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What is balancing energy?

What is balancing energy?

The electricity grids of most European countries on the European mainland are interconnected and are operated at a common grid frequency of 50 Hertz (Central Europe synchronous area). In order to keep the frequency stable at 50 Hertz, the grid feed-in, i.e. the generation, must correspond to the grid withdrawal, i.e. the load, at all times. 

As there are fluctuations in generation and load as well as unpredictable events, the transmission system operators use the control reserve system service in three qualities:

  • FCR - Frequency Containment Reserve 
  • aFRR - Frequency Restoration Reserve with automatic activation
  • mFRR - Frequency Restoration Reserve with manual activation

to balance supply and demand and thus keep the frequency stable at 50 Hertz. For this purpose, power is reserved with providers of control reserve (control power), which is then activated when required (control work).

Before a balancing reserve provider can participate in the balancing reserve market, it must prove its organizational and technical suitability to do so (How to become a Balancing service provider).

Process balancing energy

Balancing capacity market

Prequalified suppliers can participate in the tenders for balancing capacity, which are held daily for the following day. By contracting balancing capacity, the TSOs ensure that sufficient capacity is offered in the subsequent auctions for balancing energy, as every MW of awarded capacity must be offered on the balancing energy market. The demand for balancing capacity, which the TSOs cover via the auctions, fluctuates according to the dimensioning.

The product length for all control power products is four hours, starting with the time slice from zero to four o'clock and ending with the time slice from 8 p.m. to midnight. While this completes the procurement of FCR, the foundation for the complete procurement of aFRR and mFRR products has only just been laid. The procurement of the control work that can actually be activated takes place in the control work market.

FCR is procured across borders together with many neighboring countries. The optimization function ensures that FCR is not procured too unevenly geographically and that corresponding export and import limits are adhered to. Further details on FCR cooperation can be found here.

The Austrian transmission system operator APG and the four German TSOs have been jointly tendering aFRR for many years. While a technical margin on the interconnectors between the control areas is sufficient for the joint procurement of FCR, interconnection capacity must be reserved for the cross-border procurement of FRR. As there are other countries interested in joint procurement of aFRR, the ALPACA project was founded. What ALPACA means and many more details about the cooperation can be found here.

Balancing energy market

As soon as the auction for balancing capacity is completed, the balancing energy market opens for aFRR and mFRR. Balancing reserve providers with awards on the balancing capacity market must offer the awarded quantity on the balancing energy market. All providers can also submit balancing energy bids. All balancing energy bids are awarded. The products on the balancing energy market have a length of 15 minutes, i.e. a procurement process takes place every 15 minutes. The market for each quarter-hour product closes 25 minutes before the product starts. All bids are sorted in ascending order according to the energy price and forwarded as a merit order list to the TSOs' call-off systems and to the MARI (for mFRR) and PICASSO (for aFRR) activation platforms.

Calling off balancing energy

If required, the reserves are then activated. The demand for balancing energy arises at any time as a result of deviations of the balancing groups' positions from their planned positions (schedules). Each TSO determines its demand and sends it in real time to the call-off platforms, as well as available cross-border transmission capacities. The platforms first balance the positive and negative requirements of the participating TSOs and use the remaining requirements, bids and transmission capacities to determine the most cost-effective bids needed to cover all remaining requirements. This increases efficiency and reduces the costs of activating balancing energy. You can find out more about the MARI and PICASSO call-off platforms at the European cooperations.

Billing of balancing capacity and balancing energy

While the costs for the provision of balancing capacity are financed via the grid usage fees of the TSOs, the balancing group managers bear the costs for the activation of balancing energy. For this purpose, the TSOs calculate a balancing energy price every quarter of an hour and invoice the balancing group managers monthly as part of the balancing group settlement. The balancing energy price in Germany is calculated uniformly across all control areas and is called reBAP (cross-control area uniform balancing energy price). You can read all about balancing energy, balancing groups and reBAP on the netztransparenz.de website.

Types of balancing reserves

The control reserve is divided into three types. The TSOs procure frequency containment reserve, or FCR for short. In addition to FCR, the TSOs also procure Frequency Restoration Reserves with manual activation (mFRR) and with automatic activation (aFRR). As the fastest reserve, FCR reacts directly to a frequency change in a decentralized manner, i.e. without an explicit call from the TSO.

To balance the system, the TSOs activate the aFRR. If this reaches a high level of utilization, the slower mFRR is activated to make the aFRR available for the next demand. In principle, the balancing group managers are responsible for balancing consumption and generation. They often balance the system quickly so that the use of mFRR is not necessary.

Further information is available at ENTSO-E-Operation Handbook