Impact of Dynamic Imbalance Pricing on Electricity Market Operators in Italy

The European Electricity Balancing Guideline has revised the imbalance settlement mechanism. In Italy, this regulatory reform mandated the TSO to develop a new methodology for dynamically aggregating congestion-free price areas within the same macrozone defined by a single imbalance price. This study presents the proposed methodology and analyzes how macrozone configurations and imbalance prices would change compared to the current regulatory framework, which relies on two static macrozones. Furthermore, we assess the economic impact of this reform on BRPs managing three types of assets: photovoltaic plants, wind farms, and consumption units. Results show that under the new methodology, a single macrozone configuration would be observed in 96 % of the analyzed imbalance settlement periods, leading to more uniform imbalance prices across Italy. The impact on BRP imbalance costs would be minimal, with few exceptions. Implementing this methodology would improve the accuracy of imbalance price signals, reflecting the spatial distribution of balancing costs.