Balancing markets

Moving towards integration of Europe’s energy balancing markets

European TSOs have proposed six models to enable integration of the region’s national balancing markets.
Published: Mon 07 Jan 2019

The integration of Europe’s national energy markets is set to take its next step with the integration of the balancing markets.

Paving the way, the region’s transmission system operators (TSOs), through their association ENTSO-E, and the four balancing implementation projects IGCC, PICASSO, MARI and TERRE, have developed six proposals to enable this integration including the creation of platforms for the exchange of balancing energy products.

“This is a very important achievement,” says Laurent Schmitt, ENTSO-E Secretary General indicating that they provide a “true ‘win-win-win’ situation, good for customers, the environment and the economy”.

“The proposals will lead to increased cross border participation and thus increased security of supply. Competition will be boosted by creating a level playing field for all market players. And participation of renewables and demand response in the balancing market will be facilitated thus helping reduce emissions,” he explains.

The proposals are now in the hands of the national regulatory authorities for approval, with implementation envisaged three years on in December 2021.

Energy balancing services

The proposals have been developed based on the European Commission’s guideline on electricity balancing (EBGL), which also comprises one of the eight network codes.

Two of the proposals are for implementation frameworks for European platforms for the exchange of balancing energy from frequency restoration reserves with automatic activation (aFRR) and with manual activation (mFRR).

Both are critical for frequency restoration. TSOs vary in the extent to which they forecast an imbalance and as a consequence, use the different processes to either solve a forecasted imbalance or solve imbalances in real-time. This impacts how the mFRR (including the use of direct and scheduled activations) and aFRR reserves are used.

In the case of the aFRR platform, the integration of the balancing energy markets is proposed in line with a multilateral TSO-TSO model. To their connecting TSO, balancing service providers (BSPs) can submit balancing energy bids or update the balancing energy price of their bids until the balancing energy gate closure time for the standard aFRR balancing energy product bids. These standard product bids are then forwarded to the platform until the TSO energy bid submission gate closure time for the standard aFRR balancing energy product bids, where they are merged onto a common merit order list for activation by all TSOs through a common activation optimisation function.

In the case of the mFRR platform, the process envisaged is that TSOs receive bids from the BSPs in their imbalance area. They then forward the standard mFRR balancing energy product bids to the platform along with information including the available mFRR cross border capacity limits and any other relevant network constraints as well HVDC constraints and their mFRR balancing energy demands. Optimisation of the clearing of mFRR balancing energy demands then takes place against the BSPs’ bids with communication of the accepted bids, satisfied demands and prices to the local TSOs as well as the resulting cross border schedules.

The other four proposals cover pricing, settlement, a methodology for classifying the activation purposes of balancing energy bids from common merit order lists and harmonisation of certain feature of the imbalance calculation and pricing.

Market integration milestones

Along with these proposals, ENTSO-E has reported some other milestones towards integration. These include the adoption by national regulatory authorities of the implementation framework for the replacement reserve submitted in June and the soon to be delivered amendment to the imbalance netting implementation framework.

Meanwhile, the TSOs have already started to invest to translate these proposals into practical projects and platforms and will present the first of these towards mid-year.