Given the peak imbalance prices on several grids these past weeks, we’re making the case for power producers that becoming a BSP may be a great step to profit. Why not put your ‘sleeping’ capacity to use, and get paid handsomely for it?
It was the day after Saint-Nicolas’ visit..
Monday the 7th of December 2020 – Belgium, it’s a cold day, there’s almost no wind and the sun hides behind a thick blanket of grey clouds. This phenomenon is known as ‘dunkelflaute’ in German or ‘donkerluwte’ in Dutch. It’s an adverse scenario for renewable power generation – especially during the winter months when temperatures drop.
These factors created a perfect storm on the Belgian power grid and imbalance prices rose significantly, staying above €385, most of the time between 07:45 and 18:00 hours. The peak came at 12:30, with prices reaching €2291/MWh.
The Flexibility Market – how to participate?
The opening up of access to the flexibility markets by Elia, the Belgian power TSO, means that owners of smaller generation units can also participate, and get a return on their production assets.
Elia contacts the BSPs that participate and they in turn need to fully activate their ‘promised capacity’ within 15 minutes to help Elia maintain balance on the grid.
The business case for becoming a BSP
Balancing Service Providers (BSPs) with ‘spare capacity’ can be rewarded handsomely if they participated on the flexibility markets during days with high auction prices. A BSP is an entity that offer the flexibility of a unit or load in the reserve market to parties that request flexibility services, the TSOs or DSO. Often the flexibility of several distributed units is aggregated by one BSP, which is then called an aggregator.
If you have ‘sleeping capacity’, then it is quite straightforward to calculate your business case of becoming a BSP. Take a look at the average auction prices for the past year(s), analyse the trends. If you have determined your cost of production, you can then do the calculation to see at what point you should participate in the flexibility markets. Last but not least you should strengthen your prediction models with forecasting. A good (auction) price forecasting model can only help you.
You can see an example below of the auction prices on that infamous Monday (07/12/2020). Some interesting columns are Bids+ = price paid for non-reserved upward balancing capacity and R3 Std = Activated pre-contracted Standard upward tertiary reserve capacity:
So you’ve made your business case and want to take the next steps? Then we kindly refer you to Elia’s website section on ‘how to become a BSP’.
Our Power nomination software as your ‘operations hub’
Obviously, you will need a trusted service provider and that’s where Energy One comes in with a range of innovative IT solutions and services to support placing bids and accepting activations sent by the TSO. We’re constantly adding new options to facilitate access to the flexibility markets.
To summarize, you can count on Energy One to help you optimize your energy portfolios and maximize profit. Obviously, this is only the beginning, as several TSOs are exploring ways to opening up their flexibility markets. We are ready to help you with innovative solutions to make the best use of these opportunities.