The new TIDE regulation explained

Put a big X on your calendar on 1 January 2025: the date of entry into force of the Integrated Text of Electricity Dispatching Rules (TIDE), a document that has come though a long review process and several consultations since 2019, involving all stakeholders in the sector.

Even if not revolutionary, the TIDE is certainly a root and branch organic reform of the governance of electricity dispatching, heralding a series of changes and innovations for the energy market to harmonise it with the current electricity generation mix, which itself is characterised by rapid and continuous change. The aim is to ensure greater security, efficiency, resilience and sustainability for the entire energy system.

In practice, the dispatching reform builds a system that will allow level-playing-field competition between, on the one hand, concentrated and distributed resources – ensuring that they are selected at all times and for each specific need – and more efficient flexibility resources, i.e. those capable of modulating production or load at the lowest cost for the system, in line with the principle of technological neutrality.

Terna, the operator of the national high- and extra-high-voltage grid, prepared for implementation of the new TIDE provisions by undertaking a thorough and structured process of public consultations with all the system players involved. The goal was to update the Grid transmission, dispatching, development and safety code (the text governing the procedures that the Italian TSO must adhere to in its relations with grid users).

This is a significant and necessary sea-change, starting from far-off with the aim of meeting the complex challenges and requirements of the transformation of the Italian electricity system. Central to this evolution is the progressive and unstoppable spread of renewable energy and distributed generation, coupled with reduced reliance on traditional power plants and subsequent appreciable impacts on the management of the system.

In fact, of the approximately 1.9 million green plants (end of 2024; source Terna data portal) countrywide, the vast majority of them (specifically, photovoltaic and wind power plants) are not in constant operation, i.e. they work when there is sun and wind. But we must also take into account the ever-diminishing numbers of programmable fossil fuel power plants – those that, not insignificantly, have historically provided a series of crucial ancillary services central to the continued safety and reliability of the electricity system.

The transition has imposed limits and defined targets for clean energy in order to integration reach national and EU climate-changing emission reduction targets. It has also set in motion the decommissioning of the most polluting plants, with the phase-out of coal timetabled very specifically. And this is where we see the application of TIDE – the tool that will shape the future of dispatching . This is the highly sensitive operation that Terna performs ceaselessly every day to maintain the balance of energy supply and demand on the Italian grid, which is turn interconnected with the foreign grid through 30 cross-border electricity links.

Indeed, the whole point of the TIDE is to facilitate the full integration of clean sources and promote the use of efficient plants with advanced technologies. It will allow a number of new players to participate in the energy market, bringing changes that will affect not only producers but also consumers. The latter will have an active role (hence the term prosumer) in contributing to the flexibility and therefore the overall stability of the grid.

The path towards decarbonisation goals, formalised also with the italian National Integrated Energy and Climate Plan (PNIEC), cannot be contemplated without greater electrification of consumption. This in turn will lead to significantly increased electricity demand, which will gradually have to replace the thermal demand provided by other sources. The energy transition could therefore change dispatching as we know it, turning it from a balancing process for conventional (typically non-renewable) plant output, to one with more participants and more space for renewable resources, distributed generation, and new technologies such as storage systems and electric vehicles. All of them active players working towards a single goal: to harmonise the flows of electricity from a large number of production sources and to ensure that each one is coordinated to guarantee the best possible grid configuration.

The TIDE also introduces EU regulatory terminology into the national electricity dispatching regulations and consolidates the provisions of recent years into a single body of legislation to integrate the Italian wholesale electricity market with the corresponding markets of other European countries.

The main innovations

The main innovations. The TIDE launches several innovations designed to influence the functioning of both the energy markets (MGP-Day Ahead Market and MI-Intraday Market), and the services market in Italy. Among these new features will be the opening of the Dispatching Services Market to a wider range of operators in the sector. In fact, the broader participation of a diverse range of entities is predicted, including small producers and even consumers.

One of the most significant TIDE novelties is the application of zonal prices (i.e. the emergent price for each market zone) for wholesale electricity purchase instead of the Single National Price (PUN), which will gradually be replaced as the reference calculation (equivalent to the weighted average of zonal prices) for energy purchasing transactions. The TIDE brings in a transitional equalisation mechanism that will have to consider consumers’ contribution to the flexibility of the system, thus encouraging the alignment of prices with the European internal market.

ENERGY MARKETS

Once the first implementation phase of the TIDE comes into force on 1 January 2025, Terna will update electricity market data on a quarter-hourly rather than an hourly basis. This is because with the TIDE, the significant period for energy input and withdrawal schedules and for balancing will no longer be hourly but at 15-minute intervals. This greater granularity is designed precisely to improve the competitiveness of the Italian electricity market, as energy operators will have to balance supply and demand more frequently, thus improving overall efficiency.

The TIDE also introduces the principle of separation of the trading and physical aspects of the energy markets and also redefines the duties of the BRP-Balance Responsible Party and the BSP-Balance Service Provider. The BRP is the former dispatching user and is now responsible for handling the imbalances between the "base programme" and the actual level of electricity input or withdrawal from the grid; the BSP must instead manage flexibility in consumption or production units, or aggregated portfolios, to guarantee ancillary services. The new configuration will allow the BSP and the BRP to be separate entities, with no or limited interaction between them, or to function as a single entity. The separation of the two entities is consistent with the European regulatory framework.

In particular, on the energy markets, the accepted offers of the BRPs (trading position) will define an initial zonal dispatching of injections and withdrawals for the purpose of allocating transit rights between the offer zones. This first zonal dispatching will then have to be arranged in a physical programme of input and withdrawal of the various production and consumption units through the Energy Market Operators’ (GME) nomination platform to ensure a starting point for subsequent redispatching actions (put more simply: Terna's dispatching correction with measures that modify flows to ensure the security of the electricity system) and balancing actions to be taken on the services market. The GME's nomination platform will therefore become the place for the physical scheduling of energy injections and withdrawals, to be carried out independently of the commercial outcomes of the energy markets.

DISPATCHING SERVICES MARKET

Under the TIDE, the old Dispatching Services Market (MSD) will become known as the Balancing and Redispatching Market (MBR), reflecting its inclusion of both the Integrated Scheduling Process (coinciding with the current MSD and BM-Balancing Market) and the EU balancing platforms for the exchange of standard balancing energy products between grid operators. In any case, the current arrangement of the services market as a nodal market with application of a central dispatch model central dispatch remains as is.

Again, in line with the European regulatory framework, the TIDE renames and reorganises global national ancillary services, which are necessary for transmission grid security. In particular, the TIDE introduces new services such as the ultra-fast frequency reserve and overhauls some existing services, such as remote tripping and RIGEDI (the reduction of distributed generation), bringing them into extraordinary modulation and distinguishing them based on their activation timing: instantaneous extraordinary modulation, slow modulation without notice and slow modulation with notice.

The TIDE also allows all resources, even those that are insignificantly sized or cannot be scheduled, to participate in the provision of global national ancillary services. Specifically, in addition to the previously provided option of involvement in the Balancing and Redispatching Market in individual form, the TIDE extends participation in the MBR also in aggregate form through virtual units with no technology-related constraints – e.g. non-programmable renewable sources – as long as they meet the requirements.

Another important feature introduced by the TIDE is the rationalisation of all fees due under the dispatching regulation, both to take into account the newly institutionalised distinction between BRP and BSP roles and to give greater emphasis to specific economic items.

THE NEW GRID CODE: THE STAKEHOLDER CONSULTATIONS THAT LED TO THE NEW STANDARD

In preparing to incorporate TIDE guidelines into the Grid Code, Terna has over the past few months performed a structured revision of the text. Given the complexity and breadth of the reform, this process included several public consultations for stakeholders, with each one focusing on specific topics.

As part of the lengthy Grid Code revision process, also in the light of the first set of consultations, ARERA made a series of adjustments to the TIDE, mainly concerning the fine-tuning of the document. In particular, there will be a transitional implementation phase from 1 January 2025 to 31 January 2026, a consolidation period starting on 1 February 2026 and a third and final in-operation phase that after 31 December 2026. In this context, it was therefore necessary to initiate a further consultation to define the Grid Code provisions to be applied as of 1 January 2025 and those relating to the transitional implementation of the TIDE.

During the transitional period, the MSD will not initially change, but the real operational impact will be the ISP (Imbalance Settlement Period) reduction to 15 minutes and the activation of a nomination platform Also, the BRP and the BSP will not be separated in this phase. This will happen during consolidation, when the two roles can be split with the launch of new ancillary services and new remuneration arrangements. The aggregation options also remain unchanged, leaving only the UVAM- Virtually Aggregated Mixed Units, which will be known as UVAT (‘T’ for transitional) in the transitional phase only and UVAZ (‘Z’ for zonal) when fully operational.