end of the day on Saturday in week 3, all metered data for the whole week 1 is considered to be final, and final settlement is performed. Invoicing for week 1 is carried out on the first working day after the final reporting day (see more information about invoicing in Chapter 8, Invoicing).

Figure 13. Time schedule for reporting imbalance settlement data.

The reporting roles and responsibilities per each Market Participant are presented in the chapters below. Data reporting tasks have been divided by the market role and the time when the data reporting takes place. In the last column of the tables the counterpart in each action is marked.

The data is reported electronically via market messages from the market participant’s IT system to eSett’s imbalance settlement system or entered in the Online Service. In abnormal situations, the data can be reported by e-mail or phone directly to eSett’s personnel. Before aggregation, the syntax and content of the incoming data are validated by eSett’s imbalance settlement system in order to ensure that the data can be used in the settlement calculations. The reporting parties are informed about the validation result (e.g. via acknowledgement messages). After validation, the data is stored in eSett’s imbalance settlement system and the imbalance settlement calculations are performed.

Both the data sent by market participants and the final calculated settlement data are published in the Online Service so that they can be verified and possible errors can be reported to eSett. In addition, the market participants are given the opportunity to utilise the Information Service, which provides the market participants with the settlement data (as time series data) that they are entitled to see. The Information Service (presented in Chapter 10.3 Information Services) is established as a machine-to-machine interface and made available to market participants authorised by eSett.

The market participants themselves are responsible for the accuracy and quality of the reported data. eSett sends and publishes the data received from the parties and is not able to verify the correctness of the received data.

A disturbance in the market participant’s solution does not discharge the market participant from the liability to report the settlement data to eSett. If the market participant is unable to report the settlement data electronically due to a disturbance in the market participant’s solutions, the settlement data shall be reported via the Online Service.

If the reporting cannot be performed due to a disturbance in eSett´s IT solution, the messages will be received in the same order as they have been sent to eSett once the disturbance is over.

The imbalance volumes are calculated based on received settlement data. The calculation is performed per MBA at BRP level and includes data from the parties in the BRP’s balance hierarchy, using relations in the structure information (e.g. BRP’s responsibility over REs).

The imbalance is composed of a BRP’s trades, consumption, production, MGA imbalance and imbalance adjustment up and down. For example, a balance deviation in the imbalance arises when there is a difference between the consumption, production and electricity purchases and sales. If the BRP consumes and sells more electricity than it produced and purchased, there is a deficit in the imbalance, and the BRP is required to purchase the imbalance energy from eSett in order to cover the deficit.

Correspondingly, if the BRP produces and purchases more electricity than it consumed and sold, there is a surplus in the imbalance, and the balance responsible party sells imbalance energy to eSett in order to take care of the surplus.

Imbalance is calculated from the input data in the imbalance settlement system delivered by market participants. This data contains metered and profiled consumption per RE per MGA, metered production per production unit, MGA exchange per MGA per adjacent MGA, day-ahead and intraday trades per RE per MBA, bilateral trades per counterpart per MBA and imbalance adjustments (sum of Frequency Containment Reserves (FCR), Frequency Restoration Reserves (FRR) and Replacement Reserves (RR)).

Based on the delivered data the metered and profiled consumption per BRP in MBA, metered production per BRP in MBA, MGA imbalance per BRP in MBA, MGA exchange trade per BRP in MBA, day-ahead, intraday and bilateral trades per BRP in MBA and imbalance adjustment up and down per BRP in MBA are calculated by eSett. Altogether the result is imbalance per BRP in MBA. Calculation of the imbalance is shown in Figure 16.

Figure 16. Calculation of imbalance settlement

In this chapter an example of the BRP’s imbalance calculation is presented. The example is made from the BRP´s perspective (see Table 15 and Table 16).

Table 15. Imbalance example values.

Table 16. Imbalance calculation.

As a result of the BRP’s imbalance calculation (-65 + 55 + 30 + 5 + (-15)) there is a 10 MWh surplus in the BRP’s imbalance. The BRP sells 10 MWh from eSett.

The calculation of imbalances is performed in eSett’s imbalance settlement system whether or not all the settlement data has been received. For MECs from which data hasn’t been received the value 0 is used in the preliminary calculations but empty settlement data is not changed from void to 0 in the database.

If the values have not been received by gate closure the final calculations are performed with the value 0. The market participant may view the status of reporting in Online Service to view if the calculation was done without having all settlement data available. The statistics include information on what settlement data was missing.

There will be no corrections of the imbalance settlement made by eSett after the invoice of a settlement period has been created and submitted. An exception is if eSett has committed errors or due to extraordinary circumstances (force majeure or similar). Handling of imbalance errors after invoicing is done bilaterally between the contracting parties.

Subsequent bilateral correction of imbalance settlement is outside of eSett’s scope. Handling of bilateral corrections of imbalance settlement will be performed according to national rules.

If the imbalance settlement can´t be performed due to eSett according to the schedules, the imbalance settlement will be performed and finalised as soon as the disturbance situation has been resolved.

Reconciliation is done according to current national practices. Therefore, the step-wise-approach is used for reconciliation in the Nordic Imbalance Settlement Model. This means that reconciliation is done differently in each of the countries and current national procedures are followed.

In the imbalance settlement, estimates for the profiled consumption are used when meter readings are not available in due time (13 days after delivery day). When the metering data becomes available a new and improved estimate is done and called the final profiled consumption (FPC). In the reconciliation settlement, the difference between FPC and PPC is settled using day-ahead market prices for the MBA. In this way, the error in the imbalance settlement due to incorrect estimates of the profiled consumption is corrected.

Reconciliation frequency and schedule depend on the national schedule explained in the following sub chapters that present the national step-wise approaches. Reconciliation is done if one of the following changes in the settlement structure is done: change of supplier, customer relocation, metering point switches between the profiled and non-profiled consumption or in case of change of meters.

The pricing models for imbalances are summarized in Table 18.

Table 18. Pricing models for imbalances.

Income generated by the Nordic TSOs in the imbalance settlement will cover the national cost base, which encompasses for example costs for operating eSett as well as parts of the costs for reserves.

The fees in the imbalance settlement model are calculated and invoiced separately for each market balance area. The fee categories have been harmonized across the countries but the amounts of fees to be charged will be country specific as the cost bases are national. There are three types of harmonised fee: a volume fee on production and consumption, a fee on all imbalances and a weekly fee. In addition to the harmonised fee structure there is one additional fee related to the financing of the Swedish peak load reserves, which is charged only from the BRPs active in the Swedish MBAs.

The fee levels are set by each TSO in proportion to the national cost base. The fees can be changed with one month’s notice. The goal is to keep the fees fixed for at least one calendar year at the time, if possible. TSOs are responsible for calculating and setting the fees and notifying eSett to reduce or increase the fee levels. All fees are published in the Online Service.

Table 19.Fee structure in the imbalance settlement model.

This chapter contains an example of imbalance calculation with prices. The example is based on the ones used to describe the calculation of imbalance volume in chapter 6.2. It presents BRP’s imbalance calculation. In the calculation the ISP in question is assumed to be an up regulation ISP. The example is made from the BRP’s perspective. Prices and fees used in the example are defined in Table 21 below.

Table 21. Fees and prices used in the imbalance calculation.

As a result of the BRP’s imbalance calculation there is a surplus of 10 MWh. The BRP sells 10 MWh imbalance energy to eSett.

Invoicing is done from the BRP’s point of view. The BRP’s balance has a 10 MWh surplus. The BRP’s balance evens up by the BRP selling imbalance energy to eSett. In the invoicing a negative expense means compensation to the BRP.

The invoicing for the imbalance is the following:

Table 22. Invoicing information for the BRP’s imbalance.

The invoices from eSett to BRPs contain the volumes (MWh), prices² and payable amounts (EUR or local currency) of the imbalances during the settlement period. The invoices also contain the fees accrued in the settlement period. The content of the invoice is illustrated in Figure 17

Figure 17. Illustrative contents of invoice from eSett to BRPs

The invoices from eSett to BSPs contain the volumes (MWh or MW for contracted reserves), prices and payable amounts (EUR or local currency) of the bought and sold balancing services during the settlement period. The invoice can contain a weekly BSP fee if it will be introduced by TSO(s). The content of the invoice is illustrated in Figure 18.

Figure 18. Illustrative contents of invoice from eSett to BSPs.

The invoices from eSett to BRPs which have also a BSP role contain the volumes (MWh or MW for contracted reserves), prices and payable amounts (EUR or local currency) of the bought and sold imbalances and balancing services during the settlement period. The invoice can contain a weekly BSP fee if it will be introduced by TSO(s). The content of the invoice is illustrated in Figure 19.

Figure 19. Illustrative contents of invoice from eSett to BRPs which have also a BSP role.

Invoice rows representing purchases by the BRP or BSP from the TSO are labelled as “sales by eSett”. The amounts of these rows are positive, i.e. the BRP shall pay these amounts to eSett. Invoice rows representing sales by the BRP or BSP to the TSO are labelled as “purchases by eSett”. The amounts of these rows are negative, i.e. they reduce the amount that the BRP or BSP needs to pay to eSett. The invoice total can be either positive or negative depending on the relative amounts of purchases, sales and fees on the invoice. Invoices with a positive total are labelled “Debit Notice” and settled with a money transfer from the BRP or BSP to eSett. Invoices with a negative total are labelled “Credit Notice” and settled with a money transfer from eSett to the BRP or BSP. When eSett issues Credit Notices to BRPs, this is referred to as “self-billing”.

In addition to the ordinary imbalance settlement invoices, eSett also invoices the BRPs operating in Sweden for the payable amounts arising from the reconciliation of their profiled deliveries. eSett is responsible for the settlement of the reconciled energy and the invoicing process. Invoicing of the reconciled energy is carried out on a monthly basis. The invoice contains the volumes (MWh) and payable amounts of the reconciled energy and profile compensation as well as accrued interest on the payable amounts. The content of this invoice is illustrated in Figure 20.

Figure 20.  Illustrative contents of invoice for reconciled energy of BRPs in Sweden.

The BRP or BSP receives one invoice for each country where it is active. Companies that operate multiple BRP or BSP roles in a country also get separate invoices for each role.

Companies that operate in the same country with both BRP and BSP roles, shall receive only one BRP invoice. The invoice will contain details from both BRP and BSP invoices as illustrated in Figure 19. Companies that operate multiple BRP roles and a BSP role in the same country, shall have the BSP invoice contents in one of the BRP invoices for a designated BRP.

The invoice is distributed as an e-invoice through the network of e-invoice operators active in the Nordic region. eSett’s e-invoice operator is Basware. To receive e-invoices, the BRPs and BSPs need to establish an agreement with an e-invoicing operator and inform eSett of the e-invoicing operator and e-invoicing address that it will use. The e-invoice consists of two components:

• An invoice message in XML, which allows for automatic import of the invoice into the BRP’s or BSP’s accounting system
• A PDF file with a traditional image of the invoice, which facilitates manual review of the invoice

eSett encodes the invoice message in the Finnish Finvoice 3.0 format. However, the BRP or BSP can agree with its invoice operator to receive the invoice in any supported e-invoice format. Any required translation of the message is carried out while the message is transferred from eSett’s e-invoice operator to the recipient’s e-invoice operator.

BRPs and BSPs that do not wish to receive e-invoices will instead receive their invoices by email in PDF format.

eSett will use a direct debiting scheme for collecting the incoming payments from the BRPs and BSPs. This means that when a BRP or BSP receives a Debit Notice from eSett, they should not pay the invoice. Instead eSett will issue an instruction through its main bank to the BRP’s or BSP’s bank to debit the payable amount from the BRP’s or BSP’s account and transfer it to eSett. The use of direct debiting helps to ensure timely settlement according to a short settlement cycle. The payments between BRPs and eSett, and BSPs and eSett are all executed as same-day-value payments, which means that the payments will be available to the recipient’s bank on the same day as they are paid by the payer. Typically, the funds will also be credited to the recipient’s account on that same day, but that depends on the terms agreed upon between the recipient and its bank.

To participate in the imbalance settlement, the BRPs and BSPs need to hold a bank account(s) in an approved settlement bank, i.e. a bank which has been approved by eSett to be used in the imbalance settlement. This bank account shall enable the direct debiting in the settlement of its outstanding settlement amounts referred to in section 8.3 above. In case direct debiting would not be possible in accordance with the terms and conditions of the said bank account, for example related to anti-money laundering regulations or sanctions, between the Settlement Bank and BRP or BSP, the precondition for the BRP or BSP to be entitled to access the electricity market settlement would not be fulfilled and eSett has the right to terminate the Imbalance Settlement Agreement (BRP) or Balancing Service Settlement Agreement (BSP).

eSett defines the criteria for approval of banks as settlement banks. These criteria include requirements on credit rating as well as the ability to interchange required SWIFT messages with eSett’s bank for execution of payments and balance reporting (see chapter 9.9). The settlement bank also needs to sign a Settlement Bank Agreement with eSett.

The list of approved settlement banks is available in the Online Service and in Open Data portal (opendata.esett.com). If a party wishes to use a bank which is not on the list of approved settlement banks, they shall inform eSett and supply the contact details of a contact person at the bank, with whom the necessary process can be initiated to establish the settlement bank status, given that the bank meets the criteria.

Depending on selected settlement bank there are two alternative ways (see list of approved settlement banks in www.eSett.com) to setup accounts for the imbalance settlement:

Table 23. Pledged Settlement Account Model.

Table 24. Cash Account Model.

The Pledged Settlement Account/Cash Account is used for the debiting and crediting of all payable amounts between the BRP and eSett, and BSP and eSett. In the Pledged Settlement Account Model any collateral that the BRPs and BSPs provide in the form of cash shall also be held on the Pledged settlement account. In the Cash Account model all cash collateral must be held on the Cash Collateral Account. The requirements and procedures related to collaterals are further described in chapter 9.

The currency of the settlement account can be EUR, DKK, NOK or SEK depending on country that the BRP operates (see chapter 8.8 Currency Treatment). The BRPs and BSPs must select the same currency for their pledged settlement account/cash account as they have selected for their invoices. If a party operates in multiple countries, it can have one pledged settlement account/cash account per country over which the invoices for respective country are settled. Or party can have one common account over which invoices are settled if the invoicing currency is the same in all the countries. The account(s) will be updated by the BRP or BSP through Online Service. Any account setup is subject to review and approval by eSett.

In the Pledged Settlement Account Model to enable the debiting of the pledged settlement account and to make it possible to apply the funds on the pledged settlement account as collateral, the BRPs and BSPs need to sign a Pledged Cash Account Agreement, as defined by eSett, whereby they pledge the funds on the account to eSett and grant eSett the necessary right of disposal over the account. The BRPs and BSPs also need to sign MT101 and MT940 agreements with their settlement bank. These agreements are necessary for eSett to direct debit the settlement account and retrieve balance statements of it. An agreement on same-day-value payments to the account is needed if the party wishes to receive the payment as same-day-value payment. The settlement bank will advise on what agreements are required.

In the Cash Account Model to enable the debiting the cash account, the BRP or BSP needs to sign an Agreement on Right of Disposal of Cash Account and Cash Collateral, as defined by eSett, whereby they grants eSett the necessary right of disposal over the account. The BRPs and BSPs also needs to sign MT101 and MT940 agreements with their settlement bank. These agreements are necessary for eSett to direct debit the account and retrieve balance statements of the accounts. An agreement on same-day-value payments to the cash account is needed if the party wishes to receive the payment as same-day-value payment. The settlement bank will advise on what agreements are required.

Invoicing of the imbalance settlement is carried out on a weekly basis. Invoices are issued each Monday. Each invoice comprises the transactions and fees from the delivery days for which the result of the imbalance settlement has been finalized but not invoiced yet. This means that the invoice on Monday will include the settlement that was finalized during the previous week. This settlement covers the delivery days of the week that started three weeks before the invoicing date. The schedule for settlement and invoicing in relation to the delivery dates is illustrated in Figure 21.

Since eSett does not perform imbalance settlement on weekends, the settlement of Sundays’ and Mondays’ transactions is finalized on a Monday. The transactions from Sundays will be invoiced on the same Monday on which their settlement was finalized. The transactions from Mondays will be invoiced one week after the Monday on which their settlement was finalized.

Figure 21. Schedule for settlement, invoicing and payment

The payable amounts of the debit notices will be debited by eSett from the settlement account two days after the invoicing day, i.e. on Wednesday. The payable amounts of the credit notices will be paid by eSett to the settlement account three days after invoicing day i.e. on Thursday.

Invoices and updated collateral requirements are published in the Online Service on Mondays by 13 CE(S)T. BRPs and BSPs need to post any required additional collateral during the same day. In addition to the collateral, the BRPs and BSPs also need to have sufficient funds on their accounts for the settlement of their next invoice in case it is a debit notice. These funds also need to be in place during the Monday. The requirements and procedures related to collaterals are further described in chapter 9.

For clarity, BRPs and BSPs should note that the Settlement Bank agreement or the Pledged Cash Account agreement does not prevent the Settlement Bank from utilising its possible right to set-off accrued negative interest payable by BRP or BSP (if any) to the Settlement Bank under the terms and conditions of the Pledged Cash Account, if such negative interest will not be otherwise charged. However, if such set-off right exists and is being used by the Settlement Bank, BRP or BSP is still obliged to have sufficient funds on its settlement accounts for the settlement of their next invoice and to meet the collateral requirement as required.

The weekly activities related to invoices, payments, collateral, and currencies are summarized in Table 25.

Table 25. Weekly activities related to invoices, payments, collateral, and currencies

Invoices and updated collateral requirements are published in the Online Service on Mondays by 13 CE(S)T. BRPs and BSPs need to post any required additional collateral during the same day. If updated collateral requirements are published later than 13 CE(S)T on Monday (invoicing day), any required additional collateral needs to be posted latest during the following day.

If there are one or more holidays during the invoicing cycle (Monday to Thursday), the invoicing activities on and after the holiday will be moved forward correspondingly so that there is always the same number of business days between the events: one business day between the invoicing day and the day when incoming amounts are debited and two business days between the invoicing day and the day when outgoing amounts are paid. A holiday in any of the NBS countries will be treated as a holiday for the whole system in this regard. A holiday on a Monday before the Swedish reconciliation invoicing also causes the activities related to the reconciliation invoicing to move forward correspondingly to ensure that settlement invoicing and reconciliation invoicing won’t occur on a same day.

If the finalization of the imbalance settlement is delayed due to some technical problem at eSett and all of previous week’s settlement has not been finalized on Monday by the time the invoicing should take place, eSett will not invoice the incomplete week but rather delay the invoicing until all settlement data has been finalized. If the issuing of invoices is postponed from Monday to another day in the week, all other days in the invoicing cycle will also be postponed with an equal number of days so that there will be one business day between the invoicing day and the day when incoming amounts are debited and two business days between the invoicing day and the day when outgoing amounts are paid.

If a BRP or BSP notices an error in an invoice, which is caused by a mistake made by eSett, they should notify eSett thereof as soon as possible, at the latest during the same week as the invoice was issued. If it is possible to correct the invoice during the day after the invoicing (Tuesday), the corrected amount will be debited on Wednesday or paid out on Thursday. Otherwise, the original amount will be debited on Wednesday or paid out on Thursday and a correction will be debited or paid out after the corrected invoice has been issued. Due to the short time span between invoicing and debiting/payment, it is essential that BRPs and BSPs carefully verify the preliminary and finalized settlement and balancing service amounts as soon as they are available so that any errors in the settlement amounts can be identified and corrected well ahead of the invoicing. Invoicing errors that are caused by errors of the market participants or reported after the week when the invoice was issued will not be corrected by eSett. Such errors will instead have to be settled bilaterally between the contracting parties.

At the beginning of a new year, the invoicing period that contains the settlement from the delivery days at the turn of the year is split into two and two invoices are issued for that period: one with the settlement from the delivery days that fall on the old year’s side and another one with the settlement from the delivery days that fall on the new year’s side. The weekly fee will be divided respectively into the two invoices. Both invoices are issued on the same day and debited or credited according to the same schedule.

The imbalance energy, fees and activated reserves invoiced to the BRPs and BSPs by eSett are subject to value added tax (VAT) in all the Nordic countries. The tax rules and rates differ depending on the location where the buyer is VAT registered, the location where the seller is VAT registered, and the location of delivery. The VAT procedures in the Nordic Imbalance Settlement are based on the premises that eSett is established in Finland and that it acts as a commissionaire for the TSOs. Most BRPs and BSPs are established and VAT registered in the country where they act as BRP or BSP, but it is also possible for companies in other EU member states and Norway to act as BRPs or BSPs in Denmark, Finland and Sweden without local establishment and VAT registration. Due to Norwegian legislation, a local VAT registration is needed in Norway in order to buy and sell electricity in Norway. The different applicable VAT rates depending on the location of the party’s VAT registration and the country of delivery are illustrated in Table 26 and explained in the following subchapters.

* Electricity trade in Norway requires local VAT registration

Table 26. Applicable VAT rates depending on registration location of BRP or BSP and country of delivery.

Counterparty risk of eSett arises from the outstanding obligations of BRPs, i.e. from negative imbalances that have taken place but not been paid for yet. The counterparty risk vis-à-vis a BRP also includes the risk that the BRP is unable to pay for negative imbalances that accumulate from the current day onwards until the point when possible irregular behaviour can be identified and the accumulation of further imbalances prevented.

In the imbalance settlement eSett faces a significant time period of uncertain exposure. The counterparty risk for eSett will also vary substantially from time to time, depending on price levels and volumes of production and consumption. Continuous surveillance of trades compared to expected commitments and monitoring of other market developments, such as prices, is therefore essential.

The BRP needs to provide collateral to eSett as security against the counterparty risk.

Collateral can be provided in the form of cash or an on-demand guarantee, or a combination of these. Any cash collateral shall be held in a bank that has been approved by eSett as a settlement bank for the imbalance settlement, and in the account designated to hold collaterals.

Any bank guarantee shall be unconditional, irrevocable and payable on first demand, and issued by an approved settlement bank.

eSett is entitled, if needed, to use the collateral to cover any outstanding commitments that the BRP is unable to fulfil within the time frame stipulated by the invoicing process presented in chapter 8.5.

The objective of the collateral model is to provide the best possible estimate of the prevailing counterparty risk exposure at any point in time based on the data available at the time. Excessively high collateral requirements would constitute a threshold for entering the market. The aim is therefore to set the collateral requirement at a level that provides adequate protection against the actual counterparty risk without being higher than necessary.

The overall counterparty risk exposure of eSett consists of the following components:

1. Delivery days for which the settlement amounts have been invoiced but not yet paid
2. Delivery days for which the settlement amounts are known but not yet invoiced
3. Delivery days during which the BRP has been active but the imbalances are unknown; only trade and imbalance adjustments are known
4. Delivery days in the future during which the BRP will be active, but for which there is no information yet about the BRP’s activity; This component needs to be considered as well since there is the risk that a distressed BRP might cease to honor its commitments in the electricity market and accumulate significantly higher imbalances than normally until the point when this is noticed and the accumulation of further imbalances can be prevented

At the time of calculating the collateral, finalized settlement data is only available for components 1 and 2. The total exposure will therefore have to be estimated based on the best available data for this purpose.

If a BRP operates in multiple countries, eSett will publish a single collateral requirement for the BRP, which covers the counterparty risk arising from the BRP’s operations in all these countries. This collateral requirement is the sum of the individual collateral requirements for each country, which are calculated as described in chapter 9.3 based on the BRP’s invoices and data for respective country.

If the BRP has different settlement accounts per country, the account balance of each settlement account is taken into account as collateral. The sum of all individual collateral deposits must meet the collateral requirement.

All collateral requirements are calculated and published in euro. Cash collateral and on-demand guarantees can be denominated in euro, Norwegian krone (NOK), Swedish krona (SEK) or Danish krone (DKK). For the purpose of collateral monitoring, the value of any collateral denominated in NOK, SEK or DKK is converted to euro using the latest available reference rates from the European Central Bank.

 

Collateral requirements are calculated by eSett each Monday and published in the Online Service by 13 CE(S)T on Monday. eSett will further monitor the risk exposures during the week and recalculate the collateral requirements if necessary. If collateral requirements are updated during the week, eSett will publish the updated collateral requirements by 13 CE(S)T on that day. New collateral demands are not published on holidays in the Nordic calendar. The BRPs shall check their collateral requirement in the Online Service on a daily basis and arrange for additional collateral with their settlement bank whenever necessary.

The BRP must provide sufficient collateral to meet the collateral requirement during the day when the updated collateral requirement was published. Any additional Cash Collateral shall be transferred to the account during the banking day so that it gets included in the account balance of that day. Any additional on-demand guarantee shall be provided to eSett by 15 CE(S)T.

To be able to monitor the collaterals, eSett will retrieve the account balances of the BRPs’ accounts from the settlement banks on a daily basis. When needed, the settlement banks will also confirm to eSett any changes in the posted collaterals during the day.

If a BRP should fail to provide the required amount of collateral within the required time frame, this is considered a material breach of the Imbalance Settlement Agreement. If such a breach occurs, eSett in cooperation with the concerned TSO(s) have the right to take any necessary action to prevent losses and safeguard the power system. The BRP will be contacted and asked to urgently clarify its situation. If the BRP is unable to remedy the deficiency in its collateral, this will lead to the immediate termination of the Imbalance Settlement Agreement with the BRP and the exclusion of the BRP from the electricity market.

If the amount of collateral provided by the BRP exceeds the collateral requirement, the BRP may request from eSett that the exceeding part of its collateral is released. Such requests can be made through the Online Service on any day of the week. If the request is valid, eSett will instruct the BRP’s settlement bank to transfer the funds to BRP’s other account. The settlement bank will not allow the BRP to withdraw any funds from its pledged settlement account or cash collateral account.

The BRP has to inform eSett about the account to be used for releasing the excess collateral when Pledged Settlement Account Model is used. If the Pledged Settlement Account Model is used, the collateral release account will be updated by the BRP through Online service at the same time as the settlement account (see chapter 8.4 about updating the settlement account). The BRP will also send eSett the Standard payment instructions signed by the signatory authorized to act on behalf of the BRP. eSett compares the Standard payment instructions with the collateral release account number updated through Online service. After verifying the release account number this way, eSett approves of it in the system. If BRP uses Cash Settlement Account Model, collateral is released to the Cash Account. Requests to release collateral are processed from Tuesday to Friday. Requests to release excess funds are not processed on holidays in the Nordic calendar.

If the Imbalance Settlement Agreement is terminated, eSett is entitled to withhold the collateral until the BRP has fulfilled all its obligations under the agreement and if necessary, to use the collateral to cover any unsettled commitments that the BRP is unable to fulfil. Any remaining collateral will be released to the BRP after the final settlement has been performed.

While it is acknowledged that any (positive) interest accrued to the funds on the Pledged Bank Account (if any) is in the scope of the pledge under the Pledged Cash Account Agreement it is stated for clarity, that the Settlement Bank Agreement or the Pledged Cash Account Agreement does not prevent the Settlement Bank from utilising its possible right to set-off accrued negative interest payable by the Account Holder (if any) to the Settlement Bank under the terms and conditions of the Pledged Cash Account if such negative interest will not be otherwise charged.

In addition to managing the counterparty risk vis-à-vis BRPs, eSett also needs to ensure that the settlement banks are able to fulfill their roles in the settlement process. eSett also needs to safeguard against the risk that the failure of a settlement bank could get to disrupt the imbalance settlement. For this purpose, there are certain requirements that a bank must fulfill in order to be approved as a settlement bank for the imbalance settlement:

• The bank needs to be rated by at least one of the three major rating agencies (Fitch, Moody’s or Standard & Poor’s) and the rating (or the majority of the ratings, if several) must be on A level 3
• If the Settlement Bank is rated by several agencies, at least one of the ratings must be on the aforementioned level and the lowest rating must be at least BBB+ (Fitch, Standard & Poor’s) or Baa1 (Moody’s).
• The bank needs to commit to executing the requests for transfers that eSett issues through its main bank
• The bank needs to commit to reporting the BRP’s account balances to eSett
• The bank needs to have the technical capabilities to exchange the necessary messages with eSett’s main bank for the request for transfer and balance reporting services
• The bank needs to sign necessary agreements with eSett and eSett’s main bank

eSett monitors the credit ratings of the settlement banks as well as the services performed in order to ensure that the banks comply with the requirements of the Imbalance Settlement. If a settlement bank is unable to maintain the required credit rating or to provide the agreed services in an adequate manner, eSett will take steps to exclude the bank from the list of approved settlement banks and the BRPs that have used this bank will have to move their settlement accounts and collaterals to another approved settlement bank. If there are signs of non-compliance with the requirements, the bank will first be placed on a watch list. The watch list is published in the Online Service to give concerned BRPs pre-warning that they should prepare for the possibility that the bank may get excluded from the list of approved settlement banks. If a settlement bank gets excluded, the BRPs need to complete the move to another approved settlement bank within three months.

¹Standard & Poor’s: long term rating at least “A-“
Moody’s: long term rating at least “A3”
Fitch: long term rating at least “A-“

The above described procedures related to the collateral management and calculations will not be applied for the reconciliation. Such invoices will be based on the result provided by Svk. This means that volumes and amounts that are part of the reconciliation will not be part of the collateral calculation. Furthermore, direct debit will not be applied for these invoices. Currency will be SEK or EUR.

BSPs cause a counterparty risk for eSett from the outstanding obligations, i.e. purchase of activated reserves from eSett (down regulation) that have taken place but not been paid for yet. The counterparty risk vis-à-vis a BSP also includes the risk that the BSP is unable to pay for purchased activated reserves that accumulate from the current day onwards until the point when possible irregular behaviour can be identified, and the accumulation of further costs prevented. The counterparty risk for eSett will also vary substantially from time to time, depending on price levels and volumes of activated bids.

Nordic TSOs reserve the right to require collateral from the BSPs. Each TSO will define the locally used collateral regime until a common Nordic collateral model has been defined. More detailed information about the collateral requirement for BSPs shall be provided and will be presented in the Balancing Service settlement Agreement’s Appendix 2 – Collaterals if any of the Nordic TSOs decide to apply the requirement nationally.

Collateral for BSP which also act as a BRP shall be covered by the existing dynamic collateral requirement for the BRPs. BSPs that don’t also have a BRP role will have a risk-based defined and manually set collateral requirement if such is required by the local TSO.

Messaging Service enables eSett and Market Parties to exchange messages necessary for the Settlement process. It is used both for inbound messages, such as meter values sent from the DSOs, and outbound messages, such as the settlement result to the BRPs. In order to ensure that imbalance settlement information exchange is based on the same communication technology and formats, a common data communication standard has been developed, which is presented in chapter 10.4.

eSett will communicate via SMTP, SFTP, web service or ECP when messages are sent to and from eSett by messaging service. Swedish and Norwegian market participants will use SMTP, Finnish market participants may use any channel and Danish market participants are recommended to use ECP.

Data packages are a functionality that enables market participants (BRPs, BSPs and DSOs) to receive settlement data by subscription. eSett defines the content of a data package and also defines when the data packages will be compiled and sent out automatically. After this, eSett adds the newly defined data package to the list of available data package on the Online Service. The market participants can then go to the Online Service and “order/subscribe” the data package. According to the distribution schedule that eSett has defined, the eSett settlement system compiles and sends the packages via messaging service.  The data packages are created per market participant role so that each package is populated only with the data that the market party is entitled to see. Generally, data packages will be sent to the market participants on daily basis, with same granularity as the settlement is calculated and include settlement data from open imbalance settlement period as well as the final data for closed settlement period.

Data packages are divided into “specific” and “generic”. The specific data packages will utilize the same data flows as Information Service and those are presented in the Communication Guidelines. The generic data packages will utilize generic format (e.g. most of the settlement aggregation time series will use the generic data format). The generic format is defined in the Communication Guidelines.

Additionally, eSett provides data packages in UTILTS format regarding the profiling and reconciliation in Sweden. These are defined in the UTILTS & APERAK guide which can be found from Swedish Edielportalen: https://www.ediel.se/Info/edielanvisningar.

Table 27. Specific Data Packages

Table 28. Generic Data Packages

Table 29. UTILTS Data Packages for Swedish profiling and reconciliation.

eSett gives market participants the possibility to retrieve settlement data (time series data) from an Information Service. The Information Service is established as a system-to-system connection between market participant and eSett.

The service is established as a web service, which provides the possibility for data requesting and transfer but also capabilities for information security; secure connection between two system and tools for market participant’s authentication and authorisation. If the market participant wants to use the Information Service, it needs to set up the connection with eSett.

The market participants must first be authorised to use the Information Service. After authorisation a market participant can fetch time series data through the Information Service. Market participant can only fetch data that the party is entitled to view, as instructed in the regulations.

The market participant’s IT system can send a request for MEC data to the Information Service in order to receive it. A market participant can for example order following MEC data: detailed production plans, detailed reserves data, settlement data, settlement results or imbalance prices. The Information Service provides the requested data to market participant’s system if the requested data is available.

The information that can be received via the Information Service is shown in Table 30.

Table 30.  Available information service tasks per market participant.

Detailed information regarding the Information Service interface and the supported data flows can be found in the Communication Guidelines, published on eSett’s web page (https://www.esett.com/customers/data-communications/)

The common file format syntax will be based on ENTSO-E and ebIX ®. Definition of the utilized file format is specified in the document “A market model for data exchange, Business Requirement Specification for Data Exchange in NBS (BRS). The focus of the BRSs for the Nordic Balancing System is the business aspects of the document exchanges. The latest version of the document can be found at: https://ediel.org/.

Market participants responsible for reporting data to eSett are obliged to use the common standard, as stated in section 5.1 Reporting requirements.

The TSOs have prepared a user guide for NBS. The User Guide for XML documents for NBS is a detailed User Guide for the ENTSO-E and ebIX® XML documents used in the Nordic Balancing System. The focus of the document is the technical aspects of the documents to be exchanged. In addition, NMEG has also prepared a document with XML schemas and examples. The latest version of the documents can be found at https://ediel.org/.

Open Data is eSett’s primary interface to other stakeholders than market participants. The Open Data can be accessed without a user account or authentication. The information provided there gives a basic knowledge about imbalance settlement and the companies involved in it.

The Open Data contains information presented in Table 32 .

Table 32. Information in Open Data.

The Online Service is eSett’s main communication tool and primary interface to market participants. The Online Service requires login and contains settlement information that only the respective market participants can view.

Settlement information from the imbalance settlement IT system is published at the Online Service, so that market participants and authorized service providers can view and download the information they are entitled to see. The Online Service provides a functionality for update of structure information and upload of settlement data. The user is also able to monitor messaging related to the market participant.

The Online Service focuses on the needs of the companies (and market participants) that are involved in the imbalance settlement or balancing services and provide them with all the data that are included in their settlement. The market participants are able to have the complete overview of the imbalance settlement input and result, thus enabling them to perform a full verification over their entire settlement.

The market participants and their service providers are able to send and update information to eSett’s imbalance settlement IT system. This includes both time series and structure data. Functionality for management of their collaterals and invoice information is also provided and it is possible to download data in different forms. The tasks that market participants can perform in the Online Service are presented in Table 33.

Table 33. Online Service features for market participants.

The example in Table 34 shows what settlement information regarding MGAs the BRPs, DSOs and REs can view and update in the NBS model.

The example in based on the assumption that:

• BRP1 is a BRP for
  • RE1 consumption in MGA1
  • RE2 production in MGA1
  • RE3 losses in MGA1
  • BRP1 imbalance in MGA1
  • RE2 consumption in MGA2
  • BRP1 (as a RE) consumption in MGA2
• BRP2 is a BRP for
  • RE4 production in MGA2
  • RE5 losses in MGA2
  • BRP2 imbalance in MGA2

Table 34. Example of information access rights in the NBS model.

eSett provides both public and restricted reports in accordance with the reporting responsibility. The market participants can also order so called data packages from eSett. The subscriptions are managed through the online service.

Most data packages contain data from D-14 to D-1, where D refers to current day. For some data packages, e.g. imbalance settlement results, there are four different versions of each data package:

• Preliminary (containing data from an open period)
• Final (containing data from a closed period)
• Invoiced (containing data from an invoice period)
• Corrected (with corrections done after invoicing)

Reports available for market participants are statistics report to externals, KPI reports, transparency reports, reports to regulators, financial reports and settlement data packages (presented above).

The reports are either one-time reports or regularly compiled and distributed reports. If the report is compiled and distributed regularly, eSett defines the frequency for that. Some of the reports are not stored in the system after they have been compiled. Report’s distribution channel can be; manual retrieval and/or distributed automatically (sent and/or published).

eSett is responsible for monitoring BRPs’ performance. In the monitoring process data is gathered for calculating KPIs and evaluating the BRPs’ and DSOs’ performance. eSett evaluates the outcome and identifies which market participants are underperforming, misusing their market power or conducting other unprofessional misbehaviour e.g. in the regulating power market.

If KPIs show that, for example, a certain BRP’s imbalance is constantly on an insufficient level, eSett can take action to terminate the imbalance settlement agreement of this BRP.

All KPIs are published at the Online Service for BRPs to review and compare their position with other participants on Country level.

KPIs are utilised to measure the performance of different market participants. KPIs are a transparent way to display how BRPs carry out their respective responsibilities. eSett will develop KPIs that are critical for TSO to follow up the market behaviour. In addition to these KPIs, eSett will develop in co-operation with Market Participants the KPIs that help the Market Participants to improve their performance and quality.

The following KPIs are presented:

• BRP Imbalance KPI Report – Country
  • Visible only for BRPs who are operating in Norway or Sweden in that specific country
  • Report includes results of all BRPs which are active in that specific country
• BRP Imbalance KPI Report – Own Data
  • Visible for all BRPs
  • Report includes results of BRP’s own data
• Advanced Settlement Report – Month
• Advanced Settlement Report – Week
• Production Plan KPI
  • Visible only for BRPs who are operating in Finland, Norway or Sweden
  • Report includes results of BRP’s own data

The main objective for BRPs is to stay in balance and keep their imbalances on a minimum level. For a BRP who has systematic imbalances it is possible to impose sanctions and finally terminate the contract. Bad data quality makes it difficult for BRPs to make dependable forecasts, which is why DSOs are being monitored by eSett. However it is not legally possible for any of the involved TSOs or eSett to impose sanctions on the DSOs. KPIs’ calculated by eSett are used by the national regulators to issue economic sanctions for those DSOs which do not live up to predefined minimum levels.

eSett therefore only has the possibility to initiate the termination of the contract between the BRP and eSett. The control process have three steps:

1. eSett evaluates the BRP performance with the help of the market surveillance data and KPIs

2. If the BRP performance is not at an acceptable level, eSett initiates a dialogue in order to investigate the reason and possibilities to enhance performance

3. TSOs and/or regulators can place sanctions on the BRP or the DSO

4. If the dialogue ends in a state where the BRP performance is still found too low, the process to terminate the imbalance settlement agreement is started

eSett does not perform imbalance settlement on weekends or midweek holidays, which are listed in appendix Nordic Calendar (below). List shows holidays in Finland, Sweden, Denmark and Norway.

Appendix. Nordic Calendar