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Balancing Service Provider (BSP)
European Union Electricity Market Glossary

 

 

 

Balancing Service Provider (BSP) in the European Union Internal Electricty Market is a market participant providing Balancing Services to its Connecting TSO, or in case of the TSO-BSP Model, to its Contracting TSO.

 

According to Article 14(1) of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, each Transmission System Operator (TSO) is responsible for procuring Balancing Services from BSPs in order to ensure operational security.

 

 

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, Article 2(6)

 

‘balancing service provider’ means a market participant with reserve-providing units or reserve-providing groups able to provide balancing services to TSOs

 

The so-called 'Winter Energy Package' defines a BSP as a market participant providing either or both balancing energy and balancing capacity to the TSO - Article 2(2)(k) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD).

 

BSPs, such as generators or demand facilities, balance out unforeseen fluctuations on the electricity grid by rapidly increasing or reducing their power output (Commission Staff Working Document accompanying the document Commission Regulation of 23.11.2017 establishing a guideline on electricity balancing {SWD(2017) 383 final}, p. 3).

 

The terms and conditions related to electricity balancing require that each balancing energy bid from a Balancing Service Provider is assigned to one or more Balance Responsible Parties (BRPs).

 

According to Article 15(1) of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, Distributon System Operators (DSOs), TSOs, BSPs and BRPs are required to cooperate in order to ensure efficient and effective balancing.

 

The role of Balancing Service Providers is described in Article 16 of the said Commission Regulation (EU) 2017/2195 of 23 November 2017.

 

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Article 2(2)(k) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD)   

 

'balancing service provider' means a market participant providing either or both balancing energy and balancing capacity to transmission system operators

 

According to Article 18(4), (5) and (7) of the said Commission Regulation (EU) 2017/2195 of 23 November 2017 the terms and conditions developed by each TSO for BSPs must:

 

(a) define reasonable and justified requirements for the provisions of balancing services;

 

(b) allow the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to offer balancing services;

 

(c) allow demand facility owners, third parties and owners of power generating facilities from conventional and renewable energy sources as well as owners of energy storage units to become BSPs;

 

(d) require that each balancing energy bid from a BSP is assigned to one or more BRP to enable the calculation of an imbalance adjustment.

 

The said terms and conditions for BSPs must contain:

 

(a) the rules for the qualification process to become a BSP;

 

(b) the rules, requirements and timescales for the procurement and transfer of balancing capacity;

 

(c) the rules and conditions for the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to become a BSP;

 

(d) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO during the prequalification process and operation of the balancing market;

 

(e) the rules and conditions for the assignment of each balancing energy bid from a BSP to one or more BRP;

 

(f) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO to evaluate the provisions of balancing services;

 

(g) the definition of a location for each standard product and each specific product;

 

(h) the rules for the determination of the volume of balancing energy to be settled with the BSP;

 

(i) the rules for the settlement of BSPs;

 

(j) a maximum period for the finalisation of the settlement of balancing energy with a BSP for any given imbalance settlement period;

 

(k) the consequences in case of non-compliance with the terms and conditions applicable to BSPs.

 

Each connecting TSO may include the following elements in the proposal for the terms and conditions for BSPs:

 

(a) a requirement for BSPs to provide information on unused generation capacity and other balancing resources from balancing service providers, after the day-ahead market gate closure time and after the intraday cross-zonal gate closure time;

 

(b) where justified, a requirement for BSPs to offer the unused generation capacity or other balancing resources through balancing energy bids or integrated scheduling process bids in the balancing markets after day ahead market gate closure time, without prejudice to the possibility of BSPs to change their balancing energy bids prior to the balancing energy gate closure time or the integrated scheduling process gate closure time due to trading within intraday market;

 

(c) where justified, a requirement for BSPs to offer the unused generation capacity or other balancing resources through balancing energy bids or integrated scheduling process bids in the balancing markets after intraday cross-zonal gate closure time;

 

(d) specific requirements with regard to the position of BRPs submitted after the day-ahead market timeframe to ensure that the sum of their internal and external commercial trade schedules equals the sum of the physical generation and consumption schedules, taking into account electrical losses compensation, where relevant;

 

(e) an exemption to publish information on offered prices of balancing energy or balancing capacity bids due to market abuse concerns;

 

(f) an exemption for specific products to predetermine the price of the balancing energy bids from a balancing capacity contract;

 

(g) an application for the use of dual pricing for all imbalances.

 

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ENTSO-E Supporting Document for the Network Code on Electricity Balancing of 23 December 2013 and the amended version of 6 August 2014

 

BSPs have to pass a pre-qualification test of the Connecting TSO in order to be able to participate to the procurement processes. Once qualified, BSPs must submit their service proposals prior to a deadline named procurement gate closure time. This procurement gate closure time can vary depending on a number of factors including product and location.

 

BSPs which have been selected in the procurement of Balancing Capacity are then obliged to submit the services for relevant volumes and time period they have been selected for.

 

However, in addition to this requirement, any BSP can submit bids for Balancing Energy regardless of whether or not they have been contracted for Balancing Capacity or not.

 

All the Balancing Energy bids have to be provided before a deadline which is close to real-time, namely the Balancing Energy Gate Closure Time. 

 

Finally, as a general requirement, it is mandatory that for a given product the Reserve Providing Unit, Reserve Providing Group, Demand Units or aggregators and the associated BRP to be in the same Responsibility Area or Scheduling Area where appropriate.

 

Settlements between Transmission System Operators and Balancing Service Providers are among tasks and functions that are fundamental to the core objectives of ensuring operational security and integrating the balancing market and thus cannot be delegated or assigned by the TSOs to any third parties.

 

Key task related to TSO-BSP settlement is the calculation of activated volume of balancing energy. 

 

TSO has information about activation times and amount as well as other relevant detailed information according the product specification e.g. about ramping. 

 

Based on this information the total activated volume is calculated and for invoicing also price information about each activation needs to be included. In addition to balancing energy also  alancing capacity is part of TSO-BSP settlement.

 

The aforementioned Supporting Document for the Network Code on Electricity Balancing reasons the above assignment constraints in the following way:

 

1. assignment of the said task to a third party tends not to bring any added value, because all the calculation has to be done anyway by the TSO to control invoicing. TSOs also monitor that (pre)qualification criteria as well as other terms and conditions are fulfilled.

 

2. In the event of any breaches, it is preferable that the TSO is in direct contact with the BSP.

 

3. A direct contractual relationship between TSOs and BSPs makes handling of such situations easier to manage and thus more efficient.

 

The Agency for the Cooperation of Energy Regulators (ACER) in its Recommendation No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing proposes that the price of balancing energy should not be predetermined by a contract for balancing capacity.

 

An exemption to this rule should only be allowed when accompanied by a clear justification demonstrating higher economic efficiency, the avoidance of distortion of balancing energy prices and providing insurance that such balancing energy bids in the common merit order list (CMOL) reflect the real time price of energy.

 

The main reason for the above amendments is to provide a level playing field allowing them to set the price of balancing energy for all BSPs as close as possible to real time and at least until the intraday cross-zonal gate closure time.

 

The aforementioned ACER's Recommendation of 20 July 2015 suggests also the clarification that requirement on BSPs to offer their unused generation capacity or other balancing resources through balancing energy bids in the balancing markets after day-ahead market gate closure time is without prejudice to the possibility of BSPs to change their balancing energy bids prior to the balancing energy gate closure time due to trading within the intraday market.

 

The submission by a balancing service provider of balancing capacity and balancing energy bids may be temporarily suspended by TSO in situations indicated in Article 35 of the Commission Regulation (EU) 2017/2196 of 24 November 2017 establishing a network code on electricity emergency and restoration - NC ER).

 

 

Use of cross-zonal capacity by Balancing Service Providers

 

 

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

 

Article 43
Use of cross-zonal capacity by balancing service providers


1.   Balancing service providers which have a contract for balancing capacity with a TSO on the basis of a TSO-BSP model pursuant to Article 35 shall have the right to use cross-zonal capacity for the exchange of balancing capacity if they are holders of physical transmission rights.


2.   Balancing service providers which use cross-zonal capacity for the exchange of balancing capacity on the basis of a TSO-BSP model pursuant to Article 35 shall nominate their physical transmission rights for the exchange of balancing capacity to the concerned TSOs. Such physical transmission rights shall provide the right to their holders to nominate the exchange of balancing energy to the concerned TSOs and shall therefore be excluded from the application of the UIOSI principle.


3.   Cross-zonal capacity allocated for the exchange of balancing capacity in accordance with paragraph 2 shall be included as already allocated cross-zonal capacity in the calculations of cross-zonal capacity.

 

 

Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing envisions the rule (Article 43 - see box) that the BSPs which have a contract for balancing capacity with a TSO on the basis of a TSO-BSP Model have the right to use cross-zonal capacity for the exchange of balancing capacity if they are holders of physical transmission rights.

 

In such a case BSPs nominate their physical transmission rights for the exchange of balancing capacity to the concerned TSOs.

 

Such physical transmission rights provide the right to their holders to nominate the exchange of balancing energy to the concerned TSOs and will therefore be excluded from the application of the UIOSI principle.

 

 

Independent BSP

 

 

The said ACER's Recommendation of 20 July 2015 is noteworthy for one more important point - ACER proposes to introduce a new provision to the Electricity Balancing Network Code related to the independent BSP.

 

The ACER acknowledges that providers of the demand-side response my face important entry barriers into the balancing services market and difficulties to compete on a level playing field in particular with energy suppliers.

 

For this reason the ACER proposes that, when such problems occur, the EU Member States or National Regulatory Authorities should mitigate them by either implementing adequate measures to mitigate entry barriers and ensure the demand-side response can compete on a level playing field or by enabling the provision of demand-side response independently of energy suppliers.

 

In this respect, the ACER has defined standard and harmonised requirements for provision of demand-side response independently of energy suppliers.

 

The requirements for the provision of demand-side independently of energy suppliers consist of:

 

– the provision that the BSP can provide the demand-side response service from the demand facility without the need for consent or a contract with the energy supplier of that demand facility or its BRP,

 

– the requirement that BSPs providing demand-side response independently of energy suppliers should be balance responsible,

 

– the requirements for TSOs to adjust the final position and determine the allocated volume for the BRP of the BSP and for the BRP of the energy supplier, and

 

–the requirement for TSOs to establish the financial settlement between the BRP of the BSP and BRP of the energy supplier.

 

ACER believes that such harmonised requirements on provision of demand-side response independently of energy suppliers should help to facilitate greater participating of demand-side response in the balancing market.

 

 

 

Article 16
Role of balancing service providers


1.   A balancing service provider shall qualify for providing bids for balancing energy or balancing capacity which are activated or procured by the connecting TSO or, in a TSO-BSP model, by the contracting TSO. Successful completion of the prequalification, ensured by the connecting TSO and processed pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485 shall be considered as a prerequisite for the successful completion of the qualification process to become a balancing service provider pursuant to this Regulation.


2.   Each balancing service provider shall submit to the connecting TSO its balancing capacity bids that affect one or more balance responsible parties.


3.   Each balancing service provider participating in the procurement process for balancing capacity shall submit and have the right to update its balancing capacity bids before the gate closure time of the procurement process.


4.   Each balancing service provider with a contract for balancing capacity shall submit to its connecting TSO the balancing energy bids or integrated scheduling process bids corresponding to the volume, products, and other requirements set out in the balancing capacity contract.


5.   Any balancing service provider shall have the right to submit to its connecting TSO the balancing energy bids from standard products or specific products or integrated scheduling process bids for which it has passed the prequalification process pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485.


6.   The price of the balancing energy bids or integrated scheduling process bids from standard and specific products pursuant to paragraph 4 shall not be predetermined in a contract for balancing capacity. A TSO may propose an exemption to this rule in the proposal for the terms and conditions related to balancing set-up pursuant to Article 18. Such an exemption shall only apply to specific products pursuant to Article 26(3)(b) and be accompanied with a justification demonstrating higher economic efficiency.


7.   There shall be no discrimination between balancing energy bids or integrated scheduling process bids submitted pursuant to paragraph 4 and balancing energy bids or integrated scheduling process bids submitted pursuant to paragraph 5.


8.   For each product for balancing energy or balancing capacity, the reserve providing unit, the reserve providing group, the demand facility or the third party and the associated balance responsible parties pursuant to Article 18(4)(d), shall belong to the same scheduling area.

 

 

 

 

 

 

 

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    Documentation    

 

 

 

 

 

 

Electricity Balancing Network Code (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing), Article 2(6), Article 14(1), Article 16, Article 18(4), (5), (7), Article 43

 

Network Code on Emergency and Restoration (Commission Regulation (EU) 2017/2196 of 24 November 2017 establishing a network code on electricity emergency and restoration - NC ER), Article 35

 

Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD), Article 2(2)(k)

 

 

 

 

 

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Last Updated on Wednesday, 17 January 2018 22:32
 

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