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Exchange of Balancing Capacity
European Union Electricity Market Glossary

 

 

Exchange of balancing capacity means the provision of balancing capacity to a Transmission System Operator (TSO) in a different scheduling area than the one in which the procured balancing service provider (BSP) is connected (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, Article 2(25)).

 

Rules on the exchange of balancing capacity are stipulated in Article 33 of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - see box.

 

 

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.

 

According to Article 33(2) - (4) and (7) of the said Regulation:

 

- the exchange of balancing capacity must 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 (the exception is the TSO-BSP model where applicable);


- all TSOs exchanging balancing capacity submit all balancing capacity bids from standard products to the capacity procurement optimisation function.


- TSOs must not modify or withhold any balancing capacity bids and are required to include them in the procurement process (except under conditions set out for specific product and in central dispatch systems);


- all TSOs exchanging balancing capacity are required to ensure both the availability of cross-zonal capacity and that the operational security requirements are met;


- TSOs must not increase the reliability margin due to the exchange of balancing capacity for frequency restoration reserves (FRRs) and replacement reserves (RR).

 

In case TSO(s) perform the exchange of balancing capacity, a cross zonal capacity needs to be ensured.

 

According to Article 38(7) of the said Commission Regulation (EU) 2017/2195 of 23 November 2017 if physical transmission right holders use cross-zonal capacity for the exchange of balancing capacity, the capacity shall be considered as nominated solely for the purpose of excluding it from the application of the use-it-or-sell-it (‘UIOSI’) principle.

 

The Supporting Document for the Network Code on Electricity Balancing of 6 August 2014 explains the exchange of balancing capacity is an opportunity for a TSO(s) to procure part of its dimensioning requirement in another area (change of the geographical distribution of balancing capacity) and as such is not obligatory.

 

Hence, if a TSO decides together with another TSO to commonly procure balancing capacity a coordinated balancing area (CoBA) needs to be established.

 

The exchange of reserves allows but does not oblige the TSO(s) of area A to place part of their reserves (frequency containment reserve (FCR), FRR or RR) within the area B of other TSO(s) in order to ensure the provision of the required amount of balancing capacity.

 

The exchange of reserves changes the geographical distribution of balancing capacity without changing the total amount of balancing capacity in the system. 

 

In contrast the concept of sharing of reserves allows the TSO(s) of an area A and the TSOs of an area B to rely on the same reserves (FCR, FRR and RR) in order to ensure the provision of the required amount of balancing capacity resulting from the dimensioning process.

 

The sharing of reserves changes the total amount of procured balancing capacity but not the dimensioning incident sizing, thereby also impacting the geographical distribution.

 

Article 15 (3) and (4) 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) stipulates that TSOs:

 

- are required to use the methodologies developed in network codes and guidelines on balancing, where applicable, to allocate cross-zonal capacity for the exchange of balancing capacity or sharing of reserves,

 

- must not increase the reliability margin calculated pursuant to Regulation (EU) 2015/1222 (CACM Guideline) due to the exchange of balancing capacity or sharing of reserves.

 

 

 

 

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    Documentation    

 

 

 

 

Network Code on Electricity Balancing (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - NC EB), Article 2(25), Article 33

 

Supporting Document for the Network Code on Electricity Balancing of 6 August 2014 

 

 

 

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Last Updated on Sunday, 21 January 2018 13:49
 

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