Abstract
A 'balancing market' can be defined as an institutional arrangement that establishes marketbased balancing, and consisting of three main pillars: balance responsibility, balancing service provision, and imbalance settlement. In today's liberalized power markets, balance management is becoming increasingly market-based.
Recently, the integration of balancing markets has received the interest of the European Commission, TSOs, and the electricity industry itself. Balancing market integration can be regarded as a logical next step after day-ahead and intraday market integration (coupling) to stablish a single Internal Electricity Market for Europe. It is believed to reduce balance procurement costs, as a result of increasing competition in balancing service markets. Balancing market internationalization of currently national European balancing markets contains the notions of harmonization and integration. Harmonization focuses on equalization
of the important balancing market rules; integration on the facilitation of cross-border balancing service trade by means of balancing service market integration.
The realization of balancing market harmonization and integration both require the reachin of agreement by TSOs and regulators on a variety of balancing market rules, which forms a large regulatory barrier for balancing market internationalization. In addition, balancing market integration involves new technical and market arrangements related to cross-border balancing service exchange, which translate into further regulatory changes. Another regulatory challenge is the development of supranational (regional) legislation on balance management. Viewing the uncertainty and variety existent in balancing market design, it will
take some time before balancing markets in Europe will be harmonized and integrated, but experience from the Nordic system and Germany shows that the challenges can be overcome
Recently, the integration of balancing markets has received the interest of the European Commission, TSOs, and the electricity industry itself. Balancing market integration can be regarded as a logical next step after day-ahead and intraday market integration (coupling) to stablish a single Internal Electricity Market for Europe. It is believed to reduce balance procurement costs, as a result of increasing competition in balancing service markets. Balancing market internationalization of currently national European balancing markets contains the notions of harmonization and integration. Harmonization focuses on equalization
of the important balancing market rules; integration on the facilitation of cross-border balancing service trade by means of balancing service market integration.
The realization of balancing market harmonization and integration both require the reachin of agreement by TSOs and regulators on a variety of balancing market rules, which forms a large regulatory barrier for balancing market internationalization. In addition, balancing market integration involves new technical and market arrangements related to cross-border balancing service exchange, which translate into further regulatory changes. Another regulatory challenge is the development of supranational (regional) legislation on balance management. Viewing the uncertainty and variety existent in balancing market design, it will
take some time before balancing markets in Europe will be harmonized and integrated, but experience from the Nordic system and Germany shows that the challenges can be overcome