A qualitative analysis of main cross-border balancing arrangements

The integration of balancing markets, i.e. market-based balance management arrangements, is regarded as an important next step in the development towards an Internal Electricity Market for Europe, and is expected to largely reduce the costs of real-time balancing by enhancing competition in balancing service markets. However, there is still a large knowledge gap on the possibilities and effects of balancing market integration. This paper contributes to filling up that gap by means of a qualitative assessment of the main alternative market arrangements for cross-border balancing. We evaluate the impact of seven main cross-border balancing arrangements on the basis of a set of ten high-level performance criteria. The analysis shows that although the net impact of the arrangements of ACE netting and a common merit order list can be expected to be positive, there are major uncertainties in impact related to the dependency on detailed balancing market design choices and power system and market conditions. The uncertainties and dependencies regarding the impact of balancing market integration call for a detailed analysis in each individual integration case.