From regulatory identification to financial settlement: Operational framework and management of procedures and data in the liberalised electricity market

Written by: Dejan Mladenovski, MA, Head of Tariff Calculation and Imbalance Settlement

From a vertically integrated system to a liberalized market

As in most countries worldwide, the electricity sector in our country was, in the past, vertically integrated and monopolized.  One company was responsible for the generation, transmission, distribution, and supply of electricity, and most often it was a state-owned entity.

The liberalization of the electricity market began in the late 1980s and early 1990s, with the transition from state monopolies to competitive, market-oriented systems, aimed at increasing efficiency, reducing costs, and expanding consumer choice.  Pioneer countries in this process included the United Kingdom and Norway, which implemented reforms to unbundle generation from transmission and distribution.

The liberalization of the electricity market in the Republic of North Macedonia began in 2007–2008, in accordance with the obligations arising from the Energy Community Treaty signed in 2005.  The process was carried out in phases – first covering large industrial consumers, followed by small and medium-sized enterprises, and finally households.

The Market as a Data-Driven System

The modern functioning of the electricity market is based on intensive and rapid exchange of data to ensure constant balancing of supply and demand in order to ensure stability of the power grid. These data range from traded electricity quantities, generation and consumption schedules, and metered values within defined time intervals, to long-term market forecasts.

Registration for Participation in the Electricity Market

License

Any entity wishing to participate directly in the electricity market is required to hold an appropriate license. It registers as a participant in the electricity market and defines its rights and obligations depending on the type of activity (production, supply, trading, aggregation, etc.).

Each market participant, depending on the type of license held, has different rights and obligations, hence a different volume and type of data that the entity should submit or use in its operations.

EIC Code – Unique Market Identification

For the purchase and sale of electricity, each market participant must hold an EIC (Energy Identification Code), which is a unique code for identifying that participant. Through this code, participants nominate quantities of electricity.

The traded quantity of electricity may consist of:

• electricity purchased for resale,
• electricity purchased for final consumption, for which the submission of a consumption schedule is required, and
• electricity generated by a producer who is obliged to submit generation schedules in accordance with its production plan.

Balancing Responsibility

One of the key prerequisites for a market participant to commence its activities is the settlement of its balance responsibility. There are two ways market participants can regulate their balance responsibility:

• to assume balancing responsibility individually and establish their own balancing group; or
• to access an existing balance group.

A balancing group represents a virtual association of market participants that aggregate their generation and consumption positions in order to optimise and reduce imbalance costs. The functioning of balancing groups requires accurate and timely data on nominated and realised quantities of electricity.

Metering Points and Virtual Metering Points

Each electricity market participant that has metering points for the receipt and/or delivery of electricity must possess an ID code for a virtual metering point, in which the metered values for a given period are represented.

In cases where a market participant acts as an aggregator, aggregating multiple retail market entities, the data from multiple physical metering points is consolidated into a single virtual metering point.

A virtual metering point represents the aggregation of one or more metering points of electricity market participants, whose metered data correspond to the sum of the measured values from their individual metering points.

The establishment of virtual metering points, the collection and submission of metered values, as well as the overall operation of the power system, are the responsibility of the network system operators.

From Data to Financial Settlement

Based on the aforementioned data and the timelines in which the relevant obligations arise, the National Electricity Market Operator – MEMO DOOEL Skopje performs the necessary calculations, which are subsequently used for the settlement of financial obligations, as well as for the preparation of various reports that serve as a basis for electricity market operation and management.

Conclusion

The electricity market is a dynamic and highly complex system in which data constitute the foundation for security, transparency, and financial sustainability. While in the past data served only for statistical analysis and billing, today they have become a strategic resource and a key link for the functioning of the dynamic electricity market. Accuracy, timeliness, and integrity of data are key to the stable functioning of the entire electricity system, security of supply as well as fostering trust among all market participants. The future of energy independence and stability depends not only on installed plant capacities, but above all on the ability of electricity market participants to transform data into smart and timely decisions.

MEMO Info