Electricity Balancing
European Union Electricity Market Glossary




Electricity balancing encompasses all actions and processes, on all timelines, through which Transmission System Operators (TSOs) ensure, in a continuous way, the system frequency is within a predefined stability range as set forth in the Network Code on System Operation, and complies with the amount of reserves needed per:


- Frequency Containment Process,


- Frequency Restoration Process, and


- Reserve Replacement Process,


with respect to the required quality.


The so-called 'Winter Package' defines balancing as 'all actions and processes, in all timelines, through which transmission system operators ensure, in a continuous way, maintenance of the system frequency within a predefined stability range and compliance with the amount of reserves needed with respect to the required quality' (Article 2(2)(i) 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)).


Electricity system balancing includes all those actions and processes performed by a TSO in order to ensure that total electricity withdrawals (including losses) equal total injections in a control area at any given moment (ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2014, November 2015p. 204).



Balancing Costs



The overall costs of balancing can be calculated as the procurement costs of balancing capacity and the costs for activating balancing energy (based on the activated energy volumes and the prices of the different products).


As the above ACER's Report of November 2015 evidences (p. 209) there are large disparities in balancing costs across the EU Member States.


The reasons for this depend on both the volumes of balancing capacity and balancing energy procured and their prices.


The level of the volumes required in different EU Member States are often dependent on obvious factors, such as the penetration level of renewable-based generation, or less evident factors, such as the efficient dimensioning of balancing reserves by TSOs.


For example, relatively smaller systems are likely to require a larger amount of reserves in relation to demand, due to the application of the N-1 criteria in the dimensioning of the reserves.


The prices of balancing services also depend on many other factors, such as the underlying costs of the available resources to provide fexibility and the level of competition in the markets. 


The overall balancing services' procurement costs are normally transferred to end-consumers, partly through imbalance charges to Balance Responsible Parties (BRPs) and partly socialised in the network charges.


Imbalance charges represent the effective prices that out-of-balance BRPs pay (or receive) for deviations from their schedules.


They should ensure that BRPs are incentivised to keep and/or help restore system balance in an efficient and cost-reflective way.


In most cases, Imbalance charges cover the costs of activated balancing energy and a negligible or small share of the balancing capacity procurement costs.


However, in competitive retail markets, it should be expected that less efficient BRPs are not able to transfer all their imbalance charges to their consumers (ACER's Report of November 2015, p. 210).









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)(i)




Last Updated on Sunday, 01 January 2017 09:17


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