Imbalance Chasing in Belgian Energy Markets

Details

Supervisors

Contino, Francesco

Faculty

Ecole polytechnique de Louvain

Degree label

Master [120] : ingénieur civil mécanicien, à finalité spécialisée

Abstract

The Belgian electricity balancing market settles Balance Responsible Party (BRP) imbalances at a single quarter-hourly price plus a scarcity adder (α) above 150 MW system imbalance, rewarding any BRP that takes an offsetting position—imbalance chasing. The 2024 PICASSO and 2025 MARI accessions completed cross-border reserve integration; whether they compressed the residual chasing incentive on Belgian data has not been measured. This work evaluates the incentive using a 244,773-bin master panel of Elia public feeds spanning 2019–2025, of which a 93,073-bin forecast-available subsample (2023–2025) carries the chasing analysis across three regulatory regimes—Pre-PICASSO, PICASSO Adapted, and MARI Adapted—using a transparent rule that operates on the published forecast system imbalance. Between Pre-PICASSO and MARI Adapted, the mean per-bin chasing reward fell by 47%, but the extreme-tail reward magnitude fell by only 11% and the loss rate rose from 20% to 35%. The cascade rate on chasing-active bins fell by 78%, while the over-representation of cascades in the extreme-chasing tail rose from 3.4× to 9.8×. The two reforms compressed the broad chasing economy on every metric but concentrated the residual reward and grid stress in the same thin tail. A four-pillar decomposition isolates the single-pricing rule, the α threshold, the 15-minute settlement period, and the reserve product mix as the regulatory levers; a targeted policy combination compresses the extreme-tail reward by 65–92% across regimes (92% under MARI Adapted) without altering any pillar. The residual chasing incentive is concentrated in the extreme-chasing tail and can be compressed by an incremental policy instrument without redesigning the single-pricing rule.