to as Program Responsible Parties (PRPs), submit their price-quantity bids before 11 am for the delivery period covering the following day from midnight to midnight. The Program Time Unit (PTU) on the balancing market is of 15 minutes. Balancing of the 15-minute averaged power is required from all electrical producers and consumers connected to the grid, who for this purpose may be organised in sub-sets. Since these sub-sets are referred to as Programmes, balancing on the 15-minute scale is referred to as Programme Balance. Programme Balance now is maintained by using the production schedules issued the day before delivery and measurement reports (distributed the day after delivery). When the measured power is not equal to the scheduled power, the Programme Imbalance is the difference between the realised sum of production and consumption and the forecast sum of production and consumption. If only production from wind energy is taken into account, Programme Imbalance reduces to realised wind production minus forecast wind production. The programme imbalance is the wind production forecast error. Programme Imbalance is settled by the System Operator, with different tariffs for negative Programme Imbalance and positive Programme Imbalance. A positive Programme Imbalance indicates more energy actually produced than forecast. by wind energy the realised wind production is bigger than the forecast wind production. And vice versa, in the case of a negative Programme Imbalance by wind energy. Note that the costs for positive and negative imbalances may be asymmetric, depending on the balancing market mechanism. In general, wind power producers are penalized by such market system since a great part of their production may be subject to penalties. In parallel to be used for market participation, wind power forecasts may be used for the optimal combined operation of wind and conventional generation, wind and hydro-power generation, or wind in combination with some energy storage devices. They also serve as a basis for quantifying the reserve needs for compensating the eventual lacks of wind production. General methodology Several techniques of varying degrees of sophistication are used for short-term prediction of wind generation: persistence method is naïve: it assumes that the wind power in the next time interval will stay the same as the current measured instantaneous power. Forecast efficiency naturally quickly deteriorates with time going forward, and typically this method is used as a base-level set of numbers for the predictions of other methods to be compared against; physical methods