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Guideline on Electricity Balancing

The guideline on electricity balancing was approved in a vote by EU member states in March 2017. The harmonised requirements are expected to entry into force by the end of the year. The guideline promotes the cross-border trade of reserves needed by TSOs, in particular balancing energy, and harmonises procedures concerning imbalance settlements.

Harmonisation of the requirements is aimed at having a single European market place for balancing energy in European countries for both automatic and manual reserves. The preferred model for this system has been the joint-Nordic regulating power market.

The change will also increase the role of authorities as market regulators, while nowadays, Fingrid is developing rules for the balancing market in cooperation with electricity market parties.  Once the guidelines take effect in Finland, Fingrid has six months to compile a “Terms & Conditions for Balancing” document for approval by the Energy Authority. The proposal will specify the terms and conditions for balance responsible parties and balance service providers and for reserve procurement procedures.

Harmonised balancing products

From the perspective of a party selling balancing power, the change will require harmonisation of balancing products on the European level. The balancing energy market will expand, but the national TSO will continue to be the interface. Market transparency will also improve. Aggregation from several balances will become possible.

In the future, it will also be possible to reserve transmission capacity for the reserves if the economic benefit of the capacity need can be demonstrated.

Harmonisation of imbalance settlement

The Electricity Balancing guidelines will also clarify and harmonise imbalance settlement. The goal is to harmonise the main features for imbalance settlement, such as pricing of imbalance energy, adjustment of balancing energy in imbalance settlement and calculating the amount of imbalance energy. European TSOs will submit a joint proposal concerning the imbalance settlement procedure within one year of the requirements taking effect. The procedure must be implemented within 18 months of approval by the authorities.

For Finnish electricity market parties, the most significant change will occur when the length of the imbalance settlement period is set at 15 minutes for the entire market area. This change must be implemented within three years of the guidelines taking effect. However, the national transition can be postponed until the end of 2024 for compelling reasons.

Background for the EU-level Electricity Balancing Guideline:

  • Regulation authorities’ framework 2012
  • Entso-E’s (European Network of Transmission System Operators for Electricity) proposal
    for a network code 2014
  • ACER’s (Agency for the Cooperation
    of Energy Regulators) recommendation
    to the EU Commission 2015
  • EU Member State approval process
    starting in summer 2016