New regulations on balancing groups in EnWG -
with implications for direct marketing

The background to direct marketing

Direct marketers contribute to the efficient and secure integration of renewable energies. They prepare forecasts for their plants, trade the electricity produced, take care of balancing out shortfalls or surpluses, and settle the revenues and costs with the operators or grid operators. As always with renewables, there is a decisive basis for this: the weather, or rather its forecasts. And just like the forecast, electricity production is not 100 percent predictable.

Proposed legislation on balancing groups

In the proposal for the new section 20 (1a) sentence 9 EnWG, the legislator writes that "a contract on the management, processing and settlement of balancing groups (balancing group contract) must be concluded between the balancing group manager and the transmission system operator responsible for the respective control area". The balancing group manager also bears the financial responsibility for balancing group deviations.

The role of the balancing groups

Like all players in the energy system, the direct marketer is also assigned a (market premium) balancing group in each of the four control areas. In this balancing group, all forecasts as well as feed-ins and withdrawals and trading transactions are registered with the transmission system operator. This regulation already has its origins in Section 4 (2) StromNZV and is now being incorporated into the EnWG. However, just as with weather forecasts, deviations between the quantities registered and the quantities actually produced also occur in the generation of renewable energies - despite all due care. This is when balancing energy becomes due: the balancing group manager must physically compensate for the excess or shortfall.

Economic responsibility for deviations

Since balancing energy often costs several thousand euros in certain hours, direct marketers are exposed to high financial risks. Thus, they already bear the economic responsibility for deviations (§ 4 para. 2. p. 2 StromNZV) and, from a financial point of view alone, have an interest in exercising the greatest care in forecasting. However, an obligation to fully balance the balancing group originally contained in the draft legislation, which would have deemed deviations to be a breach of the obligation to balance the balancing group, has now been removed again in the wording aid for an amendment proposed by the parliamentary groups on 12.09.2023. Incidentally, in addition to general energy law provisions, the committee dealing with the amendments is focusing primarily on adapting energy industry law to EU requirements.

Balancing group contracts are thus an important element of a functioning energy system. For this reason, the balancing group contract and the basic allocation of financial responsibility for balancing group deviations will be included in the EnWG. The further design of the balancing group system will be based on Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on system balancing in the electricity supply system. 

Do you have any questions about the Act on the Adaptation of Energy Industry Law or about balancing group management?Please do not hesitate to contact us!

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