Replacement Reserve (RR)
European Union Electricity Market Glossary

 


 

 

According to Article 3(2)(8) of the Network Code on System Operation replacement reserve (RR) means the active power reserves available to restore or support the required level of frequency restoration reserve (FRR) to be prepared for additional system imbalances, including generation reserves.

 

This category includes operating reserves with activation time from 15 minutes (in Continental Europe) up to hours.

 

Commission Staff Working Document of 23 November 2017 accompanying the Commission Regulation establishing a guideline on electricity balancing explaines Replacement Reserves are reserves from reserve providers (generators, storage, demand response) used by Transmission System Operator (TSO) to restore the required level of frequency containment reserve (FCR) and FRR due to their earlier usage.

 

Contrary to FCR and FRR, not all TSOs in the EU maintain RR.

 

For replacement reserves the European integration model for a future EU-wide balancing market is based on:

 

- the TSO-TSO model or,

 

- the TSO-BSP model (when a TSO does not use the RR process as part of its Load-Frequency-Control structure).

 

The average price for the Replacement Reserve has a vital and commercially sensitive interconnectedness with the imbalance price.

 

The Network Code on the Electricity Balancing (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - NC EB) envisions that:

 

1. the imbalance price for shortage must not be less than:

 

(a) the weighted average price for activated positive balancing energy for FRR and RR; or

 

(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy for FRRs or RRs;

 

2. the imbalance price for surplus must not be greater than:

 

(a) the weighted average price for activated negative balancing energy for FRRs and RRs; or

 

(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy for FRRs of RRs;

 

3. imbalance settlement price, in the event that both positive and negative balancing energy for FRRs or RRs have been activated during the same imbalance settlement period, is to be determined for shortage and surplus based on at least one of the above principles.

 

According to Article 48 of the said Commission Regulation (EU) 2017/2195 of 23 November 2017 each connecting TSO may calculate and settle the activated volume of balancing energy for the reserve restoration process with balancing service providers (BSPs).


The price, be it positive, zero or negative, of the activated volume of balancing energy for the reserve restoration process is to be defined for each direction in accordance with the following table:

 

Table

Payment for balancing energy

  Balancing energy price positive Balancing energy price negative
Positive balancing energy Payment from TSO to BSP Payment from BSP to TSO
Negative balancing energy Payment from BSP to TSO  Payment from TSO to BSP

 

 

Provisions regulating replacement reserves are stipulated in Articles 160 - 162 of the Network Code on System Operation (see box below). 

 

 

 

Network Code on System Operation

 

Ttile 7
Replacement Reserves

 

Article 160

RR dimensioning

 

1. All TSOs of an LFC block shall have the right to implement a reserve replacement process.


2. To comply with the FRCE target parameters referred to in Article 128, all TSOs of a LFC block with a RRP, performing a combined dimensioning process of FRR and RR to fulfil the requirements of Article 157(2), shall define RR dimensioning rules in the LFC block operational agreement.


3. The RR dimensioning rules shall comprise at least the following requirements:


(a) for the Nordic and CE synchronous areas there shall be sufficient positive reserve capacity on RR to restore the required amount of positive FRR. For the GB and IE/NI synchronous areas there shall be sufficient positive reserve capacity on RR to restore the required amount of positive FCR and positive FRR;


(b) for the Nordic and CE synchronous areas, there shall be sufficient negative reserve capacity on RR to restore the required amount of negative FRR. For the GB and IE/NI synchronous areas, there shall be sufficient negative reserve capacity on RR to restore the required amount of negative FCR and negative FRR;


(c) there shall be sufficient reserve capacity on RR, where this is taken into account to dimension the reserve capacity on FRR in order to respect the FRCE quality target for the period of time concerned; and


(d) compliance with the operational security within a LFC block to determine the reserve capacity on RR.


4. All TSOs of an LFC block may reduce the positive reserve capacity on RR of the LFC block, resulting from the RR dimensioning process, by developing a RR sharing agreement for that positive reserve capacity on RR with other LFC blocks in accordance with the provisions of Title 8 of Part IV. The control capability receiving TSO shall limit the reduction of its positive reserve capacity on RR in order to:


(a) guarantee that it can still meet its FRCE target parameters set out in Article 128;


(b) ensure that operational security is not endangered; and


(c) ensure that the reduction of the positive reserve capacity on RR does not exceed the remaining positive reserve capacity on RR of the LFC block.


5. All TSOs of a LFC block may reduce the negative reserve capacity on RR of the LFC block, resulting from the RR dimensioning process, by developing a RR sharing agreement for that negative reserve capacity on RR with other LFC blocks in accordance with the provisions of Title 8 of Part IV. The control capability receiving TSO shall limit the reduction of its negative reserve capacity on RR in order to:


(a) guarantee that it can still meet its FRCE target parameters set out in Article 128;


(b) ensure that operational security is not endangered; and


(c) ensure that the reduction of the negative reserve capacity on RR does not exceed the remaining negative reserve capacity on RR of the LFC block.


6. Where a LFC block is operated by more than one TSO and if the process is necessary for the LFC block, all TSOs of that LFC block shall specify in the LFC block operational agreement the allocation of responsibilities between the TSOs of different LFC areas for the implementation of the dimensioning rules set out in paragraph 3.


7. A TSO shall have sufficient reserve capacity on RR in accordance with the RR dimensioning rules at any time. The TSOs of a LFC block shall specify in the LFC block operational agreement an escalation procedure for cases of severe risk of insufficient reserve capacity on RR in the LFC block.


Article 161

RR minimum technical requirements

 

1. RR providing units and RR providing groups shall comply with the following minimum technical requirements:


(a) connection to only one reserve connecting TSO;


(b) RR activation according to the setpoint received from the reserve instructing TSO;


(c) the reserve instructing TSO shall be the reserve connecting TSO or a TSO that shall be designated by the reserve connecting TSO in the RR exchange agreement pursuant to Article 165(3) or 171(4);


(d) activation of complete reserve capacity on RR within the activation time defined by the instructing TSO;


(e) de-activation of RR according to the setpoint received from the reserve instructing TSO;


(f) a RR provider shall ensure that the RR activation of the RR providing units within a reserve providing group can be monitored. For that purpose, the RR provider shall be capable of supplying to the reserve connecting TSO and the reserve instructing TSO real-time measurements of the connection point or another point of interaction agreed with the reserve connecting TSO concerning:


(i) the time-stamped scheduled active power output, for each RR providing unit and group and for each power generating module or demand unit of a RR providing group with a maximum active power output larger than or equal to 1,5 MW;


(ii) the time-stamped instantaneous active power, for each RR providing unit and group, and for each power generating module or demand unit of a RR providing group with a maximum active power output larger than or equal to 1,5 MW;


(g) fulfilment of the RR availability requirements.


2. All TSOs of a LFC block shall specify RR availability requirements and requirements on the control quality of RR providing units and RR providing groups in the LFC block operational agreement.


3. The reserve connecting TSO shall adopt the technical requirements for the connection of RR providing units and RR providing groups to ensure the safe and secure delivery of RR in the prequalification process description.


4. Each RR provider shall:


(a) ensure that its RR providing units and RR providing groups fulfil the RR technical minimum requirements and the RR availability requirements referred to in paragraphs 1 to 3; and


(b) inform its reserve instructing TSO about a reduction of the actual availability or a forced outage of its RR providing unit or its RR providing group or a part of its RR providing group as soon as possible.


5. Each reserve instructing TSO shall ensure compliance with the RR technical requirements, the RR availability requirements and the connection requirements referred to in this Article with regard to its RR providing units and RR providing groups.


Article 162

RR prequalification process

 

1. Each TSO of a LFC block which has implemented a RRP shall develop a RR prequalification process within 12 months after entry into force of this Regulation and shall clarify and make publicly available the details thereof.


2. A potential RR provider shall demonstrate to the reserve connecting TSO or the TSO designated by the reserve connecting TSO in the RR exchange agreement that it complies with the RR technical minimum requirements, the RR availability requirements and the connection requirements referred to in Article 161 by completing successfully the prequalification process of potential RR providing units or RR providing groups, described in paragraphs 3 to 6.


3. A potential RR provider shall submit a formal application to the relevant reserve connecting TSO or the designated TSO together with the required information of potential RR providing units or RR providing groups. Within 8 weeks from receipt of the application, the reserve connecting TSO or the designated TSO shall confirm whether the application is complete. Where the reserve connecting TSO or the designated TSO considers that the application is incomplete, the potential RR provider shall submit the additional required information within 4 weeks from the receipt of the request for additional information. Where the potential RR provider does not supply the requested information within that deadline, the application shall be deemed withdrawn.


4. Within 3 months from confirmation of the completeness of the application, the reserve connecting TSO or the designated TSO shall evaluate the information provided and decide whether the potential RR providing units or RR providing groups meet the criteria for a RR prequalification. The reserve connecting TSO or the designated TSO shall notify its decision to the potential RR provider.

 

5. The qualification of RR providing units or RR providing groups shall be reassessed:


(a) at least once every 5 years; and


(b) where the technical or availability requirements or the equipment have changed.


6. To ensure operational security, the reserve connecting TSO shall have the right to reject the provision of RR by RR providing groups, based on technical arguments such as the geographical distribution of the power generating modules or demand units establishing a RR providing group.

 

 

 

 

European platform for the exchange of balancing energy from Replacement Reserves

 

 

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing in Article 19 envisages the procedure for establishing the European platform for the exchange of balancing energy from Replacement Reserves - see box below.

 

 

 

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing

 

Article 19
European platform for the exchange of balancing energy from replacement reserves


1.   By six months after entry into force of this Regulation, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall develop a proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves.


2.   The European platform for the exchange of balancing energy from replacement reserves, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the activation optimisation function and the TSO-TSO settlement function. That European platform shall apply a multilateral TSO-TSO model with common merit order lists to exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14).


3.   The proposal in paragraph 1 shall include at least:
(a) the high level design of the European platform;
(b) the roadmap and timelines for the implementation of the European platform;
(c) the definition of the functions required to operate the European platform;
(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;
(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure:
(i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform;
(ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as, supports the objectives of this Regulation;
(iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;
(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;
(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;
(h) the balancing energy gate closure time for all standard products for replacement reserves in accordance with Article 24;
(i) the definition of standard products for balancing energy from replacement reserves in accordance with Article 25;
(j) the TSO energy bid submission gate closure time in accordance with Article 29( 13);
(k) the common merit order lists to be organised by the common activation optimisation function pursuant to Article 31;
(l) the description of the algorithm for the operation of the activation optimisation function for the balancing energy bids from all standard products for replacement reserves in accordance with Article 58.


4.   By six months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).


5.   By one year after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 and that have at least one interconnected neighbouring TSO performing the replacement reserves process shall implement and make operational the European platform for the exchange of balancing energy from replacement reserves. They shall use the European platform to:
(a) submit all balancing energy bids from all standard products for replacement reserves;
(b) exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14);
(c) strive to fulfil all their needs for balancing energy from replacement reserves.

 

 

 

 

 

IMG 0744

    Documentation    

 

 

 

 

Network Code on System Operation, Article 3(2)(8), Articles 160 - 162

 

Network Code on Electricity Balancing (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - NC EB), Article 19, Article 48

 

Commission Staff Working Document, Impact Assessment of 23.11.2017 accompanying the document Commission Regulation establishing a guideline on electricity balancing ({SWD(2017) 383 final}, p. 15, 16

 

The proposal of all Transmission System Operators performing the reserve replacement for the implementation framework for the exchange of balancing energy from Replacement Reserves in accordance with Article 19 of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, ENTSO-E, 21 February 2018

 

Explanatory Document to the proposal of all Transmission System Operators performing the reserve replacement for the implementation framework for the exchange of balancing energy from Replacement Reserves in accordance with Article 19 of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, ENTSO-E, 21 February 2018

 

 

 

 

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    Links    

 

 

 

TERRE (Trans European Replacement Reserves Exchange)

 

Standard Products

 

Balancing Capacity

 

 

 

 

 

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Last Updated on Saturday, 24 February 2018 20:11
 

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