Informal Questionnaire on the Supply of Balancing Capacity by Market Participants Relevant to Co-Optimised Energy and Balancing Capacity Bidding Formats

Overview

Disclaimer: This survey does not constitute formal public consultation in any case. It is important to note that any reference to a consultation strictly refers to this informal survey, which is jointly organised by Nominated Electricity Market Operators (NEMOs) and Transmission System Operators (TSOs) under the Market Coupling Steering Committee (MCSC).

TSOs procure balancing capacity to balance the power system in real time. Traditionally, balancing capacity has been procured almost exclusively from conventional generation units at the national level. In the future, this will change in two ways:

• Firstly, European legislation defines methodologies that can be applied for the voluntary cross-border procurement (exchange) of balancing capacity. This may occur through an approach where a separate market for balancing capacity is cleared before the day-ahead market (market-based) or through the procurement of balancing capacity in parallel with the day-ahead market clearing (co-optimisation).
• Secondly, we increasingly expect that balancing capacity will be supplied by other assets, such as batteries or demand response.

Why your views matter

As required by legislation, TSOs and NEMOs are in close cooperation working on the possible future design of co-optimisation, and now want to involve market participants to discuss the future design. In this context, TSOs and NEMOs would like to engage especially with parties owning assets like renewable power plants, batteries, and demand response to elaborate a possible future bidding design (bid formats) under co-optimisation.

The provision of balancing capacity faces several technical and economic complexities, which have important implications for the design of the market and the definition of the bid formats. The characteristics of conventional units are fairly well understood and can be taken into account. However, it is important that the market design takes into account the characteristics of balancing service providers with both conventional and future technology portfolios/units. In this context, NEMOs and TSOs launch this informal survey, which will possibly be followed up by an interview at a later stage, as a basis for the development of bid formats related to co-optimisation. Once the proposal is developed, it will be consulted with relevant stakeholders.

Providing balancing capacity implies being able to reserve capacity from demand or generation to react to a TSO’s request to increase or decrease demand or generation within a short time frame, from a few seconds up to 15 minutes. The balancing capacity will be offered in a future market setup (still to be designed) and will be rewarded according to the market rules and conditions. As such, it offers a potential source of revenues.

Co-optimisation is still under development following the R&D plan outlined in the SDAC Algorithm Methodology and will not be realised before some years ahead. However, market design discussions are currently taking place to ensure that market participants’ costs of providing balancing capacity and that possible relevant information can be taken into account in the market design process. TSOs and NEMOs understand that it may be challenging to answer some of the questions accurately, and therefore, in this process, follow-up bilateral personal interviews with some of the market participants to acquire better understanding may also be organised. A workshop will also be organised after the survey for further clarification and to share the first results. All answers will be treated confidentially, and no individual answers will be made openly available; however, on an aggregated level, these will be taken into account for the development of bid formats related to co-optimisation.

The proposed design derived from the process will be consulted with all relevant stakeholders.