Public consultation on Elia’s findings regarding the design of a scarcity pricing mechanism for implementation in Belgium
Topic
Elia launches a public consultation on a study containing Elia’s findings regarding the design of a scarcity pricing mechanism for implementation in Belgium. This study has been performed in the context of the 2020 balancing incentive on scarcity pricing.
The study includes, amongst others:
- An assessment of a study by UCL CORE titled ‘Study on the general design of a mechanism for the remuneration of reserves in scarcity situations ’, both from a market design compatibility as well as from a legal perspective;
- Elia’s identified alternative scarcity pricing proposal that is deemed feasible to be implemented in the short to medium term future, complemented by several open questions regarding the general desirability of this – and by extension any – scarcity pricing implementation for Belgium;
- A high-level implementation plan for the possible (conditional to a positive answer regarding the above-mentioned desirability questions) realization of Elia’s identified alternative scarcity pricing proposal, elaborating on several implementation tracks.
Elia publishes and distributes this study for consultation in order to collect stakeholders’ views on the study in general and to receive feedback on some specific questions regarding the desirability of a scarcity pricing mechanism for Belgium (cf. section 6.2 of the study).
Elia will publish the final report of the study at the latest by 23th December 2020.
Context
Scarcity pricing is an administrative intervention in the energy market, ensuring that energy prices spike during scarcity events and reflect the value of energy without relying on supra-competitive bids of generators.
This study follows up on earlier study work that has been performed on scarcity pricing for Belgium by CREG, UCL CORE and Elia. Most notably:
- In 2016, CREG published a ‘Note on scarcity pricing applied to Belgium ’, building further on a study by UCL CORE titled ‘Remuneration of Flexibility using Operating Reserve Demand Curves: A Case Study of Belgium’;
- In 2017, CREG published a ‘Note on an extended analysis of the capacity remuneration in scarcity conditions ’, building further on a study by UCL CORE titled ‘Extended analysis of the capacity remuneration in scarcity conditions’;
- In 2018, Elia published a ‘Study report on Scarcity Pricing in the context of the 2018 discretionary incentives ’;
- In 2019, CREG published a ‘Note on the implementation of a scarcity pricing mechanism in Belgium ’, building further on a study by UCL CORE titled ‘Study on the general design of a mechanism for the remuneration of reserves in scarcity situations’;
- Since October 2019, Elia publishes – for informational purposes – calculated scarcity price adders on D+1 basis on its website.
