‘Balancing capacity’ is a volume of reserve capacity that a balancing service provider (BSP) has agreed to hold and in respect to which the BSP has agreed to submit bids for a corresponding volume of balancing energy to the Transmission System Operator (TSO) for the duration of the contract (Article 2(5) of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - Electricity Balancing Guideline (EBGL)).

         
          
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21 July 2023

ACER approves three methodologies on electricity balancing capacity procurement:

• Harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves;

• Regional Coordination Centres’ (RCCs) task of regional sizing; and

• RCCs’ task of facilitating the procurement of electricity balancing capacity.

 

17 June 2020 

ACER Decision No 11/2020 of 17 June 2020 on the Methodology for a list of standard products for balancing capacity for frequency restoration reserves and replacement reserves (SPBC)

Annex I Methodology for a list of standard products for balancing capacity for frequency restoration reserves and replacement reserves

Annex II Evaluation of responses to the public consultation

 

 

Almost the same as the EBGL definition of balancing capacity can be found in the 'Clean Energy Package' (CEP), where it means a volume of capacity that a BSP has agreed to hold to and in respect to which the BSP has agreed to submit bids for a corresponding volume of balancing energy to the TSO for the duration of the contract (Article 2(13) of the Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast)). The definition was not controversial in the comitology process as it has not changed in comparison to the European Commission's Proposal of 30 November 2016 (COM(2016) 861 final 2016/0379 (COD)), Article 2(2)(l)).

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Article 16(4) EBGL: 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. 

 

The same aspects of the definition of the balancing capacity were earlier highlighted in the Recommendation of the Agency for the Cooperation of Energy Regulators (ACER) No 03/2015 of 20 July 2015 on the Network Code on Electricity Balancing.

The term: ‘balancing capacity (reserves)’ is also defined in Article 2(10) of Commission Implementing Regulation No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency for the purposes of REMIT reporting where it means ‘the contracted reserve capacity’. 

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Balancing capacity:

- is an option, giving the TSOs the possibility to activate a certain amount of balancing energy within a certain timeframe,

- refers technically to the balancing reserves.

In balancing capacity markets only balancing capacity providers can offer their services to TSOs. 
 

 

Although the EBGL and Regulation No 1348/2014 refer to the volume of “reserve” capacity - while the Regulation 2019/943 does not - balancing capacity can be understood as all resources procured by TSOs in advance, which are available for balancing purposes. This aspect is prominent in the Commission Staff Working Document accompanying the document Commission Regulation of 23 November 2017 establishing a guideline on electricity balancing ({SWD(2017) 383 final}, p. 3, 14), which describes the balancing capacity as 'all resources procured by TSOs ex ante which are available for balancing purposes'. The said Commission document od 23 November 2017 explains that the balancing capacity “refers technically to the balancing reserves”.

Hence, more in detail, a balancing capacity is a type of balancing services where the reserve capacity is contracted, in particular: 

a) frequency containment reserve (FCR), as a primary control,

b) frequency restoration reserve (FRR)

- automatic (aFRR) - as a secondary control,

- manual (mFRR) - as a tertiary control, and  

c) replacement reserve (RR), as a tertiary control.

ACER considers (consultation document to the ACER Decision No 03/2022 of 25 February 2022 on the amendment to the methodology for pricing balancing energy and cross-zonal capacity used for the exchange of balancing energy or operating the imbalance netting process) that balancing capacity markets are in place to make up for lost opportunities of BSPs in the day-ahead market and intraday market and balancing energy bidding with a short gate closure time should ensure that these bids only include the marginal cost of providing balancing energy and only include opportunity cost for the balancing market (notably imbalance settlement).

This regulatory clarification has been given as an answer to the stakeholder’s (Uniper SE) remark that “bidding for balancing services replaces a marketing opportunity in the intraday market with an uncertain revenue position in the balancing markets. With a call probability of 1% (which reflects an essential part of the merit order in 2020 in Germany), a plant operator must quote about 100 times the price of the price in the intraday market to cover opportunity costs”.

The procurement of balancing capacity should not, however, be understood as the only option that guarantees that BSPs will submit the required volume of balancing energy bids to TSOs. Other BSPs, without contracted balancing capacity, may also bid in the balancing energy market (Introduction to network tariffs and network codes for consumers, prosumers and energy communities, Technical Report, Leonardo Meeus, Tim Schittekatte, European University Institute, Badia Fiesolana, July 2018, p. 31).

In its Opinion No 07/2014 of 21 March 2014 on ENTSO-E‘s draft Network Code on Electricity Balancing ACER recommended that in order to reduce the amount of procured balancing capacity TSOs should take into account the possibility of collecting balancing energy bids from BSPs without a balancing capacity contract.

Further, ACER and CEER in their joint Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2014 (of November 2015) advised that the procurement costs of balancing capacity could be optimised by separate procurement of upward and downward balancing capacity and shorter procurement timeframes (p. 210). According to the said Report of November 2015, any distorting impact of reserve procurement on energy price formation should be minimised.

The analogous ACER/CEER Report for the year 2019 elaborates in this regard as follows:
“The recast Electricity Regulation reasserts the principle established in the EB Regulation, that balancing capacity procurement should be performed on a short-term basis. This principle aims to maximise the participation of flexible resources in short-term energy markets with a view to improve liquidity and competition. In particular, the day-ahead procurement of capacity advocated in the regulation allows for an efficient arbitrage between day-ahead and balancing capacity markets. The main benefit of this requirement is a more sound formation of close-to-real-time prices which will better reflect the instantaneous needs of the system”. The same Report concludes that following the implementation of the above mentioned provisions, the share of reserve capacity contracted as balancing capacity in day-ahead or intraday timeframes is expected to increase.

The regulators refer to the data showing that the lead time for procuring balancing capacity is currently uneven, depending on the type of reserve, and on the country. More than 60% of the capacity from RRs and aFRRs is contracted on a day-ahead basis, whereas more than 60% of the capacity from mFRRs is contracted on a monthly or yearly basis. The procurement of FCR is somewhere in the middle: a signifcant percentage (27%) is contracted on a weekly basis.

 


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

Due to the physics of electricity, this must be produced and transmitted as it is consumed, which means that the electricity system must always strike a balance between what is generated and what is demanded at any given moment in time. Further, any disturbance caused by the failure of a single component in the system is transmitted across the entire system almost instantaneously.
Balancing markets are fundamental in keeping demand and supply matched in real time.
Being responsible for the safe and secure operation of electricity systems, TSOs manage the physical equilibrium on the grid by securing a set of balancing services to cope with deviations in the supply or the demand of electricity.
TSOs can secure balancing services by means of both contracted and non-contracted services delivered by BSPs over different timescales.
In the act of balancing, TSOs need to ensure that they will always be able to activate a sufficient amount of energy to balance the deviations between supply and demand in real time. In other words, the TSO must be in the position to be able to call upon any BSPs to make demand and supply meet.
On their side, BSPs must be able to meet the necessary technical requirements to deliver such a service.
If TSOs are faced with the risk that they will not have enough offers for balancing energy from BSPs in real time, they can hedge this uncertainty by securing in advance a sufficient amount of power capacity available in their control area.
An option, giving the TSOs the possibility to activate a certain amount of balancing energy within a certain timeframe, is defined as 'balancing capacity'. It is typically defined as the available generation or demand capacity that can be either automatically or manually activated to balance the system in real time.
The TSOs usually check and/or conclude contracts to guarantee they have access to these balancing reserves ahead of real time.
Hence, TSOs can procure balancing energy in real time from balancing resources which were secured in advance as balancing capacity, or by other balancing resources that are offering balancing energy on a voluntary basis, subject to their availability in real time.
In order to deal with disturbances in system operation, TSOs may rely on three types of reserves:
- Frequency Containment Reserve (FCR),
- Frequency Restoration Reserve (FRR) and
- Replacement Reserve (RR).
A balancing market is typically organised by the TSO, which acts as a single buyer, and BSPs submit upward and downward balancing energy and capacity bids.
In accepting these bids, the TSO can therefore ensure an overall balance in supply and demand in real time.

 

The said ACER's Report of November 2015 also observed in a majority of EU Member States the largest share of balancing costs was made up by the procurement costs of balancing capacity. This tendency was upheld in subseqent years and also valid for the year 2019 (ACER Market Monitoring Report 2019 – Electricity Wholesale Markets Volume, p. 48). These are not charged directly to balance responsible parties (BRPs) through imbalance prices, but are normally socialised, typically through the network tariffs.

The aforementioned European Commission's Proposal of 30 November 2016 for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast - COM(2016) 861 final 2016/0379 (COD)) in Article 5(7) - (9) envisioned that:

- the dimensioning of reserve capacity and the amount of balancing capacity that needs to be procured must be carried out on a regional level,

- also the procurement of balancing capacity must be performed on a regional level, based on a primary market and organised in such a way as to be non-discriminatory between market participants in the prequalification process individually or through aggregation,

- the procurement of upward balancing capacity and downward balancing capacity must be carried out separately (which represents the implementation of the recommendation contained in the aforementioned ACER/CEER Annual Report of November 2015),

- the contracting for the balancing capacity must be performed for not longer than one day before the provision of the balancing capacity and the contracting period must have a maximum period of one day.

The above rules have been implemented, with some derogations, in Article 6(7) - (14) of Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast) - see below.

The regional procurement of balancing capacity will be facilitated by newly established entities called Regional Coordination Centres (RCC - Regional Operational Centres in the European Commission's Proposal of 30 November 2016).

 

 

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Annex I to the Regulation EU) 2019/943 of the European Parliament and of the Council on the internal market for electricity (recast), Tasks of Regional Coordination Centres

 

7. Regional sizing of reserve capacity

7.1 Regional coordination centres shall calculate the reserve capacity requirements for the system operation region. The determination of reserve capacity requirements shall:

(a) pursue the general objective to maintain operational security in the most cost effective manner;

(b) be performed at the day-ahead or intraday timeframe, or both;

(c) calculate the overall amount of required reserve capacity for the system operation region;

(d) determine minimum reserve capacity requirements for each type of reserve capacity;

(e) take into account possible substitutions between different types of reserve capacity with the aim to minimise the costs of procurement;

(f) set out the necessary requirements for the geographical distribution of required reserve capacity, if any.

8. Facilitation of the regional procurement of balancing capacity

8.1 Regional coordination centres shall support the transmission system operators in the system operation region in determining the amount of balancing capacity that needs to be procured. The determination of the amount of balancing capacity shall:

(a) be performed at the day-ahead or intraday timeframe, or both;

(b) take into account possible substitutions between different types of reserve capacity with the aim to minimise the costs of procurement;

(c) take into account the volumes of required reserve capacity that are expected to be provided by balancing energy bids, which are not submitted based on a contract for balancing capacity.

 

 

The tasks entrusted to these entities include, among others, supporting the TSOs of the system operation region in determining the amount of balancing capacity that needs to be procured.

In accordance with the said rules, the determination of the amount of balancing capacity must:

(a) be performed at the day-ahead and/or intraday timeframe;

(b) take into account possible substitutions between different types of reserve capacity with the aim to minimise the costs of procurement;

(c) take into account the volumes of required reserve capacity that are expected to be provided by balancing energy bids, which are not submitted based on a contract for balancing capacity.

Regional Coordination Centres are also envisioned to support the TSOs of the system operation region in procuring the required amount of balancing capacity.

The procurement of balancing capacity must:

(a) be performed at the day-ahead and/or intraday timeframe;

(b) take into account possible substitutions between different types of reserve capacity with the aim to minimise the costs of procurement.

Annual Report of the ACER and CEER on the Results of Monitoring the Internal Electricity and Gas Markets in 2016 (Electricity Wholesale Markets Volume) published in October 2017 confirms the persistence of large disparities in balancing capacity prices in Europe in 2016 (p. 49).  Each BSP intending to provide balancing capacity is required to pass a qualification process defined by the TSOs in close cooperation with Distribution System Operators (DSOs) where necessary (Recital 9 of the EBGL). The submission by a BSP of balancing capacity 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).

 

Transparency requirements

 

According to Article 12(3)(f) of the EBGL, each TSO is required to publish - anonymised where necessary - information on offered volumes as well as offered prices of procured balancing capacity. This information should be published as soon as it becomes available, however, no later than one hour after the results of the procurement have been notified to the bidders.

Moreover, according to Article 12(3)(h)-(i) of the EBGL each TSO is required to publish the following information as soon as it becomes available:

1. information on the allocation of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves at the latest 24 hours after the allocation and no later than 6 hours before the use of the allocated cross-zonal capacity:
(i) date and time when the decision on allocation was made;
(ii) period of the allocation;
(iii) volumes allocated;
(iv) market values used as a basis for the allocation process;

2. information on the use of allocated cross-zonal capacity for the exchange of balancing capacity or sharing of reserves at the latest one week after the use of allocated cross-zonal capacity:
(i) volume of allocated and used cross-zonal capacity per market time unit;
(ii) volume of released cross-zonal capacity for subsequent timeframes per market time unit;
(iii) estimated realised costs and benefits of the allocation process.

A TSO may withhold the publication of information on offered prices and volumes of balancing energy bids if justified for reasons of market abuse concerns and if not detrimental to the effective functioning of the electricity markets. A TSO shall report such withholdings at least once a year to the relevant regulatory authority. No later than two years after entry into force of the NC EB, each TSO is required publish the above information in a commonly agreed harmonised format at least through the information transparency platform established pursuant to Article 3 of Regulation (EU) No 543/2013.

 

Requirements for the procurement of balancing capacity according to the EBGL

 

In balancing capacity markets not all market participants can trade among themselves (which is the case, for example, for the Single Day-Ahead Coupling - SDAC), but in balancing capacity markets only balancing capacity providers can offer their services to TSOs. 

 

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

 

Article 32

Procurement rules

 

1. All TSOs of the LFC block shall regularly and at least once a year review and define the reserve capacity requirements for the LFC block or scheduling areas of the LFC block pursuant to dimensioning rules as referred in Articles 127, 157 and 160 of Regulation (EU) 2017/1485. Each TSO shall perform an analysis on optimal provision of reserve capacity aiming at minimisation of costs associated with the provision of reserve capacity. This analysis shall take into account the following options for the provision of reserve capacity:
(a) procurement of balancing capacity within control area and exchange of balancing capacity with neighbouring TSOs, when applicable;
(b) sharing of reserves, when applicable;
(c) the volume of non-contracted balancing energy bids which are expected to be available both within their control area and within the European platforms taking into account the available cross-zonal capacity.


2. Each TSO procuring balancing capacity shall define the rules for the procurement of balancing capacity in the proposal for the terms and conditions related to balancing service providers developed pursuant to Article 18. The rules for the procurement of balancing capacity shall comply with the following principles:
(a) the procurement method shall be market-based for at least the frequency restoration reserves and the replacement reserves;
(b) the procurement process shall be performed on a short-term basis to the extent possible and where economically efficient;
(c) the contracted volume may be divided into several contracting periods.


3. The procurement of upward and downward balancing capacity for at least the frequency restoration reserves and the replacement reserves shall be carried out separately. Each TSO may submit a proposal to the relevant regulatory authority in accordance with Article 37 of Directive 2009/72/EC requesting the exemption to this requirement. The proposal for exemption shall include:
(a) specification of the time period during which the exemption would apply;
(b) specification of the volume of balancing capacity for which the exemption would apply;
(c) analysis of the impact of such an exemption on the participation of balancing resources pursuant to Article 25(6)(b);

(d) justification for the exemption demonstrating that such an exemption would lead to higher economic efficiency.

 

 

Requirements for the procurement of balancing capacity are stipulated in Articles 32 - 34 of the EBGL. According to Article 32 of the said Regulation each TSO defines the rules for the procurement of balancing capacity and the terms and conditions related to balancing service providers.

The rules for the procurement of balancing capacity must obligatory comply with the following principles:
(a) the procurement method shall be market-based for at least the frequency restoration reserves and the replacement reserves;

(b) the procurement process shall be performed on a short-term basis to the extent possible and where economically efficient;
(c) the contracted volume may be divided into several contracting periods.

The binding requirement is the separate procurement of upward and downward balancing capacity for at least the frequency restoration reserves and the replacement reserves (however, TSO may submit a proposal to the relevant regulatory authority requesting the exemption to this requirement).

BSPs contracted in the balancing capacity market are required to offer balancing energy for their contract duration and the price of the balancing energy bid must not be predetermined in the contract for balancing capacity (Articles 16(4) and 16(6) of the EBGL).

According to these provisions:

- each BSP 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;
- the price of the balancing energy bids or integrated scheduling process bids from standard products and specific products shall not be predetermined in a contract for balancing capacity (TSO may propose an exemption to this rule, however, such an exemption shall only apply to specific products and be accompanied with a justification demonstrating higher economic efficiency).

 

Transfer of balancing capacity

 

Requirements for the transfer of balancing capacity are stipulated in Article 34 of the EBGL. According to this provision the following rules for the transfer of balancing capacity apply:

1. within the geographical area in which the procurement of balancing capacity has taken place, the TSOs are required to allow balancing service providers to transfer their obligations to provide balancing capacity (the concerned TSO or TSOs may request an exemption where contracting periods for balancing capacity are strictly less than one week);

2. the transfer of balancing capacity must be allowed at least until one hour before the start of the delivery day;

3. the transfer of balancing capacity must be allowed if the following conditions are met:

(a) the receiving balancing service provider has passed the qualification process for the balancing capacity for which the transfer is performed,

(b) the transfer of balancing capacity is not expected to endanger operational security,

(c) the transfer of balancing capacity does not exceed the operational limits;

4. in case the transfer of balancing capacity requires the use of cross-zonal capacity, such transfer is only allowed in case:

(a) the cross-zonal capacity required to perform the transfer is already available from previous allocation processes,

(b) the cross-zonal capacity is available pursuant to the methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time.

5. if a TSO does not allow the transfer of balancing capacity, the concerned TSO must explain the reason for the rejection to the balancing service providers involved.

 

 

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

 

Article 34

Transfer of balancing capacity

 

1. Within the geographical area in which the procurement of balancing capacity has taken place, the TSOs shall allow balancing service providers to transfer their obligations to provide balancing capacity. The concerned TSO or TSOs may request an exemption where contracting periods for balancing capacity pursuant to Article 32(2)(b) are strictly less than one week.


2. The transfer of balancing capacity shall be allowed at least until one hour before the start of the delivery day.


3. The transfer of balancing capacity shall be allowed if the following conditions are met:
(a) the receiving balancing service provider has passed the qualification process for the balancing capacity for which the transfer is performed;
(b) the transfer of balancing capacity is not expected to endanger operational security;
(c) the transfer of balancing capacity does not exceed the operational limits set out in Chapters 1 and 2 of Part IV Title VIII of Regulation (EU) 2017/1485.


4. In case the transfer of balancing capacity requires the use of cross-zonal capacity, such transfer shall only be allowed in case:
(a) the cross-zonal capacity required to perform the transfer is already available from previous allocation processes pursuant to Chapter 2 of Title IV;
(b) the cross-zonal capacity is available pursuant to the methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time in accordance with Article 33(6).


5. If a TSO does not allow the transfer of balancing capacity, the concerned TSO shall explain the reason for the rejection to the balancing service providers involved.

 

 

On 15 January 2018 the Draft Proposal for the exemption of the FCR Cooperation Parties from the obligation to allow balancing service providers to transfer their obligations to provide balancing capacity in accordance with Article 34 (1) of Commission Regulation (EU) 2017/2195 establishing a guideline on electricity balancing has been published by TSOs from Austria, Belgium, Denmark, France, Germany, the Netherlands and Switzerland. The above TSOs propose that cross border transfer of awarded capacity obligations should remain prohibited in their common FCR procurement.

The said TSOs request the relevant exemption, which is reasoned as follows:

1. since the said TSOs are planning to implement daily procurement of FCR capacity, they consider that the risk for BSPs of not being able to meet their obligations is significantly lower than the case of weekly procurement (as a result, also the need for the BSPs to transfer their obligations in a cross border context is expected to be substantially lower);
2. linked to the limited needs to implement a cross border context, the said TSOs consider that the task of implementing such a solution comes with the following, significant complexity:
- the import and export limitation violations have to be reassessed each time a demand for cross border transfer of obligations is expressed,
- the k factor, as defined in Commission Regulation EU 2017/1485, of each LFC Control Area needs to be readapted every time a cross border transfer of capacity takes place;
3. the following conditions should be in place in order to have an efficient cross border transfer of obligations that does not induce market distortions, these conditions require a lot of time and effort by the said TSOs:
- harmonisation of penalties in case of BSP failure of delivery among the participating countries,
- design of a mechanism for the allocation of the relevant cross border capacity resulting from the respective import and export limitations should be developed,
- implementing the above mechanism in a central tool and in the LFC of each control area.

 

 

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

 

Article 33

Exchange of balancing capacity

 

1. Two or more TSOs exchanging or mutually willing to exchange balancing capacity shall develop a proposal for the establishment of common and harmonised rules and processes for the exchange and procurement of balancing capacity while respecting the requirements set out in Article 32.


2. Except in cases where the TSO-BSP model is applied pursuant to Article 35, the exchange of balancing capacity shall always be performed based on a TSO-TSO model whereby two or more TSOs establish a method for the common procurement of balancing capacity taking into account the available cross-zonal capacity and the operational limits defined in Chapters 1 and 2 of Part IV Title VIII of Regulation (EU) 2017/1485.


3. All TSOs exchanging balancing capacity shall submit all balancing capacity bids from standard products to the capacity procurement optimisation function. TSOs shall not modify or withhold any balancing capacity bids and shall include them in the procurement process, except under conditions set out in Article 26 and Article 27.


4. All TSOs exchanging balancing capacity shall ensure both the availability of cross-zonal capacity and that the operational security requirements set out in Regulation (EU) 2017/1485 are met, either by:
(a) the methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time pursuant to paragraph 6;
(b) the methodologies for allocating cross-zonal capacity to the balancing timeframe pursuant to Chapter 2 of Title IV.


5. Each TSO using the methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time shall inform other TSOs in their LFC block of the risk of unavailability of reserve capacity in the scheduling area or areas of its control area that may affect the fulfilment of the requirements pursuant to Article 157(2)(b) of Regulation (EU) 2017/1485.


6. TSOs exchanging balancing capacity for frequency restoration reserves and replacement reserves may develop a proposal for a methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time. The methodology shall at least describe:
(a) the procedures to notify to other TSOs in the LFC block;
(b) the description of the process to perform the assessment for the relevant period for the exchange of balancing capacity;
(c) the method to assess the risk of unavailability of cross-zonal capacity due to planned and unplanned outages and due to congestions;
(d) the method to assess the risk of insufficient reserve capacity due to unavailability of cross-zonal capacity;
(e) the requirements for a fall-back solution in case of unavailability of cross-zonal capacity or insufficient reserve capacity;
(f) the requirements for ex-post review and monitoring of risks;
(g) the rules in order to ensure the settlement pursuant to Title V.


7. TSOs shall not increase the reliability margin calculated pursuant to Regulation (EU) 2015/1222 due to the exchange of balancing capacity for frequency restoration reserves and replacement reserves.  

 

 

 

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

Settlement of balancing capacity

Article 56
Procurement within a scheduling area

1.   Each TSO of a scheduling area using balancing capacity bids shall establish rules for the settlement of at least frequency restoration reserves and replacement reserves pursuant to the requirements set out in Article 32.
2.   Each TSO of a scheduling area using balancing capacity bids shall settle at least all procured frequency restoration reserves and replacement reserves pursuant to the requirements set out in Article 32.

Article 57
Procurement outside a scheduling area
1.   All TSOs exchanging balancing capacity shall establish rules for the settlement of procured balancing capacity pursuant to Article 33 and Article 35.
2.   All TSOs exchanging balancing capacity shall jointly settle procured balancing capacity using the TSO-TSO settlement function pursuant to Article 33. TSOs exchanging balancing capacity based on a TSO-BSP model shall settle procured balancing capacity pursuant to Article 35.
3.   All TSOs exchanging balancing capacity shall establish rules for the settlement of allocation of cross-zonal capacity pursuant to Chapter 2 of Title IV.
4.   All TSOs exchanging balancing capacity shall settle the allocated cross-zonal capacity pursuant to Chapter 2 of Title IV.

 

 

 

Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast), Article 6(7) - (14)

 

7. The dimensioning of reserve capacity shall be performed by the transmission system operators and shall be facilitated at regional level.

 

8. The procurement of balancing capacity shall be performed by the transmission system operator and may be facilitated at a regional level. Reservation of cross-border capacity to that end may be limited. The procurement of balancing capacity shall be market-based and organised in such a way as to be non-discriminatory between market participants in the prequalification process in accordance with Article 40(4) of Directive (EU) 2019/944 whether market participants participate individually or through aggregation.

Procurement of balancing capacity shall be based on a primary market unless and to the extent that the regulatory authority has provided for a derogation to allow the use of other forms of market-based procurement on the grounds of a lack of competition in the market for balancing services. Derogations from the obligation to base the procurement of balancing capacity on use of primary markets shall be reviewed every three years.

 

9. The procurement of upward balancing capacity and downward balancing capacity shall be carried out separately, unless the regulatory authority approves a derogation from this principle on the basis that this would result in higher economic efficiency as demonstrated by an evaluation performed by the transmission system operator. Contracts for balancing capacity shall not be concluded more than one day before the provision of the balancing capacity and the contracting period shall be no longer than one day, unless and to the extent that the regulatory authority has approved the earlier contracting or longer contracting periods to ensure the security of supply or to improve economic efficiency.

 

Where a derogation is granted, for at least 40 % of the standard balancing products and a minimum of 30 % of all products used for balancing capacity, contracts for the balancing capacity shall be concluded for no more than one day before the provision of the balancing capacity and the contracting period shall be no longer than one day. The contracting of the remaining part of the balancing capacity shall be performed for a maximum of one month in advance of the provision of balancing capacity and shall have a maximum contractual period of one month.

 

10. At the request of the transmission system operator, the regulatory authority may decide to extend the contractual period of the remaining part of balancing capacity referred to in paragraph 9 to a maximum period of twelve months provided that such a decision is limited in time, and the positive effects in terms of lowering of costs for final customers exceed the negative impacts on the market. The request shall include:
(a) the specific period during which the exemption would apply;
(b) the specific volume of balancing capacity to which the exemption would apply
(c) an analysis of the impact of the exemption on the participation of balancing resources; and
(d) a justification for the exemption demonstrating that such an exemption would lead to lower costs to final customers.

 

11. Notwithstanding paragraph 10, from 1 January 2026 contract periods shall not be longer than six months.

 

12. By 1 January 2028, regulatory authorities shall report to the Commission and ACER on the share of the total capacity covered by contracts with a duration or a procurement period of longer than one day.

 

13. Transmission system operators or their delegated operators shall publish, as close to real time as possible but with a delay after delivery of no more than 30 minutes, the current system balance of their scheduling areas, the estimated imbalance prices and the estimated balancing energy prices.

 

14. Transmission system operators may, where standard balancing products are not sufficient to ensure operational security or where some balancing resources cannot participate in the balancing market through standard balancing products, propose, and the regulatory authorities may approve, derogations from paragraphs 2 and 4 for specific balancing products which are activated locally without exchanging them with other transmission system operators.

 

Proposals for derogations shall include a description of measures proposed to minimise the use of specific products, subject to economic efficiency, a demonstration that the specific products do not create significant inefficiencies and distortions in the balancing market either inside or outside the scheduling area, as well as, where applicable, the rules and information for the process for converting the balancing energy bids from specific balancing products into balancing energy bids from standard balancing products.

 

 

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