How to Take Advantage of the 2022 Balancing Market Changes

As the go-live of the pan-European balancing energy platforms MARI and PICASSO approaches, we talk to Volue’s Eivind Graversen about the upcoming changes in the balancing markets and the opportunities this brings.


Mar 24, 2022

Windmills on a mountain

Across Europe, Transmission System Operators (TSOs) are responsible for balancing production and consumption in the power system and ensuring a stable system frequency.

The TSOs handle these deviations in the balancing markets: they procure reserve capacity in auctions and activate reserve energy when required.

“Up until now, each TSO has designed their own markets to handle reserve energy. This resulted in different market designs for the balancing markets across Europe,” says Eivind Graversen from Volue.

With the European Electricity Balancing Regulation from 2017, the framework for the harmonisation of the balancing market was established.

The MARI and PICASSO projects create European mFRR and aFRR cross-border platforms for the exchange of balancing energy.

The PICASSO platform is set to go live in May 2022 and the MARI platform will go live in July 2022. As a result of the harmonisation, all European markets will work in a similar way.

“The new market design is a fundamental change that market participants need to take into account.”

Changes in the balancing markets with EU harmonisation

In 2022, market participants need to adapt their bidding processes to participate in the balancing markets based on the new market design.

“The fundamental change is the introduction of 15 minute products. Up until now, the different European markets have had hourly or longer duration products. Now, they can bid for each 15 minute product up to 25 minutes before the actual quarter-hour.”

This change concerns both aFRR and mFRR markets meaning that for both of these markets, market participants are able to rebid or adapt their bids 96 times per day.

These changes result in a somewhat more complicated market.

“And here is the opportunity. Market players should adapt their processes to take advantage of the new market design. If they decide to deal with the market complexity by non-participation or, indeed, by not fully utilising the possibilities of the new market design, they forgo the opportunity to exploit the market possibilities.”

Balancing market changes mari picasso
Photo of Eivind Gravers

There is a huge opportunity in this but the new situation calls for smartness.

Eivind Graversen

Product Manager, Volue Balancing

Automated bidding in the balancing markets

“Some years ago, you could simply enter your offers on the web page of the TSO. You would bid in the balancing markets once per day and that would be sufficient,” says Eivind Graversen.

Not any more.

The new market design offers the possibility to bid and rebid for balancing reserves 96 times per day, and to adapt bids closer to delivery.

“There is a huge opportunity in this but the new situation calls for smartness.”

With the new design, it becomes mandatory to have efficient software support in the energy activation market.

“You will need to automate the process of sending bids to the TSO. It happens too often and you need to take into account new information every 15 minutes. This isn’t something you can do manually. It isn’t possible.”

In addition, power producers often manage several capacity and activation markets, as well as have many plants and generators.

“Power producers will want to look at their entire portfolio and have functionality that gives them optimal and valid bids that they can send to the market. Smart solutions that provide automated bidding support will be essential.”

Monetising flexibility in the balancing markets

“What we see is that the new market design gives power producers the opportunity to benefit from their flexibility,” says Eivind Graversen.

As balancing markets are very much linked to physical assets, power producers are mostly offering flexibility from their assets.

“If you integrate participation in the balancing markets tightly with the production planning processes, you are well on your way to optimally price and monetise your flexibility.”

The winners are those who participate in more markets to unlock the value of flexibility.

“The ideal scenario is that you participate in all relevant physical markets to utilise the different value pools: the balancing markets, the day-ahead market and the continuous intraday market.”