What is the Electricity Balancing Guideline (EBGL)?

The Balancing Guideline brings us much closer to the final goal: the common, non-discriminatory, restriction-free, and harmonized electricity market between the member states of the European Union. On a regional level, strong collaboration between some neighboring countries has already led to a degree of harmonization. For example, in Western Europe, the German, Belgian, and Dutch market designs have many similarities. Their day-ahead and intraday markets are coupled, all have balancing energy markets, most of which work based on merit order clearing and activation. Accessing those markets is largely non-discriminatory and market conditions are transparent. 

However, these conditions do not exist in all countries: In Poland, for example, the control energy market is still in an initial opening phase. Other countries, especially in Eastern Europe, have a largely state-controlled, vertically organized electricity system.

To bring the benefits of harmonized balancing markets to all member states, successful implementation of the Balancing Guideline is crucial. To that end, all TSOs and their national regulatory bodies must agree on common rules and protocols for data exchange. The TSOs, united on a European Level under the ENTSO-E (European Network of Transmission System Operators for Electricity ) have done a lot of work already towards the implementation of the EBGL. Market parties who will eventually have to deliver reserve power within the harmonized framework are also involved and consulted in the process. In the end, transmission system operators, distribution system operators, electricity traders, electricity producers, and the consumers must speak a common language, a binding set of contracts and rules for the electricity market – kind of an "acquis communautaire" for the energy market.

Harmonizing the European electricity markets will not be achieved only by executing the Balancing Guideline. The ENTSO-E and its members defined five key areas to realize the EBGL. We discuss each of them very briefly below.

Behind the rather flowery names PICASSO, MARI and TERRE are the three platforms on which balancing energy and system services are to be auctioned, cleared, monitored, and remunerated within the Energy Union in the future. Some of these platforms have already taken their first steps in some member states. While PICASSO deals with pan-European trading for aFRR, MARI aims to do the same for mFRR. TERRE is meant to establish a trans-European exchange for Replacement Reserves (RR), a product that does not exist in all member states yet but can be loosely compared to mFRR. For example, RR does not exist in Germany nor Belgium and therefore these countries have not been involved much in the discussions around TERRE.

The FCR cooperation aims to establish a harmonized market for the fastest of all reserve power products: Frequency Containment Reserve (FCR), also known as primary reserve in many countries. Of all the implementation projects, this one is most advanced , with 9 TSOs from six European countries including Germany, Belgium, and the Netherlands already procuring FCR power from market participants on a common platform called “Regelleistung”. On this platform, Primary reserve power from several countries is already auctioned together; the increased competition has led to lower costs for the TSO. Regardless of this, there is still a lot of work to do in bringing the rules for monitoring the service, prequalification, and market access on one line.

Today, grid operators manage the balance within their control zones. Often, the control zone covers a whole country like in the Netherlands and in Belgium. With IGCC, these countries can balance their power grids together. An example: A given day in the Benelux States before IGCC: The Belgian TSO notices a positive imbalance (an excess of power production). He activates his downward reserves. At the same time, the Dutch TSO notices a negative imbalance (a shortage of production). He activates his upward reserves. If the cross-border capacity allowed for it, they can net the imbalances to relief the imbalance situation partly or even completely. Therefore, the IGCC project aims to establish a cross-border imbalance netting platform.

The Balancing Guideline is not the online Guideline put in place in recent years to foster European wide collaboration in the energy market. For example, both the regulation on capacity allocation and congestion management (CACM) and the generation and load data provision methodology (GLDPM) are intended to establish a harmonized, universal system for data exchange of power generation and congestion management. For this purpose, all grid users throughout Europe, including of course the producers of electricity from renewable energy sources, were called upon to transmit system data if the system has an installed capacity of more than 10 MW.

A number of grid codes complete the different guidelines. The grid codes are an important component of EU Regulation 2017/2095 and regulate market and technology-relevant framework conditions in the electricity supply. The grid codes were laid down in EU Regulation 714/2009 and have been legally binding for all European market participants since 2016.