Predicting Electricity Imbalance Prices and Volumes: Capabilities and Opportunities

Round 1

Reviewer 1 Report

This paper presents the case for developing imbalance price forecasting methods and provide motivating examples from the Great Britain market, demonstrating forecast skill and value. It is a very interesting piece of work that has value to practitioners and academics. I only have few comments.

• In Introduction, “No paper leverages close to the full range of relevant data now readily available to market participants.” You can say “due to my limited knowledge” or “to the best of our knowledge”
• Add some environmental regulations in study, how these are linked in todays world of globalization.
• The contribution section should be expanded.
• Please update literature review. Authors can read the followings; https://0-onlinelibrary-wiley-com.brum.beds.ac.uk/doi/abs/10.1002/pa.2379

• Case 1 to Case 3 should be explained in more detail.
• In conclusion, I would love to see some new policy ideas that can be implemented.

Author Response

Thank you for your positive review and helpful suggestions. We have made the following revisions:

Clarified our statement on imbalance price and volume literature, including that the statement is made “to the best of our knowledge”.

The environmental context for this work is now provided in the final paragraph of the Introduction: “The transition to renewables is central to the decarbonisation of society, and as such, integrating them into electricity markets, including balancing markets, is critical [12]. The stochastic nature of wind and solar power in particular continue to motivate research to improve forecasting of power production and associated quantities, including electricity prices.”

The “Author Contribution” section follow a pre-specified format so has not been changed. The “Acknowledgements” section has been expanded to provide more detail on the contributions of Global Energy Analytics. If the reviewer is referring to something else, please provide a more details.

The suggested reference is not relevant to electricity imbalance price forecasting so has not been added. However, the literature survey has been expanded. Please note that this is short “Communication” article and not a comprehensive literature review.

The description of the three trading strategies has been improved with additional description and an equation.

We make the case that greater research should be directed to imbalance price forecasting and leveraging the large volumes of diverse data that are available for this task, rather than focusing on comparing statistical models with a restricted set of data. We also argue that research on energy trading should utilise state-of-the-art imbalance forecasts to be representative of best practice. These are our ‘policy idea’ and the discussion has been edited to reflect this more clearly.

Reviewer 2 Report

First of all, there is no extensive review of the literature and reference to the scientific debate on the topic under consideration.

Definitely expand the section of the introduction, discussions and conclusions with references on the research topic.

The research methodology should also be presented in a transparent and clear manner.

Refer to other studies and extend your own conclusions, which will refer to the results obtained in the presented article.

Author Response

Thank you for your helpful suggestions. We would like to highlight that this is a short “Communication” article and neither a full research article, nor a comprehensive literature review. However, we have expanded several sections of the paper, including adding five new references to the literature review and discussion in light of suggestions from reviewers.

The forecasting methods are presented as clearly as possible, however, as the intraday forecasts are produced by a proprietary system, we are unable to add more detail. However, the main contribution is the case study that evaluates the economic value of these predictions, the description of which has been expanded and is now more transparent and clear.

Reviewer 3 Report

The manuscript “Predicting the imbalance: capabilities and opportunities” concerns the scientific problem to judge whether to trade out a position or settle it in the balancing market at the as-yet-unknown imbalance price and forecast them in short-term markets, to pay to “lose” as little as possible (or increase revenue/reduce risk of the market participants), and will be interesting for Energies readers, after revision.

The scientific problem presented in the article is interesting, novel, and should be pursued in future research. Forecasting prices (the imbalance prices) seem to be needed for electricity users.

The title you should be modified; now does not fully represent what the research problem is and does not resonate with the purpose of the journal;

 – Predicting the imbalance price/pricing (…) – what prediction is important?

Please describe the results in euros.

Lack of conclusion: a few main remarques you should give, now is too general.

Some specific comments:

l.181: Global Energy Analytics (for their contributions…) – please, you could give some details.

Author Response

Thank you for your encouraging review and helpful comments. We have made the following revisions:

The title has been made more direct: “Predicting electricity imbalance prices and volumes: capabilities and opportunities”

The case study is based on the Great Britain market, so all prices are given in GB Pounds. We have not converted them to Euros as this would cause confusion. For example, if we converted all prices used in the study to Euros according to that day’s exchange rate (there is a daily exchange rate for European electricity markets) then the results would be polluted by changes in the exchange rate, which is beyond the scope of this study. If we simply convert all results from GBP to Euros, it is not clear how we should choose a single conversion rate, and in any case, a reader could apply such a conversion easily themselves.

The Results subsection has been expanded to support the conclusion that sophisticated imbalance price forecasting has economic value. And the “Discussion” section has been revised and renamed “Discussion and Conclusions”, with greater emphasis on conclusions drawn from the presented results.

Additional details have been added to the acknowledgements section as follows: “In addition to our funders, we would like to thank Thomas Alexander, who developed the software for intraday imbalance price forecasting, and Global Energy Advisory for many informative discussions on energy trading and Great Britain’s Balancing Mechanism.”

Round 2

Reviewer 1 Report

The authors have solved some comments. Most of them still unsolved. I give one more chance to authors to revise as per my comments as in previous round. 

I read paper few times, and I get lost in each section. The current draft is more like a report. Please link the story and make a coherence. Improve the overall writing. 

Author Response

Please see attached document.

Author Response File: Author Response.pdf

Reviewer 2 Report

The authors complied with the recommendations and, in line with their comments, corrected the article, which is suitable for publication in its current form.

Author Response

Thank you for your review.

Round 3

Reviewer 1 Report

I have no further comments. Manuscript can be considered for Publication.