Balansfaktorn

Balansfaktorn is a term used in the Swedish electricity market to describe a balancing factor that adjusts the financial settlement for deviations between forecasted and actual electricity production and consumption. It functions as a multiplicative coefficient applied to imbalance charges or credits, and it is used to allocate the costs and revenues associated with keeping the transmission system in balance among market participants.

Purpose and use: The balancing factor aims to reflect the costs of balancing the grid and to create incentives for participants to adhere to their schedules. Participants whose actual production or consumption deviates from their forecasts may incur payments or receive revenues that are scaled by the Balansfaktorn, influencing the economic consequences of deviations and the overall efficiency of the balancing process.

Calculation and scope: The exact formula and the time windows in which the Balansfaktorn applies are defined in market rules and are determined by the regulator in consultation with the system operator. The value of the factor can vary over time and may depend on market conditions, forecast accuracy, and policy decisions. It is one component of the broader imbalance settlement framework and works together with imbalance prices and other balancing instruments.

Regulatory context: Balansfaktorn exists within Sweden’s liberalized electricity market structure, where a system operator and regulator oversee balancing responsibilities and ensure that costs are allocated in a manner that supports grid security and market efficiency. The factor is periodically reviewed and adjusted to reflect changing conditions in the electricity system.

See also: Balancing market, Imbalance price, Svenska Kraftnät, Nord Pool.