Insights
Imbalance is one of the least understood ways that an energy supplier loses money. It rarely shows up as a single large invoice. Instead it leaks away quietly through forecasting gaps, data errors and settlement adjustments that unwind over months. This guide explains what imbalance is, how it costs suppliers real money, and how to find and recover it.
By Christopher Fagan
Every supplier tells the market how much energy it expects its customers to use. The market then measures what those customers actually used. The gap between the two is imbalance, and it is settled at the system imbalance price, which can be far higher or lower than the price the supplier paid for its energy. When demand is underforecast, the supplier buys the shortfall at a price it did not choose. Over a year, and across a large customer base, those differences add up.
The losses come from a handful of recurring sources.
Under the Balancing and Settlement Code, each settlement period is calculated several times as more accurate metered data replaces earlier estimates. Money moves at every reconciliation run right through to final reconciliation. This is good news, because it means errors can be found and corrected while there is still time to recover the value, but only if someone is watching the runs and comparing them. That window shrinks under market wide half hourly settlement: from 2 July 2027 final reconciliation comes at four months, not fourteen, which is why electricity settlement performance is becoming a weekly discipline.
Finding imbalance is a data exercise. It means bringing together the notified positions, the metered volumes, the settlement statements and the industry data flows, then looking for the patterns that do not make sense. The questions that surface value are practical ones. Where are estimates persistently replaced by very different actuals? Which supply points show consumption in the wrong periods? Where does the reconciliation run move money in a way that points to a data problem rather than genuine demand? Answering these turns a vague sense that the numbers are off into a specific, recoverable figure.
Identification is only half the job. The value is recovered by correcting the underlying data, raising the right disputes within the settlement timetable, and fixing the process so the same leak does not reopen next quarter. The suppliers that do this well treat imbalance as a standing operational discipline, not a one off clean up.
PEF has identified and recovered imbalance value for suppliers by combining settlement data analysis with a real understanding of industry flows. If you suspect money is leaking through settlement, our energy and utilities team can help you quantify it. Get in touch to discuss a review.
Imbalance is the gap between the volume of energy a supplier tells the market it expects its customers to use and the volume they actually use. That gap is settled at the system imbalance price, which can be very different from the price the supplier paid for its energy.
The losses come from weak forecasting, estimated consumption data that is wrong in a costly direction, and settlement adjustments that unwind over many months. Because settlement reruns as better data arrives, money keeps moving, and a supplier that is not watching will not see it leave.
Often yes. Bringing together notified positions, metered volumes and settlement statements surfaces the errors, and correcting the underlying data and raising the right disputes within the settlement timetable recovers value, provided it is done while there is still time.
If any of this is live for you right now, the senior people who wrote it are the people you would work with.