Balancing energy market integration in Northern Europe — Modeling and case study

The increase in market integration and renewable penetration in European countries makes the issue of balancing market integration very important. This work is a package of a market design where reserve capacity is procured by the TSO on a daily basis before the clearing of the day-ahead market. In this paper, we focus on balancing energy market formulation. We take the status of the Northern European power system in 2010 as a case study to asses the implications of balancing market integration by considering three market arrangements. A decrease in the balancing costs and the total net imbalances is obtained for the arrangement where transmission capacity is optimally allocated and exchange of balancing energy between balancing regions is possible. Results also show that when there is exchange of balancing energy between balancing regions, the Nordic system provides cheap balancing energy to Germany and Netherlands given that there is ample transmission capacity.