CROSS BOrder management of variable renewable energies

and storage units enabling a transnational Wholesale market

Title: Document Version:

D10.1 National balancing and wholesale electricity markets structure and principles 1.3

Project Number: Project Acronym: Project Title:

H2020- 773430 CROSSBOW CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale
market.

Contractual Delivery Date: Actual Delivery Date: Deliverable Type*-Security*:

M18 (4/2019) M18 (4/2019) R-PU
*Type: R: Report; DEM: Demonstrator/Prototype; DEC: Website, videos; O: Other; E: Ethics requirement.
**Security Class: PU: Public; CO: Confidential, only for members of the consortium (including the Commission).

Responsible: Organisation: Contributing WP:

Andrej Gubina UL WP10

Authors (organisation):
Jan Jeriha, Andrej Gubina, Tomi Medved, Benjamin Komel (UL)

Vesna Borozan, Petar Krstevski, Aleksandra Krkoleva, Stefan Borozan, Rubin Taleski (UKIM)

Catalin Chimirel (CRE)

Contributors (organisation):

Vojislav Pantić, Obrad Škrba (NOSBiH)

Dan Nastase, Mihai Marcolt, Alexandru Luca (TRANS)
Branka Vasikj (MEPSO)
Biljana Ivanović, Željko Adžić (CGES)
Srdjan Subotić, Nikola Tošić, Marko Zarić (EMS)
Despoina Makrygiorgou, Nikos Andriopoulos (ADMIE)
Antun Andrić, Tonči Tadin, Ana Horvat Sedlić, Zora Luburić (HOPS)
Stefan Sulakov (ESO)

Abstract:
This task will examine the current state and perspectives of balancing markets at the national and regional level and
the current existing electricity markets. It will focus on the existing principles, types of balancing services,
procurement of balancing services and standard products on the balancing markets and short-term wholesale
electricity markets. On a second step, the task will examine cross-border balancing principles for common usage of
balancing reserve, exchange of balancing energy and imbalance netting. It will focus on the possibilities and barriers
to integration of regional balancing mechanisms, the essential preconditions for cross-border exchange/sharing of
balancing reserve and energy exchange and common usage of balancing energy in South East Europe. Furthermore,

© CROSSBOW Consortium http://crossbowproject.eu/

 the analysis will be extended to short-term wholesale electricity markets with the aim of making the minimum set of
harmonized market rules.

Keywords:
Balancing market, types of balancing services, cross-border principles for common usage

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Revision History

Revision Date Description Author (Organisation)

V0.1 03.12.2018 New Document, Table of Contents Jan Jeriha, Tomi Medved (UL)
V0.2 17.02.2019 Chapter 3, subchapter 3.3.3 Vesna Borozan, Aleksandra Krkoleva,
Petar Krstevski, Stefan Borozan, Rubin
Taleski (UKIM)
V0.3 22.02.2019 Chapter 3, subchapter 3.3.1 and 3.3.3 Obrad Škrba, Vojislav Pantić (NOSBIH),
Branka Vasikj (MEPSO)
V0.4 26.02.2019 Chapter 3, subchapter 3.3.2 and 3.3.4 Biljana Ivanović (CGES), Srdjan Subotić,
Nikola Tošić (EMS)
V0.5 06.03.2019 Chapter 3, subchapter 3.1 and 3.2 Vesna Borozan, Aleksandra Krkoleva,
Petar Krstevski, Stefan Borozan, Rubin
Taleski (UKIM)
V0.6 20.03.2019 Chapter 2 Jan Jeriha, Andrej Gubina, Edin Lakić,
Tomi Medved (UL)
V0.7 22.03.2019 Chapter 2 review Catalin Chimirel (CRE), Vesna Borozan
(UKIM), Nikola Tošić, Marko Zarić (EMS)
V0.8 25.03.2019 Chapter 3 review Vojislav Pantić (NOSBIH), Mihai Marcolt,
Adrian Nastase (TRANS), Branka Vasikj
(MEPSO), Nikola Tošić, Marko Zarić
(EMS), Ana Horvat Sedlić (HOPS)
V0.9 05.04.2019 Chapter 4, Appendix 1 Petar Krstevski, Vesna Borozan,
Aleksandra Krkoleva, Stefan Borozan,
Rubin Taleski (UKIM), Catalin Chimirel
(CRE), Jan Jeriha (UL)
V1.0 11.04.2019 Chapter 5 Vojislav Pantić, Obrad Škrba (NOSBIH),
Stefan Sulakov (ESO), Nikola Tošić (EMS),
Despoina Makrygiorgou, Nikos
Andriopoulos (ADMIE), Antun Andrić,
Tonči Tadin, Ana Horvat Sedlić, Zora
Luburić (HOPS), Željko Adžić, Biljana
Ivanović (CGES), Adrian Nastase, Mihai
Marcolt, Alexandru Luca (TRANS),
Branka Vasikj (MEPSO), Vesna Borozan,
Petar Krstevski, Aleksandra Krkoleva,
Stefan Borozan, Rubin Taleski (UKIM)
V1.1 15.04.2019 Chapter 6, Introduction Jan Jeriha (UL)
V1.2 22.04.2019 First final version Jan Jeriha (UL)
V1.3 29.04.2019 Merged review from UKIM, EMS, CRE, Jan Jeriha, Andrej Gubina (UL), UKIM,
ETRA, CGRID EMS, CRE, ETRA, CGRID

D10.1 National balancing and wholesale electricity markets structure and principles 3
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This project has received funding from the

European Union’s Horizon 2020 Research and Innovation Programme
under Grant Agreement № 773430.
More information available at https://crossbowproject.eu

Copyright Statement

The work described in this document has been conducted within the CROSSBOW project. This document
reflects only the CROSSBOW Consortium view and the European Union is not responsible for any use that
may be made of the information it contains.
This document and its content are the property of the CROSSBOW Consortium. All rights relevant to this
document are determined by the applicable laws. Access to this document does not grant any right or license
on the document or its contents. This document or its contents are not to be used or treated in any manner
inconsistent with the rights or interests of the CROSSBOW Consortium or the Partners detriment and are not
to be disclosed externally without prior written consent from the CROSSBOW Partners.
Each CROSSBOW Partner may use this document in conformity with the CROSSBOW Consortium Grant
Agreement provisions.

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EXECUTIVE SUMMARY

This report mainly examines the current state and perspectives of balancing markets in the South East Europe
(SEE), and the principles for common usage of balancing reserve, exchange of balancing energy and
imbalance netting.
Countries from the SEE region are in different stages of development in the energy sector and therefore
different stages of implementation and integration of electricity balancing markets. An overview was made
of recent changes in the way electricity balancing market is structured in European Union (EU) and the way
a common European balancing market will be structured in the future. After the definition of common
meanings of balancing mechanisms, individually made questionnaire was administered to TSOs, from the
SEE, participating in CROSSBOW project. The analysis of the questionnaire that will serve as an input for
future work in the project included the following six topics:
- Current state of legislation
- Procurement of Balancing Capacity
- Procurement of Balancing Energy
- Cross-border balancing
- BSP Settlement
- BRP Settlement (Balancing Mechanism)
Additionally, as a precondition for common usage of balancing reserve and energy in the cross-border use
cases, sufficient Cross Zonal Capacity (CZC) should be made available between two Load Frequency Control
(LFC) areas. Both, exchange and sharing of balancing reserves are highly dependent on the availability of
long-term CZC and exchange of balancing energy is highly dependent on the availability of short-term CZC.
Under the Regulation (EU) 2017/2195 establishing a Guideline on Electricity Balancing (EBGL), there are
various ways of Transmission System Operators (TSOs) reserving CZC upfront and all of them were briefly
addressed in the report. European platforms for exchange of balancing energy for standard products
(Replacement Reserve, Frequency Restoration Reserve), applied on a multilateral TSO-TSO model are based
on the exchange of balancing energy with a Common Merit Order List (CMOL). The use of similar TSO-TSO
model and CMOL will be further exploited in the CROSSBOW’s Work Package 10: CROSSBOW Wholesale and
Ancillary Market toolset (AM).
The aim of the report was to provide a solid background for development of the CROSSBOW AM products
(System market platform for the aFRR and mFRR, Balancing energy market platform, Measurement of aFRR
energies software). The findings of this investigation will improve the design of the AM products and facilitate
its implementation and use in the region of SEE and other European countries, starting with this report
serving as an input to the second deliverable of Work Package 10: Novel balancing and wholesale electricity
market design, where a minimum set of harmonized rules for participation on the common market and
technical specifications will be made.

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TABLE OF CONTENTS
1 INTRODUCTION .................................................................................................................................................. 9
PURPOSE OF THE DOCUMENT.................................................................................................................................... 9
STRUCTURE OF THE DOCUMENT ................................................................................................................................ 9
2 FUNCTIONING OF THE BALANCING MARKETS, LITERATURE REVIEW .................................................................11
WHAT IS A BALANCING MARKET?............................................................................................................................. 11
Guideline on Electricity Balancing – EBGL ................................................................................................... 11
Guideline on Electricity Transmission System Operation – SOGL ................................................................ 11
Balancing market ........................................................................................................................................ 11
TYPES OF BALANCING SERVICES ............................................................................................................................... 13
FCR – Frequency Containment Reserves ..................................................................................................... 14
FRR – Frequency Restoration Reserves ....................................................................................................... 15
RR – Replacement Reserves ........................................................................................................................ 15
STANDARD PRODUCTS ON THE BALANCING MARKET..................................................................................................... 15
IMBALANCE SETTLEMENT ....................................................................................................................................... 16
3 LEGISLATION AND REGULATIVE FRAMEWORKS IN WESTERN BALKAN AND EUROPEAN UNION COUNTRIES.....18
DESCRIPTION OF METHODOLOGY ............................................................................................................................. 18
REGULATORY FRAMEWORK ON EUROPEAN LEVEL........................................................................................................ 19
Market codes and Electricity Markets development ................................................................................... 19
Electricity balancing code ........................................................................................................................... 21
REGULATORY FRAMEWORK IN WB6 COUNTRIES ......................................................................................................... 23
Bosnia and Herzegovina.............................................................................................................................. 24
Montenegro ................................................................................................................................................ 25
North Macedonia ........................................................................................................................................ 26
Serbia .......................................................................................................................................................... 28
4 CROSSBOW QUESTIONNAIRE ON BALANCING MARKETS IN SEE COUNTRIES .....................................................31
LEGISLATION ....................................................................................................................................................... 31
PROCUREMENT OF BALANCING CAPACITY ................................................................................................................. 31
PROCUREMENT OF BALANCING ENERGY.................................................................................................................... 32
CROSS-BORDER BALANCING .................................................................................................................................... 33
BSP SETTLEMENT ................................................................................................................................................. 34
BRP SETTLEMENT................................................................................................................................................. 35
5 ANALYSIS OF CROSSBOW QUESTIONNAIRE DATA .............................................................................................36
BOSNIA AND HERZEGOVINA.................................................................................................................................... 36
Current state of balancing market .............................................................................................................. 36
Balancing capacity procurement scheme ................................................................................................... 36
Balancing products and prequalification for BSPs ...................................................................................... 36
Balancing energy procurement process, activation of balancing energy and pricing ................................ 37
Settlement of balancing energy between TSO and BSPs............................................................................. 37
BULGARIA ........................................................................................................................................................... 37
State of legislation ...................................................................................................................................... 37
Procurement of Balancing Capacity ............................................................................................................ 37
Procurement of Balancing Energy ............................................................................................................... 38
Cross-border balancing ............................................................................................................................... 39
BSP Settlement ............................................................................................................................................ 39
BRP Settlement (Balancing Mechanism) ..................................................................................................... 40
CROATIA............................................................................................................................................................. 41
State of legislation ...................................................................................................................................... 41
Procurement of Balancing Capacity ............................................................................................................ 42
Procurement of Balancing Energy ............................................................................................................... 43

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Cross-border balancing ............................................................................................................................... 44

BSP Settlement ............................................................................................................................................ 44
BRP Settlement (Balancing Mechanism) ..................................................................................................... 44
GREECE .............................................................................................................................................................. 44
State of legislation ...................................................................................................................................... 45
Participants ................................................................................................................................................. 45
Procurement of Balancing Capacity and Balancing Energy ........................................................................ 47
Cross-border balancing ............................................................................................................................... 49
Balancing market settlement ...................................................................................................................... 50
MONTENEGRO..................................................................................................................................................... 52
State of legislation ...................................................................................................................................... 52
Procurement of Balancing Capacity and Balancing Energy ........................................................................ 53
Cross-border balancing ............................................................................................................................... 54
BSP and BRP settlement .............................................................................................................................. 54
NORTH MACEDONIA ............................................................................................................................................. 54
State of legislation ...................................................................................................................................... 54
Procurement of Balancing Capacity ............................................................................................................ 55
Procurement of Balancing Energy ............................................................................................................... 55
Cross-border balancing ............................................................................................................................... 56
BSP Settlement ............................................................................................................................................ 56
BRP Settlement (Balancing Mechanism) ..................................................................................................... 56
ROMANIA ........................................................................................................................................................... 57
State of legislation ...................................................................................................................................... 57
Procurement of Balancing Capacity ............................................................................................................ 57
Procurement of Balancing Energy ............................................................................................................... 59
Cross-border balancing ............................................................................................................................... 60
BSP Settlement and BRP Settlement (Balancing Mechanism) .................................................................... 60
SERBIA ............................................................................................................................................................... 61
State of legislation ...................................................................................................................................... 61
Procurement of Balancing Capacity ............................................................................................................ 62
Procurement of Balancing Energy and BSP Settlement .............................................................................. 62
Cross-border balancing ............................................................................................................................... 63
BRP Settlement (Balancing Mechanism) ..................................................................................................... 63
6 CROSS-BORDER BALANCING PRINCIPLES ...........................................................................................................64
COMMON USAGE OF BALANCING RESERVE ................................................................................................................. 64
Common dimensioning ............................................................................................................................... 65
Exchange of balancing reserve ................................................................................................................... 66
Sharing of reserve ....................................................................................................................................... 66
COMMON USAGE OF BALANCING ENERGY .................................................................................................................. 67
Imbalance netting ....................................................................................................................................... 67
Exchange of balancing energy with Common Merit Order List................................................................... 67
7 CONCLUSION .....................................................................................................................................................68
8 REFERENCES AND ACRONYMS...........................................................................................................................70
REFERENCES ........................................................................................................................................................ 70
ACRONYMS ......................................................................................................................................................... 74
9 APPENDIX 1: QUESTIONNAIRE RESPONSES .......................................................................................................76
LEGISLATION ....................................................................................................................................................... 76
PROCUREMENT OF BALANCING CAPACITY ................................................................................................................. 78
PROCUREMENT OF BALANCING ENERGY.................................................................................................................... 81
CROSS-BORDER BALANCING .................................................................................................................................... 87
BSP SETTLEMENT................................................................................................................................................. 92
BRP SETTLEMENT (BALANCING MECHANISM) ........................................................................................................... 94

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LIST OF FIGURES
FIGURE 1: BALANCING MARKET SEQUENCE IN ELECTRICITY MARKETS AND ITS PARTICIPANTS (SOURCE [9]) .............................................. 12
FIGURE 2: ORGANISATION OF BALANCING ENERGY IN EUROPE (SOURCE [9]) ..................................................................................... 14
FIGURE 3: CHARACTERISTICS OF STANDARD PRODUCT (SOURCE [9]) ................................................................................................ 16
FIGURE 4: COUNTRIES ENCOMPASSED WITH THE ANALYSES (SOURCE [12]) ........................................... ERROR! BOOKMARK NOT DEFINED.
FIGURE 5: EU TARGET MODEL - MARKET NETWORK CODES (SOURCE [31]) ...................................................................................... 20
FIGURE 6: DIFFERENT TYPES OF RESERVE CAPACITY PROCURED BY ADMIE ........................................................................................ 49

LIST OF TABLES
TABLE 1: IMBALANCE PAYMENT [1]........................................................................................................................................... 17
TABLE 2: MARKET TIMEFRAMES (SOURCE [12]) .......................................................................................................................... 19
TABLE 3: QUESTIONS ON TOPIC 1 OF THE QUESTIONNAIRE ............................................................................................................ 31
TABLE 4: QUESTIONS ON TOPIC 2 OF THE QUESTIONNAIRE ............................................................................................................ 32
TABLE 5: QUESTIONS ON TOPIC 3 OF THE QUESTIONNAIRE ............................................................................................................ 32
TABLE 6: QUESTIONS ON TOPIC 4 OF THE QUESTIONNAIRE ............................................................................................................ 33
TABLE 7: QUESTIONS ON TOPIC 5 OF THE QUESTIONNAIRE ............................................................................................................ 34
TABLE 8: QUESTIONS ON TOPIC 6 OF THE QUESTIONNAIRE ............................................................................................................ 35
TABLE 9: REQUIRED RESERVE IN BIH FOR 2018 ........................................................................................................................... 36
TABLE 10: BM SETTLEMENT CALCULATIONS FOR EACH DISPATCH DAY ............................................................................................. 50
TABLE 11: CLEARING DATA NOTIFIED TO THE BSPS AND/OR TO THE BRPS ........................................................................................ 51
TABLE 12: THE IMBALANCE PRICES IN THE CONTROL AREA OF MEPSO ............................................................................................. 56
TABLE 13: LIST OF LFC BLOCKS, AREAS AND MONITORING AREAS .................................................................................................... 65

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1 Introduction
Purpose of the document
The purpose of this document is to examine the national balancing electricity market (BM) structure and
principles, as well as the current state of the balancing markets and the existing electricity markets in the
CROSSBOW countries from the South East European (SEE) region. The work done in the first deliverable of
CROSSBOW’s Work Package 10 will serve as an input for the novel balancing electricity market design that
will be made later on in the second task of Work Package 10. In addition to the novel market design, the
second deliverable will design a minimum set of harmonized rules for cross-border market participation.
The balancing markets and mechanisms discussed in this document aim at supporting and addressing the
general principles and goals set in 2017 by the European Commission and are part of the European Network
Codes. The Guideline on electricity balancing and Guideline on electricity transmission system operation are
two of the Commission Regulations that aim to support the harmonisation of balancing in EU.
The aim is to provide a solid background for development of the CROSSBOW Wholesale and Ancillary Market
Toolset (AM) product. Therefore, the work for its preparation includes investigation of the current BM
organization, development and practices in the CROSSBOW countries from SEE. The findings of this
investigation will improve the design of the AM product and facilitate its implementation and use in the
region of SEE and other European countries. An overview of the current state of the balancing markets was
made with the help of a questionnaire that was drafted and revised by the CROSSBOW partners. It was later
sent to Transmission System Operators (TSOs) from Bosnia and Herzegovina, Bulgaria, Croatia, Greece, North
Macedonia, Montenegro, Romania and Serbia to fill in. The questionnaire was prepared specifically and
individually for each country, building from the lessons learnt from Deliverable 1.1 – Legislation and
regulatory frameworks.
In the document, the existing balancing principles, the types of balancing services, procurement of balancing
services and the standard products on the balancing markets are presented. On the second step, the cross-
border balancing principles for a common usage of balancing reserve and energy will be examined.
The delivery date of this document is CROSSBOW’s month 18 (April 2019).

Structure of the document

The contents of the present document are divided into seven chapters.
• Chapter 2 presents and describes the functioning of the balancing market, as defined in the EU
legislation. This chapter is intended to create a common language and to have a common definition
of terms that were later-on used in the questionnaire regarding the development of the balancing
market on a national level in CROSSBOW SEE countries. The types of balancing services and the
standard products on the balancing market, as well as the imbalance settlement are presented in
this chapter.
• Chapter 3 is dedicated to the comparison of legislation and regulative frameworks in the Western
Balkan (WB) countries and the European Union (EU). From the EU point of view, Network codes (NCs)
regulating system operation and electricity balancing are presented. For the WB part, each of the
TSOs from participants’ countries had to prepare a draft overview of legislation in their country.
• Chapter 4 is dedicated to the preparation of the questionnaire. The questionnaire covers six topics
and the chapter is divided into six subchapters, each describing the rationale of the topic and some
example questions in the topic.
• In Chapter 5, an analysis of the questionnaire responses is presented. The questionnaire helps us to
obtain the latest information on the existing legislation as well as the realistic level of its
implementation in practice.

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• Chapter 6 of the document presents the cross-border balancing principles. Common dimensioning,
exchange of balancing reserve and sharing of reserves is introduced under common usage of
balancing reserves. Imbalance netting and exchange of balancing energy with Common Merit Order
List is introduced under common usage of balancing energy.
• Chapter 7 of the document is dedicated for conclusions and recommendations.

The document has an appendix, which includes the questionnaire sent to the TSOs (CROSSBOW partners) as
well as their responses, categorised and presented by topics and country.

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2 Functioning of the balancing markets, literature review

What is a balancing market?
The balancing market (BM) and mechanisms discussed in this chapter take into account the general principles
and goals set by the European Commission (EC) in 2017 and are part of the European Network Codes (NCs).
Two NCs that aim to support the harmonisation of balancing were established by the EC, a Commission
regulation (EU) 2017/2195 of 23 November 2017 on establishing a guideline on electricity balancing (EGBL)
[1] and a Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity
transmission system operation (SOGL) [2]. EU NCs can be divided into three categories: Grid Connection
Codes, Market Codes and Operation Codes. EBGL is one of the three market and SOGL is one of the two
operation codes, both are a part of the EU NCs.

Guideline on Electricity Balancing – EBGL

EBGL will be briefly described in this chapter and described in more detail in subchapter 3.2.2.
EBGL has been established in November 2017 and entered into force twenty days after its publication in the
Official Journal of the European Union L 312 [3] on 20 December 2017. The EBGL provides detailed rules on
electricity balancing. It addresses establishment of common principles for procurement, activation and
exchanges of balancing energy. The mail goal of EBGL is the integration of national BMs into a trans-national
balancing market, where countries would be able to share resources and services used by their Transmission
System Operators (TSOs) to ensure that the system frequency and scheduled exchanges are kept within
predefined limits. In addition, new actors (demand response units, renewables, etc.) will be allowed to
partake in the common market. EBGL aims to help limit emissions, increase operational security and increase
social welfare [4], [5].

Guideline on Electricity Transmission System Operation – SOGL

SOGL will be briefly described in this chapter and described in more detail in subchapter 3.2.2.
SOGL has been established in August 2017 and entered into force twenty days after its publication in the
Official Journal of the European Union L 220 [6] on 14 September 2017. SOGL defines actions of TSOs when
managing their power system. High renewables penetration in Europe as well as an increasing number of
interconnections and cross-border competition has been considered in SOGL. It makes regional coordination
a legal obligation for grid operators [7]. It addresses requirements and principles regarding operational
security as well as rules and responsibilities for the coordination and data exchange between actors (TSOs,
Distribution System Operators (DSOs) and others).

Balancing market
Balancing represents all actions and processes that the TSOs use, within a specific area to ensure and
maintain the system frequency at predefined limits and active power exchanges within scheduled values. In
Europe, the nominal frequency is 50 Hz. Each TSO is responsible for dimensioning and procuring of balancing
services from qualified electricity market participants, Balancing Service Providers (BSPs), as necessary for
the balancing in real time.
From the TSO’s point of view, these balancing services are ancillary services provided by BSPs. In case of
system frequency deviations which are caused by the difference in actual consumption/generation from the
forecasted consumption or scheduled generation or by the deviation of active power exchange on
interconnectors, appropriate balancing services need to be used to keep the frequency within limits. The

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Balance Responsible Parties (BRPs) are required to schedule the generation of their group, exchanges and
forecast (schedule) their consumption issuing the schedule nomination for each dispatching period. If
consumption/production is higher/lower than scheduled, additional energy needs to be injected/taken
in/from the grid. Balancing energy can be upward and/or downward, and is supposed to ensure a secure
operation of the power grid, and can be bought on the electricity BM. The balancing energy market is active
after the gate closure time of electricity market and is intended for TSOs to ensure balance in real time or
near real time, [8].
Balancing services can consist of balancing energy or balancing capacity, or both. Balancing energy means
energy used by TSO to preform balancing and is provided by BSP. “Balancing capacity means a volume of
reserve capacity that a BSP has agreed to hold and in respect to which the BSP has agreed to submit bids for
a corresponding volume of balancing energy to the TSO for the duration of the contract”, [1].

Figure 1: Balancing market sequence in electricity markets and its participants (Source [9])

The liberalized electricity market in Europe encompasses [10]–[12]:

- The unbundling of supply, generation and operation of networks;
- Providing market access to third parties, and the ability for consumers to choose their own electricity
supplier;
- Ensuring competition on a wholesale and retail markets.
The BM [1] represents the institutional, commercial and operational agreements that deal with the balancing
of electricity and supply. It establishes market-based management of system balancing within the regulatory
frameworks in force and can be divided into:
- Balancing responsibilities;
- Balancing service provision;
- Imbalance settlement.
It is organized as a form of collecting bids and concluding deals (sale or purchase) of balancing energy with
the aim of settling imbalances between generation and consumption to maintain the balance in the power
system, in a transparent and economically efficient manner, [9], [13]–[16].
It has a crucial role in operation of power systems and electricity markets in a fine adjustment role. The TSOs
use the electricity BM to balance the system in real-time to ensure safe and secure system operation. While
TSOs have a specific role close to and in real time, their role as market mechanism designers is crucial in
creating incentives to balance in longer timeframes. Through these market mechanisms, balancing service
provision and procurement are dictated. For balancing close to real time, TSOs need to secure sufficient

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balancing capacities (reserves, both upwards and downwards) for their control areas beforehand, as well as
balancing energy procured close to and in real time to balance the power system, [17].
Relevant actors related to the BM can be divided into three categories [9], [13]–[16]:
- TSOs: Requires the BM for real-time balancing of the system to ensure safe and secure system
operation. They are responsible for procuring balancing services from BSPs;
- BRPs: Are groups of market participants represented by the BRP that is responsible for the
imbalances (consumption/generation cannot be forecasted with 100 % accuracy). They are
financially responsible for their portfolio’s imbalances and strive to be balanced in real time. An
imbalance charge is imposed if the scheduled sum of generation and consumption does not match
the actual one;
- BSPs: They are market participants (parts of the balancing groups), such as generators, demand
response facilities, storage operators that can offer balancing services (capacity and energy) to TSOs
and can provide energy bids for the market on a voluntary basis. TSOs can balance unforeseen
disturbances in the power system by activating the offers of BSPs and alter the BSP power output on
demand. BSPs, on TSO’s request, provide balancing services in the electricity grid by altering their
power output.
The desired effect of BMs is to guarantee and maintain power quality at the lowest cost. Therefore, the desire
to increase harmonisation of balancing rules, extend the markets from national to regional (transnational)
and increase efficiency is strongly present. Standard balancing products, energy pricing and imbalance pricing
are required and a prerequisite for transnational markets. Roles and responsibilities of market actors can also
be harmonised to achieve a level playing field.
Integration of the BMs is the end goal in creating a common European electricity market. The progress in
integrating some national BMs has been limited. Differences in existing legislation and regulatory frameworks
make it difficult for countries to cooperate on a common electricity market [4].

Types of balancing services

Balancing services are fundamental for ensuring a safe and secure operation of the power system. TSOs are
responsible for keeping the power system balanced by permanently matching the trading transactions,
supply and demand, by acquiring the appropriate level of balancing system services to maintain frequency
within predefined limits. Reliable electricity BM is fundamental to ensure an increasing high level renewables’
penetration, [17].
Traditionally, vertically integrated power companies predicted the level of demand and adjusted the supply
accordingly. The traditional approach was that power plants were dispatched optimally in regard to the cost
of electricity production, in order to cover the consumption and for the demand to match the supply. Larger
conventional power plants, such as coal and nuclear, were used to its full capabilities to cover the base load
during the year. Some coal power plants were dispatched at medium capabilities and adjusted to meet the
demand in daily and hourly timeframes or seasonal variations. The peak was covered with dispatching hydro,
pumped storage hydro and gas-fired power plants, or other more flexible power plants, [17].
Active power reserves are offered on the electricity BM by BSPs and are procured by the TSOs. In order to
ensure power system balancing, TSOs determine the need to use these services either to increase or decrease
the output of their facilities to meet the demand in real time. They are a part of ancillary services required
by the TSOs to ensure the operational security of its system and to maintain the integrity, stability and power
quality in the power grid. Ancillary services can be divided into [18]:
- Frequency ancillary services;
- Voltage control;
- System restoration services or black-start capability.

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Frequency ancillary services and voltage control are relevant for the system operation, whereas the system
restoration services allow the TSOs to reset the system after a black-out. [19]

Frequency related ancillary services can be further divided into [2]:

- Frequency Containment Reserve (FCR);
- Frequency Restoration Reserve (FRR);
- Replacement Reserve (RR).

Balancing energy
FCR aFRR mFRR RR
market
- Semi-automatic/manual
- Automatic activation - Automatic activation activation - Semi-automatic/manual - Cheaper than RR
- Up to 30s - 30s to 15min - Max time of activation activation - For activations up to a
15min - Min time of activation 15min
couple of hours
Frequency
Balancing
energy

t0 t0+30s t0+15min t0+45min t0+1

hour
Figure 2: Organisation of balancing energy in Europe (Source [9])

On the Figure 2 above, we can observe the timings of various balancing products after a disturbance in fre-
quency. The first to respond is the FCR (light purple). It is activated automatically and can last up to 30 sec-
onds. To release the FCR, automatic FRR (aFRR) (light orange) is usually activated (when necessary). It is also
activated automatically, and its activation has to meet the requested power between 30 seconds and 15
minutes. To release the aFRR, manual FRR (mFRR) (blue) is activated when necessary. It can be activated
semi-automatically or manually with the maximum activation time of 15 minutes. The second (stripped) blue
line represents the possibility of stacking multiple mFRR products at a time. Activation of RR is not “standard”
and can be activated semi-automatically or manually with the minimum activation time of 15 minutes. After-
wards, balancing energy can also be bought on the BM for a couple of hours in advance. It is cheaper than
RR and all previously mentioned products and can be activated for up to a couple of hours.

FCR – Frequency Containment Reserves

In EU, the FCR in Electricity BM means active power reserves necessary for constant containment of
frequency deviations from nominal value in order to constantly maintain the power balance in the whole
power grid, [2].

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The FCR is the first to respond after a disturbance with activation times up to 30 seconds. Because of the
quick response time, the FCR is mostly deployed automatically and supplied in a decentralised manner by
power plants which act as reserve providers (such as generators).

FRR – Frequency Restoration Reserves

If for more than 30 seconds after the disturbance the frequency does not return inside the agreed limits, FRR
is deployed. In EU, FRR represents the active power reserves available to restore system frequency to nominal
values. It is intended to release the FCR and can be activated either automatically or manually. Operation of
the FRR is in the time range from 30 seconds up to 15 minutes after the disturbance, [2].
aFRR– automatic Frequency Restoration Reserves
The aFRR is the second to react after FCR in case of a disturbance, with activation times between 30 seconds
and 15 minutes. aFRR operates in a continuous manner, typically every couple of seconds (6-8), the load
frequency controller of the TSO provides a new aFRR activation requests. Therefore, it is deeply connected
to the TSO’s internal systems and its activation is triggered automatically to balance the control area
imbalances. The “activation request” for aFRR is a “secondary regulation order” issued automatically by the
Automatic Generation Control system (AGC).
mFRR – manual Frequency Restoration Reserves
The mFRR usually follows aFRR and releases it during longer lasting imbalances with maximum activation
time of 15 minutes. It also helps in releasing the FCR. mFRR operates in a discrete way in an almost continuous
manner. It can be activated manually, after a failed production unit or a deviation from the scheduled
production/forecasted consumption, to free up the aFRR reserves after the frequency has been restored. It
is important to solve imbalance and congestion problems. The “activation request” for mFRR is a “dispatch
order” issued “manually” or “semi-automatically” by the Dispatcher.

RR – Replacement Reserves
RR is mostly used to release FRR in case of disturbances that last longer or to complement its activations. It
also represents an active power reserve. It is important for system operation and is needed by the TSOs to
prepare for further imbalances. It is intended for activation times from 15 minutes up to an hour and is
manually or semi-automatically activated, [2].

Standard products on the balancing market

According to the EBGL [1], [20], the list of standard products for balancing energy and capacity may set out
at least the following parameters [8], [21]:
- Preparation period: The period between the activation request by the TSO and start of the ramping
period;
- Ramping period: The time required for the active power output to increase or decrease from the
current set point;
- Full Activation Time (FAT): The period between the activation request by the TSO and full delivery of
requested MW power. It is the sum of preparation period and ramping period;
- Minimum and maximum quantity: Represents the change of power output in MW, offered to the
platform by the BSPs. It is necessary that the offered power change can be reached until the end of
the activation time. For the mFRR balancing energy product, the minimum quantity is 1 MW and the
maximum quantity is 9999 MW;
- Deactivation period: The time required from full delivery to the previous set point;
- Minimum and maximum duration of delivery period: The time period when the BSP delivers full
requested change of power to the system;

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- Validity period: Represents the time in which the submitted bid can be activated by the provider;
- Mode of activation: Can be either automatic or manual and represents the way system operator can
activate the relevant bid.

Figure 3: Characteristics of standard product (Source [9])

To facilitate the sharing of balancing energy on a transnational market, EBGL has defined a set of standard
products that can be exchanged on the cross-border platforms [22]. Standard products:
- Replacement Reserves (RR);
- Manual Frequency Restoration Reserves (mFRR);
- Automatic Frequency Restoration Reserves (aFRR).

Imbalance settlement
Imbalance settlement is one of the fundamental parts of the BM. It represents the financial settlement
mechanism with the goal of settling the costs incurred by the deviations from BRPs’ net positions
(imbalances). BRPs need to pay for any deviations from the scheduled net positions in negative direction and
to receive financial compensation for any deviations from the scheduled net positions in positive direction if
Imbalance price is positive and vice versa if Imbalance price is negative. The deviations are calculated by
comparing the scheduled market plan of the BRP with the actual realisation, [1], [23], [24].

The main goal of financial settlement is to ensure that BRPs help maintain the system’s balance in an eco-
nomically efficient was and to incentivise market participants in helping support the system balance. In the
regulation, imbalance settlement is defined on a non-discriminatory, fair, objective and transparent basis. To
help with the increased share of renewables, imbalance prices should reflect the real time value of en-
ergy,[25].

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Imbalance price for each imbalance settlement period is required for the financial value of imbalance settle-
ment. Imbalance price is determined for each imbalance price area, for each imbalance settlement period
and in each direction (positive and negative). The imbalance settlement period is defined as the time for
which the imbalance is calculated and should be the same duration as “dispatch period”.

Based on metered values for each imbalance settlement period, the TSO charges/pays BRPs/BSPs depending
on the situation in the power grid and on market rules defined for the balancing area. Some imbalance
settlement methodologies may distort a level playing field for BRPs and BSPs between different countries.
The payment or charge is dependent on BM prices, which motivate market participants to balance their
demand and supply, so that overall deviations of the system are minimized. Until late 2021, the imbalance
settlement period of 15 minutes should be implemented in all scheduling areas, [1], [26].
In the Table 1 below, the financial cash flow between TSO and BRP is presented regarding to the imbalance
price and type of imbalance. Each TSO should determine the imbalance price in each direction in its
imbalance areas for each settlement period. Within its scheduling area, each TSO should also calculate the
allocated volume, imbalance adjustment and the imbalance for each BRP, for each imbalance settlement
period and in each imbalance area. If imbalance has a positive sign, that indicates the BRP’s surplus and if it
has a negative sign, it indicates BRP’s shortage Within its scheduling area, each TSO should calculate the
allocated volume, imbalance adjustment and the imbalance for each BRP, for each imbalance settlement
period and in each imbalance area, [1].
Imbalance price is positive Imbalance price is negative
Positive imbalance TSO pays BRP BRP pays TSO
Negative imbalance BRP pays TSO TSO pays BRP
Table 1: Imbalance payment [1]

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3 Legislation and regulative frameworks in Western Balkan and European Union

countries
Description of methodology
The overview of the status of development of legislation and regulative frameworks on electricity BM in
Project participating countries [27] is provided by a top-down approach, starting from the legally binding
documents at EU and Energy Community (EnC) levels for EU MSs and Contracting Parties (CPs) to the EnC
Treaty (EnCT) [28] respectively, going down to the specifics of each country.
The countries encompassed with the overview are presented in Figure 4 (green colour), representing a large
part of South East Europe (SEE). Legislation and regulative frameworks in SEE countries which are EU MSs1
is considered highly harmonized and thus, it is presented by examining the electricity BM related EU acquis.
However, analysing the regulative frameworks in the Project participating Western Balkans (WB) countries2,
which are EnC CPs and members of the WB6 Initiative3, has proven to be a more challenging task. Therefore,
along with analysing relevant publicly available documents, participating WB TSOs were requested to draft
subchapters on legislation and regulative frameworks in their own countries with the aim to obtain the very
latest information and existing legislation as well as the realistic level of its implementation in practice.

Figure 4: Countries encompassed with the analyses (Source [12])

While the legally binding acquis from the Third Package for Electricity and Gas Markets (TPEGM)4, for both
EU MSs and via EnCT for all EnC CPs5, is perfectly clear in its aim to establish functional EU and pan-European
energy markets including electricity BM, which is the topic of this research, the implementation of this acquis
does not always deliver the anticipated results as it is often delayed for different reasons. This is especially

1
Bulgaria, Croatia, Greece and Romania
2
Bosnia and Herzegovina (BiH), Montenegro, North Macedonia and Serbia
3
https://www.energy-community.org/regionalinitiatives/WB6.html
4
https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation
5
https://www.energy-community.org/legal/acquis.html

D10.1 National balancing and wholesale electricity markets structure and principles 18
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true for the EnC CPs and for the initiatives to establish an integrated regional electricity market in SEE. For
this reason, the level of implementation of the TPEGM and particularly of the established electricity BMs in
the region was considered necessary in this investigation.
The most appropriate approach to investigating the level of implementation of the related acquis was seen
in conducting a questionnaire among Project participating TSOs, as they are almost regularly in charge of
electricity BM management and operation. The CROSSBOW questionnaire on BMs in SEE countries
(Questionnaire) consisted of six segments addressing various elements of the electricity BMs
implementation, current practices of reserves/balancing energy procurement, pricing and settlement, as well
as the foreseen near future developments. The Questionnaire was designed to enable compilation of
information related to the current state, encountered or expected barriers, and anticipated developments.
Both the Questionnaire and the results of the analyses are described in Chapter 4 of this report.
Aiming to capture the current state of play related to electricity BMs, the investigation was not limited to the
Questionnaire, but it also included WB6 monitoring reports of the EnC Secretariat (EnCS) as well as findings
of the Agency for Cooperation of Energy Regulators (ACER). The approach is necessary to incorporate both
the developments related to EnC CPs and EU MSs.
The results of the research conducted within WP 1, Task 1.1 and presented in D1.1 [12] were useful for this
study, as well.

Regulatory framework on European level

Market codes and Electricity Markets development
The EU regulatory framework that establishes the EU Electricity Market Target Model is based on the TPEGM
and a set of market NCs, that have been developed and adopted in the past few years. These NCs include:
Regulation (EU) 2016/1719 establishing a Guideline on Forward Capacity Allocation (FCA) [29], Regulation
(EU) 2015/1222 establishing a Guideline on Capacity Allocation and Congestion Management (CACM)
[30]and Regulation (EU) 2017/2195 establishing a Guideline on Electricity Balancing (EBGL) [1]. The
framework actually sets the chain of management of risks, energy and the power system through the
electricity market timeframes (forward market (FM), day-ahead (DAM), intraday market (IDM) and BM, as
presented in Table 2.
Table 2: Market timeframes (Source [12])

Managing risk Managing energy Managing the system

FM DAM IDM BM
• Market players managing • Market players balancing their • TSO balancing the system in real
price risks physical positions time
• Forwards, futures and • Operational planning, capacity • Re-dispatching, frequency
transmission rights allocation, congestion control and incidents
management management
Years ahead to 24 hours prior 12-36 hours prior >1 hour prior Hour of operation
hour of operation hour of operation hour of operation
FCA CACM EBGL
Balancing the system, however, closely interferes with real time system operation, and therefore it is
important to include SOGL [2] in the context of BM timeframe.
Figure 5 contains the presentation of the market timeframes of the EU Target Model, including the close
relation of the BM with real-time system operation timeframe and SOGL. This presentation is used by EnCS
to introduce to its CPs and stakeholders the necessity of implementation of electricity NCs in the EnC for the
long-term goal of establishing a functional SEE regional electricity market.

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Figure 5: EU Target model - Market Network Codes (source [31])

Implementation of basic legislation pieces of the TPEGM in EnC was due on 1 January 2015. Today, most of
the WB6, except Bosnia and Herzegovina (BiH), are on a good track on its implementation at least [32], [33].
However, introducing the NCs in EnC legal framework requires a special procedure of negotiating the
adaption of the NC text between EnCS and EC and its approval by the Permanent High Level Group of the
EnC. After completion of the process by the EnC, these regulations become legally binding and applicable not
only between any two CPs, but also between any CP and EU MS. Such adapted text of NC should be
implemented in the CPs “without any changes in the structure and text of the Regulation … other than
translation and the adaptations made…”, in the same way it is done in all MSs.
For the time being, EnCS and the EC succeeded to agree on adaption of several NCs, specifically Connection
NCs6 and the NC on wholesale energy market integrity and transparency7. The market NCs are still pending
to enter into the adaption procedure. However, the WB6 Initiative has called upon WB participating countries
and territories for an “early implementation” of CACM.
WB6 Initiative was launched at the Berlin Summit in 2014, by several leading EU MSs and with the
governments of six WB countries and territories8. The general aim of the Initiative is to strengthen regional
cooperation and drive sustainable growth and job creation. The EnC implements the WB6 initiative in the
areas of energy infrastructure development, energy ‘connectivity’ and sustainability9. This part of the
Initiative culminated with signing the Memorandum of Understanding (MoU) on developing SEE regional
electricity market in April 2016. The MoU sets out the general principles of cooperation as well as concrete
actions to develop the SEE regional electricity market, in terms of driving regional DAM and IDM coupling

6
COMMISSION REGULATION (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid
connection of generators, COMMISSION REGULATION (EU) 2016/1447 of 26 August 2016 establishing a network code
on requirements for grid connection of high voltage direct current systems and direct current-connected power park
modules and COMMISSION REGULATION (EU) 2016/1388 of 17 August 2016 establishing a Network Code on Demand
Connection
7
REGULATION (EU) 1227/2011 of 25 October 2011 on wholesale energy market integrity and transparency (REMIT)
8
Albania, BiH, Kosovo*(*this position is without prejudice on status and in line with UNSCR 1224 and the ICJ Opinion
on the Kosovo declaration of independence), North Macedonia, Montenegro and Serbia
9
https://www.energy-community.org/regionalinitiatives/WB6.html

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between the EnC CPs and neighbouring EU MSs; cross-border balancing; regional capacity allocation;
introduction of a coordinated capacity calculation process for the allocation of day-ahead capacities through
the establishment of a regionally coordinated calculator; and cross-cutting measures of a horizontal
dimension.10
This study gives an importance to the WB6 MoU, not only because it supports electricity market development
and cross-border balancing in WB6, but also because stakeholders from all EU MSs that neighbour the WB6
countries, including those which participate in this Project, have joined the initiative by signing the MoU.
In addition to the activities under the WB6 MoU, most of the Project participants, both EU MSs and EnC CPs,
have already taken actions for establishing national BM and participation in EU projects that support
implementation of the EBGL, like Platform for the International Coordination of Automated Frequency
Restoration and Stable System Operation (PICASSO), Manually Activated Reserves Initiative (MARI), Trans
European Replacement Reserves Exchange (TERRE) and International Grid Control Cooperation (IGCC)
platform, as presented in WP1, D1.1 [12]. For the non-EU participating countries, this is assumed that is
mainly influenced by membership of their TSOs in ENTSO-E and the obligations forthcoming from that
membership.
However, establishing a functional SEE regional electricity market including cross-border balancing can hardly
happen without previous and uniform implementation of Market and System Operation NCs in all examined
countries of the SEE region (Figure 4). This necessity and the regulatory details are addressed in the next
subchapter.

Electricity balancing code

Development and harmonization of BMs across Europe is facilitated by the EBGL, especially in terms of BM
market design and the imbalance settlement mechanism. However, BM design and arrangements cannot be
fully decoupled from real time system operation as they occur in real time, and consequently, SOGL is also
relevant for the discussion of electricity balancing. SOGL primarily addresses three aspects of balancing: the
harmonisation of reserve categories, the activation strategy for balancing energy in real-time and the sizing
of reserves [34].
Therefore, in this subchapter the accent will be given to EBGL and provisions of SOGL will be considered in
function of those of EBGL and the operation of BM.
EBGL entered into force on 18 December 2017 accompanied with expectations that within the next 6 years
it will result in one European platform where all TSOs would have access to different types of balancing
energy while taking into account the transmission capacities available between different areas11.
Namely, the objective of EBGL is to foster BM integration with the aim to reduce total costs and to increase
social welfare while ensuring operational security. EBGL provides a definition of the concept of “Balancing
energy”, which is provided by BSPs. This energy is needed so that the TSOs balance the deviations between
supply and demand in real-time. The BSPs should meet the necessary technical requirements in order to be
able to deliver this service. Balancing can be provided by a wide range of technologies including small-scale
generation, energy storage, Demand Side Response, renewable resources and intermittent resources. In
general, EBGL does not refer to any technology type and therefore provides opportunities for all potential
sources of balancing which fosters competition and thus maximises the social welfare gain. EBGL is guided
by the notion that actions which are not explicitly forbidden, like participation or initiative for cooperation,
are allowed [35].

10
https://www.energy-community.org/regionalinitiatives/WB6/MoU.html
11
https://acer.europa.eu/en/Electricity/FG_and_network_codes/Pages/Balancing.aspx

D10.1 National balancing and wholesale electricity markets structure and principles 21
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As TSOs are faced with the risk that they will not have enough offers for balancing energy from BSPs in real-
time, they hedge this uncertainty by securing in advance a sufficient amount of balancing capacity available
in their responsibility area. An option which gives the TSOs the possibility to activate the certain amount of
balancing energy within a certain timeframe is referred to as “Reserve Capacity”. It is typically defined as the
available generation or demand capacity which can be activated either automatically or manually to balance
the system in real-time. Balancing capacity, as used in the EBGL, refers to the contracted part of the reserve
capacity. The balancing energy can be provided by balancing sources, which were secured in advance as
balancing capacity, or by other resources that can offer balancing energy. The interaction of EBGL with SOGL
is substantially needed and occurs in respect of real-time transformation of reserve capacity into balancing
energy by its activation.
EBGL consists of the following titles [1]:
1. General provisions;
2. Electricity BMs;
3. Procurement of balancing services;
4. Cross- zonal capacity for balancing services;
5. Settlement;
6. Algorithm;
7. Reporting;
8. Cost-benefit analysis
9. Derogations and monitoring;
10. Transitional and final provisions.
Title I - General provisions defines the subject matter and scope of EBGL and provides definitions on the used
terms, objectives and regulatory aspects, the terms and conditions or methodologies of TSOs, publication of
information and delegation and assignment of tasks. Article 1 (8) of this title also prescribes that EBGL “shall
apply to all system states defined in Article 18” of SOGL; namely, normal state, alert state, emergency state,
blackout state and restoration state.
Title II, within its chapter on functions and responsibilities, encompasses definitions of the roles and
responsibilities of TSOs and their cooperation with DSOs, the roles of BSPs and BRPs, as well as the terms and
conditions related to balancing. Prescribing the qualification of BSPs for providing bids for balancing energy
or balancing capacity, it recalls Article 159 and Article 162 of SOGL on (BSPs’) prequalification procedure,
which “shall be considered as a prerequisite for the successful completion of the qualification process”12 to
become BSP. SOGL is also recalled within Article 15 and Article 18 of this Title, which define the cooperation
of any TSO with the reserve connecting DSOs. Furthermore, it defines the European platforms for the
exchange of balancing energy and imbalance netting. A participation in development of individual European
platforms is obligatory for all TSOs performing the RR and aFRR processes pursuant to Part IV of SOGL13. It
provides framework for defining balancing energy gate closure time and definitions for standard and specific
products. The standardization of gate closure time and definition of standard products on European level is
essential for regional integration and acquiring increased competition and liquidity of BMs.

12
EBGL, Title II: Article 16 - Role of balancing service providers (1)
13
EBGL, Title II: Article 19 - European platform for the exchange of balancing energy from replacement reserves, Article
21 - European platform for the exchange of balancing energy from frequency restoration reserves with automatic
activation and Article 22 - European platform for imbalance netting process

D10.1 National balancing and wholesale electricity markets structure and principles 22
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Title III is related to procurement of balancing services and the close interaction of EBGL with SOGL is rather
frequent in this title14. The balancing services are grouped in two types: balancing energy and balancing
capacity. The procurement of balancing energy in regional BM is linked to activation of balancing energy bids
from a common merit order list. In this process, Activation optimization function, which will consider the
limited cross-zonal transmission capacity, is needed. EBGL also sets a framework for pricing of balancing
energy and Cross Zonal Capacity (CZC) used for exchange of balancing energy or imbalance netting. Regarding
balancing capacity, a set of procurement rules is defined in EBGL along with concepts for exchange and
transfer of balancing capacity. In this part of EBGL, the TSO-BSP model for exchange of balancing services is
defined too. However, this solution for exchange of reserves is temporary and in four years after entering
into force of EBGL all exchanges of balancing capacity, with some exceptions, shall be based on the TSO-TSO
model.
Title IV provides a framework for use and calculation of cross-zonal transmission capacity for exchange of
balancing energy or imbalance netting, as well as for exchange of balancing capacity or sharing of reserves.
Framework for calculation of market value of CZC and co-optimized allocation process, market-based
allocation process, and allocation processes based on economic efficiency analysis are also provided in this
title.
Title V of EBGL encompasses a framework for developing common methods for settlement. Several types of
settlement are defined. The settlement of balancing energy concerns activated balancing energy for
frequency containment, frequency restoration and reserve replacement process from BSPs and TSO. In
addition, provisions for settlement of balancing energy exchanges between TSOs and unintended exchanges
of energy between TSOs are given. Another issue for which provisions for harmonisation are given is the
imbalance settlement of BRPs regarding pricing, imbalance settlement period and imbalance calculation.
Provisions for settlement of balancing capacity are also given in EBGL.
In Title VI additional provisions for the algorithm for activation of balancing energy bids in the scope of the
activation optimization function, are given. Among others, the prescribed algorithms should “take into
account the process descriptions for imbalance netting and cross-border activation pursuant to Part IV Title
III of SOGL”15.
Title VII gives instructions to ENTSO-E to publish European report on integration of BMs on yearly basis and
provides a framework for this report. Also, TSOs should publish a report on balancing at least once every two
years.
Title VIII gives additional provisions regarding the criteria and methodology for performing of Cost-benefit
analyses by TSOs required by EBGL.
The provisions from Title IX give possibilities to regulatory authorities to grant a derogation from one or more
provisions of EBGL to relevant TSOs. It also appoints ENTSO-E to monitor the implementation of EBGL.
Finally, Title X of EBGL gives the transitional and final provisions.

Regulatory framework in WB6 countries

Over the years, the EnC has actively and continuously supported regional activities related to development
of BMs. Aiming to provide adequate support to drive the development of regional BM in the WB6 countries,
EnCS has initiated several activities that encompass development of legal, contractual and governance

14
EBGL, Title III: Chapter 1 - Balancing energy: Article 29 - Activation of balancing energy bids from common merit order
list and Article 30 - Pricing for balancing energy and cross-zonal capacity used for exchange of balancing energy or for
operating the imbalance netting process; Chapter 2 - Balancing capacity: Article 32 – Procurement rules, Article 33 -
Exchange of balancing capacity and Article 34 - Transfer of balancing capacity; Chapter 3 - TSO-BSP model: Article 35 -
Exchange of balancing services.
15
EBGL, Title VI: Article 58 – Balancing algorithms

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framework for implementation of cross-border balancing in the WB6 region. The primary objective of these
activities is to develop the framework that is in line with EBGL and SOGL and that shall create conditions for
development of a functional regional BM. An important activity in this regard is the detailed legal analysis of
gaps between the legislation that defines the electricity BM arrangements in the WB6 countries and the EU
guidelines, i.e. EBGL and SOGL, [33].
Among the activities for development of cross-border balancing, platforms for imbalance netting and for
cross-border exchange of balancing energy from mFRR and RR were developed. Furthermore, the tests of
these platforms have already begun using real-life data for a week in May 2018, provided by TSOs of this
region. The conducted tests have proven that implementation of cross-border balancing in the WB6 is an
effective approach achieving annual savings. In fact, the tests of the imbalance netting platform in WB6
shows that about 16 million EUR [33] may be saved annually, which will affect mostly the TSOs of Serbia,
North Macedonia and Kosovo16,*. Implementation of imbalance netting in the control block of Serbia, North
Macedonia and Montenegro (SMM) may provide for annual savings of around 6.6 million EUR. Furthermore,
based on the tests of the platform for mFRR and RR, using real-life data for a week in July, it was indicated
that about 4.3 million EUR may be saved, [33].
Apart from these activities which are essential for enabling cross-border exchange of balancing energy, EnCS
also conducts a project for technical assistance in development of regional coordinated capacity calculation.
The goal of the project is to provide support to the WB6 TSOs in ensuring efficient use of CZC by applying a
coordinated capacity calculation on D-2 timeframe. Within the project, a draft methodology for coordinated
capacity calculation in the WB6 region, including the surrounding EU MSs, is being consulted between the
TSOs of WB6 and the EU MSs [33].

Bosnia and Herzegovina

The major law that establishes the current legal framework for functioning of the BM and the electricity
market in general in BiH, is the Law on Transmission of Electric Power, Regulator and System Operator [36].
Independent System Operator in BiH is carrying out balancing activities according to the “Law establishing
an independent system operator for the transmission system of Bosnia and Herzegovina” [36].
Article 1 of the aforementioned Law [36] defines the TSO of BiH - NOSBIH as an organization that, together
with other companies and institutions, has to facilitate the creation of a competitive electricity market and
its integration into other regional markets, based on international practices and EU Directives: “The Law is
intended to facilitate the creation of a competitive electricity market in Bosnia and Herzegovina and its
integration into a regional electricity markets and regional energy development activities. The Law is based
on existing international practices and applicable Directives of the EU (and their implementation in EU MSs).”
Besides, Article 2 of the same Law [36] refers to NOSBIH as an organization with activities that should foresee
“… development and administration of market rules governing the provision of system services over the
transmission system, and other activities as specified in Article 7 (Powers of the NOSBIH) of this Law. …”.
Article 2 in fact is related only to those activities and market rules governing the provision of system services
in the transmission system. These activities are referring to the sole dispatch, provision of ancillary and
balancing services and instructions needed to guarantee the correct functioning and safety of the
transmission system and BM.
Article 7 in the above-mentioned Article 2, defines the power of NOSBIH. Among the other, the following is
worth mentioning on this topic:
• operate the BM;

16
As of 12 February 2019, the Constitutional name of the former Yugoslav Republic of Macedonia is the Republic of
North Macedonia

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• procure ancillary services and provide system services;

• prepare, modify and apply reliability standards, the market rules and grid code.
Functioning of the BM in BiH is in details described by the Market rules [37] at the first place, Procedures for
the ancillary services [38] and Rules on the functioning of the daily BM [39]. BM in this form started its
operation in 2016. The main operating principles are as follows:
• market principles of balancing in the power system of BiH and procurement of ancillary services,
• equal and non-discriminatory treatment of all market participants,
• transparency.
NOSBIH procures secondary and tertiary reserve capacity through the public purchase procedure on annual,
monthly and daily basis. The submitted bids are ranked by their price and selected bids are paid at the bided
price (pay-as-bid). There are price caps determined by the State Energy Regulatory Commission (SERC). In
case of missing capacities, additional capacity is paid at weighted average price of the accepted bids.
Balancing capacity dimensioning is done for the two types of balancing products: one for automatically
activated secondary reserve and the other one for manually activated tertiary reserve. According to the Grid
Code required secondary control capacities are determined on monthly basis, for peak load (from 6:00 to
24.00) and off-peak hours (from 0:00 to 6:00) separately. The required tertiary reserve capacity is determined
on a monthly level and separately for upward and downward direction, in accordance with the ENTSO-E
Continental Europe Operation Handbook Policy [40] and the procedures described in the existing
arrangements for the joint reserve in the Slovenia, Croatia and BiH (SHB) Load Frequency Control (LFC) block.
A new law on Electricity and gas regulator, Transmission and Electricity market, harmonized with the
provisions of TPEGM was drafted in 2016, but final decision is still pending. At this point in time it is difficult
to evaluate whether, when and in what form the law will be adopted.
Related to the current activities it is important to mention that NOSBIH started with activities on harmonizing
its BM legislation (Market rules, Procedures for the ancillary services and Rules on the functioning of the daily
BM) with the provisions of EBGL at the end of 2018. The planned deadline for the completion of these
activities is the second half of 2019, after which the rules will be submitted to the regulatory commission for
approval. It is expected that operation of the BM in a new form will begin in 2020.
The main innovations that will be introduced compared with current provisions of BM legislation are:
• harmonizing definitions and terminology with the EBGL,
• harmonizing pre-qualification requirements for the BSPs, as foreseen in Article 16 of EBGL and Article
159 and 162 of SOGL,
• defining specific requirements related to balancing products,
• eliminating the discriminatory provisions for submitting or updating balancing energy bids for
RR/mFRR/aFRR,
• introducing pay-as-cleared pricing.

Montenegro
The main institution for policy making is the Ministry of Economy, which covers the energy sector as a whole,
energy efficiency, as well as mining and geological exploration. In December 2015, Montenegro adopted a
new Energy Law [41] followed by adoption of numerous pieces of secondary legislation in relation to
electricity, which transposed the main pieces of legislation from the TPEGM (Directive 2009/72/EC,
Regulation (EC) No 714/2009, Regulation (EC) No 713/2009 and Regulation No 543/2013). The responsible
institutions are still working to complete the process of full implementation of the TPEGM.

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As regards transmission, the Energy Law of 2015 [41] defines the rights, obligations and responsibilities of
the TSO, and the national rules on operation of transmission system (Grid Code). It also prohibits the national
TSO from taking part in any activities in generating, supplying and trading of electricity; enables non-
discriminatory access to transmission system, and gives priority to Renewable Energy Sources in dispatching.
The national Grid Code [42] of 2017 is in compliance with the ENTSO-E guidelines. The current Capacity
Allocation Rules [43] of 2017 are implemented only at the border with Serbia. In addition, as Montenegro is
a member of allocation office SEE Coordinated Auction Office (SEE CAO), the national TSO - CGES allocates
cross border capacities at the borders with BiH and Albania according to Allocation Rules of SEE CAO [44]
from June 2017. SEE CAO establishes non-discriminatory and market criteria for capacity allocation and
curtails allocated capacity only in case of system emergency.
Montenegro established the Montenegrin Electricity Market Operator (COTEE) in July 2011 as a fully state-
owned limited liability company. It is unbundled from the TSO via the ownership unbundling model. Its
responsibility is to apply most of the provisions on universal service in electricity, enabling foreign companies
to obtain a supply license and supply customers in Montenegro. Montenegro’s Market Rules [45] were
adopted in July 2017. They define (inter alia) the admission and registration of market participants, the rights,
obligations and responsibilities of participants in the electricity market, and the balancing mechanism.
Balancing mechanism is regulated according to the Methodology for setting prices and conditions for
provision of ancillary and system services and balancing services for electricity transmission system [46].
Montenegro’s electricity market consists of the wholesale and retail markets. The market was opened for all
non-household customers on 1 January 2009 and for households on 1 January 2015.
In 2017, Electricity Exchange Company – MEPIX was founded by the power generating company EPCG, COTEE
and CGES, with the aim to create conditions for a better and more competitive electricity market in
Montenegro.
The National Regulatory Authority (NRA) is the Energy Regulatory Agency, which was established in 2004. It
is legally distinct and functionally independent from other public or private bodies in Montenegro. The Energy
Law [41] defines its responsibilities and the means to guarantee its independence and transparency of its
decisions.

North Macedonia
In May 2018, the Parliament of North Macedonia17 brought a new Energy Law [47], which finally fully
transposed the TPEGM. The new Energy Law was prepared in close cooperation with the EnCS. The adoption
of a TPEGM compliant Law was a major step forward, providing the legal ground for the establishment of a
day-ahead market and its coupling18 as well as for the development of intraday and BM timeframes. All legal
obstacles to the TSO to procure balancing services in a non-discriminatory and market-based manner were
removed. In addition, the Law removed the obligation for mandatory sales at the wholesale market and
introduced competitive purchases for all public service providers. However, to ensure its implementation in
practice, secondary legislation must be drafted and adopted, which is quite a challenging task considering
the number and scope of regulations that have to be developed or revised, [47], [48].
In September 2018, new Market Rules [48] in compliance with the Energy Law were adopted by the Energy
Regulatory Commission (ERC). The new Market Rules do not detail a national BM, but rather briefly prescribe
that TSO procures balancing services “according to the Balancing Rules” (Article 9 (1)) and that TSO
“participates in the regional balancing energy market” (Article 9 (3)). The new Market Rules entered into

17
As of 12 February 2019 the Constitutional name of the former Yugoslav Republic of Macedonia is the Republic of
North Macedonia
18
A project to couple the markets of North Macedonia and Bulgaria was initiated. The first important milestone was a
Memorandum of Understanding on Electricity Day-ahead Market Coupling between the two countries signed by the
Ministers on the margin of the EU-Western Balkans summit in Sofia on 18 May 2018.

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force with publication in the Official Government Gazette, but will apply with the day of application of the
new Balancing Rules, [49].
In fact, according to Article 68 (4) of the Energy Law [47], the TSO is in charge of operating and managing the
electricity BM in North Macedonia - “in a transparent and non-discriminatory manner”. The provisions on
balancing rules, which include both the market-based procurement of balancing services and balancing
mechanism for settlement of measured imbalances of BRPs, are prescribed within Article 79 of the Law.
Those provisions are further consistently detailed in the draft Balancing Rules [49], which were prepared by
the TSO (MEPSO) with support of technical assistance under the WB6 connectivity programme19 in
September 2018.
The draft Balancing Rules are organized in four chapters including General provisions and Transitional and
Final Provisions. The Definitions (Article 2) and the two core chapters translate to a large extent the meaning
and spirit of the provisions of EBGL in Title II – Electricity Balancing Market (excluding the Articles on EU
platforms for exchange of balancing energy), Title III – Procurement of Balancing Services and Title V –
Settlement [1].
Chapter 2 of the draft Balancing Rules firstly prescribes the provisions on roles and responsibilities of TSO
and BSPs including the procedure for prequalification of BSPs. Then, in separate subchapters, deals with
details on balancing energy from FCR, balancing energy from aFRR, balancing energy from mFRR and
balancing energy from RR. Each of these subchapters elaborates respective standard products for balancing
capacity and balancing energy, technical specifications for BSPs, procurement of balancing capacity
(prequalification, auctions), collecting bids for balancing energy, activation of balancing energy and pricing
and settlement of BSPs. Chapter 3 is devoted to the mechanism for settlement of imbalances. It contains
several subchapters prescribing the roles and responsibilities of TSO, Market Operator (MO) and BRPs, as
well as, contracts and methodology for calculation of imbalances, exchange of information and financial
settlement of BRPs.
As it is determined in the draft Balancing Rules (Article 6), MEPSO decides on the quantities of necessary
operational aFRR and mFRR reserves on the basis of the methodology prescribed in the current Grid Code –
Rules for Electrical Transmission System Operation, Annex 13 [50], which is prepared in accordance with the
ENTSO-E Continental Europe Operation Handbook, Policy 1 [40].
The process of public consultation on the draft Balancing Rules was finalised in November 2018, following
which the TSO submitted a new version of the document to ERC for approval on 21 March 2019. In this new
version of the document, MEPSO proposed an additional Chapter 4 on Submission of Nominations by Market
Participants which covers the scheduling process of power flows of each BRP for the respective balance group
in the day ahead and intraday timeframes20. The draft Balancing Rules are now pending approval of ERC and
consequently their enforcement.
Currently, the undertakings providing public service are exempted from balancing responsibility and
balancing services are provided by the incumbent state-owned generation company, ELEM, at regulated
prices21 until the TSO starts procuring balancing services in a non-discriminatory and market-based manner,
i.e. according to the Methodology for Calculation of the Activated Balancing Energy defined in the Annex 3
of the still governing Market Rules [51]. The latest ERC Rules on Amending the Market Rules22 set the start
date of application of Annex 3 and Annex 4 – Methodology for Imbalance Settlement of Balancing

19
EnCS: https://www.energy-community.org/regionalinitiatives/WB6.html
20
Source of information: MEPSO
21
ERC Decision of 28 December 2018, http://www.erc.org.mk/odluki/2018.12.28-
ODLUKA%20balansna%20Regulirani%20potpis%20-WEB.pdf
22
ERC Rules on Amending the Market Rules, http://www.erc.org.mk/odluki/2018.12.25-WEB.pdf

D10.1 National balancing and wholesale electricity markets structure and principles 27
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Responsible Parties of the Market Rules [51] on 1 April 2019. Activation of the Methodology for Calculation
of the Activated Balancing Energy (Annex 3) and Methodology for Imbalance Settlement of Balancing
Responsible Parties (Annex 4) from the old Market Rules might indicate that some considerable time might
pass before the draft Balancing Rules are adopted and implemented.
Both the new Energy Law (Article 78 (2) 21) and Article 79 (8)) and the draft Balancing Rules (Article 1 (4))
emphasise the importance of non-discriminatory cross-border exchange of balancing services and supporting
implementation of the future regional BM to be developed in coordination with the EnCS and WB6
participating countries from the SEE23.
In addition, it is important to note that Article 84 (2) of the new Energy Law [47] prescribes that all ENTSO-E
NCs “are assumed accepted and are directly applied by the TSO, in accordance with the obligations towards
ratified international agreements and membership in ENTSO-E”. This provision could be interpreted in a
sense that besides the rest of the ENTSO-E NCs, EBGL will also directly be included in the national legislation
and will apply accordingly once it becomes part of the EnC legal framework.

Serbia
Balancing and wholesale markets in Serbia are defined by three legal documents:
• Energy Law [52] adopted in 2014 which is harmonized with TPEGM;
• Grid Code [53] (last version harmonized with EnC/EU connection codes24, SOGL and Network Code
on Emergency and Restoration25); and
• Market Code [54].
Energy Law [52] provides basic definitions regarding balancing and wholesale market, such as: balance
responsibility, organised electricity market, ancillary services, system services and wholesale electricity
supply.
Furthermore, Energy Law states that energy-related activities of electricity supply, wholesale electricity
supply26 and organised electricity market management should be performed in accordance with market
principles. The license is required for performing of these energy-related activities, as well as for generation
larger than 1 MW, which is essential for BM. Also, energy permit is necessary for construction of this size of
generation.
Grid Code [53] regulates:
• definitions of active power reserves (primary – FCR, secondary – aFRR, fast tertiary – mFRR and slow
tertiary – RR);
• types and volume of ancillary and system services;
• secondary and tertiary regulation from the technical perspective;
• possibility of cross-border exchange of secondary and tertiary regulation energy;

23
EnCS: https://www.energy-community.org/regionalinitiatives/WB6.html
24
COMMISSION REGULATION (EU) 2016/631 of 14 April 2016 establishing a network code on requirements for grid
connection of generators, COMMISSION REGULATION (EU) 2016/1447 of 26 August 2016 establishing a network code
on requirements for grid connection of high voltage direct current systems and direct current-connected power park
modules and COMMISSION REGULATION (EU) 2016/1388 of 17 August 2016 establishing a Network Code on Demand
Connection
25
COMMISSION REGULATION (EU) 2017/2196 of 24 November 2017 establishing a network code on electricity
emergency and restoration
26
Energy Law: Article 12

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• functional testing of ancillary services capabilities;

• scheduling process.
On the other hand, Market Code [54] regulates in more detail:
• balance responsibility of market participants;
• balance electricity market;
• calculation of balance group imbalances;
• calculation of financial offsets between BRPs;
• calculation of electricity needed for balancing and ensuring safe system operation;
• the method for providing system services.
Electricity market in Serbia according to the Law includes [52]:
• bilateral electricity market;
• balancing electricity market, and
• organised electricity market.
According to Energy Law [52], TSO is responsible for:
• system balancing;
• efficient and functional integration of the electricity market in the Republic of Serbia with
neighbouring electricity markets, in cooperation with the MO in the Republic of Serbia, as well as
TSOs and MOs of neighbouring countries.
The TSO organises and administers the bilateral electricity market and balancing electricity market, while an
energy entity performing the activity of MO organises and administers the organised electricity market.
Electricity market participants regulate their balance responsibility. A market participant can transfer its
balance responsibility by concluding an agreement on a transfer of balance responsibility to a BRP, the end
customer transfers the balance responsibility for its Withdrawal/Injection points (WIP) to the supplier by the
conclusion of agreement on full supply. The TSO is responsible for the establishment and implementation of
balance responsibility of electricity market participants. The TSO and DSO cannot take over balance
responsibility for another market participant.27 [52]
The TSO keeps the registry of balance responsibility for the WIP in the transmission system, while the DSO
keeps the registry of balance responsibility for the WIP in the distribution system.
The TSO purchases electricity from and sell it to the balance electricity market participants for the purpose
of balancing and ensuring the safe system operation (re-dispatching).
The price of electricity for the needs of system balancing and re-dispatching is determined based on the
market principle, in accordance with the Market Code. Dominant BM participant that has Balancing Service
Entities (BSEs) in the market area of Serbia submits aggregate explicit offer for engagement of
upward/downward tertiary control for all BSEs under its competence, and it delivers explicit offer for re-
dispatching, while other BM participants with BSEs submits explicit offers for every BSE.
The TSO activates the offers for tertiary control, and also activates secondary control in accordance with the
Grid Code [53]. The possibility of Imbalance netting is also introduced. In case of an insufficient volume of
the reserve, the TSO can additionally engage the contractual balancing reserve with suppliers of neighbouring

27
Energy Law: Article 172

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TSO. The prices used for calculation of Tertiary control is determined from the offer of participant in balancing
mechanism, and prices for secondary control are determined according to activation of tertiary control.
According to activated offers, the Imbalance Settlement Price is calculated for each accounting interval
determined as weighted price of activated explicit offers from the Tertiary regulation, contractual engaged
balancing reserve in case when the TSO purchases balancing energy from the TSO from another market area,
Suppliers or Wholesale suppliers, engaged Secondary regulation and engaged secondary regulation for the
purposes of imbalance netting process.
According to the Energy Law [52], electricity producer has to:
• offer ancillary services to TSO or DSO;
• conclude an agreement on the provision of ancillary services with TSO or DSO;
• offer to TSO all the unused production capacities for the needs of balancing and ensuring the safe
system operation;
• conclude an agreement on participation in the balance mechanism with TSO.
The ancillary services should be procured on the basis of market principles, in accordance with the principles
of transparency and non-discrimination, and in the manner stipulated by the Market Code [53].
TSO and ancillary services provider (electricity producer) conclude Ancillary services contract.
The prices of power reserve for system services of secondary and tertiary regulation may be regulated, as
well. Once a year the Energy Agency of Republic of Serbia (EARS) analyses the need for the regulation of
these prices on the basis of the achieved competitiveness level in the domestic electricity market, the
development of the regional electricity market and the assessment of available cross-border capacities. If
EARS assesses that the need for the regulation of these prices is still present, then EARS determines prices of
power reserves for system services of secondary and tertiary regulation. These prices are still regulated.
In that respect, the TSO has to:
• cooperate with neighbourhood TSOs, MOs and other relevant stakeholders, aiming at the
establishment of an integrated regional and Pan-European electricity market;
• provide balancing services in accordance with transparent, non-discriminatory and market principles
that will ensure appropriate support to system users in balancing their delivery and takeover of
electricity;
• determine the price of energy for the purpose of system balancing.
Having all above stated in mind, we can say that the Serbian TSO:
• already performs cross-border tertiary control energy exchange;
• is in position to perform cross-border secondary control energy exchange (new agreement within
Serbia – Montenegro – (North) Macedonia Control Block has to define secondary control
organization);
• has recently applied for EU imbalance netting mechanism (in line with EBGL) – IGCC;
• can implement EBGL in the part which refers to TSO-TSO model (on the ground of Grid Code [53] and
Market Code [54]). On the other hand, full implementation of EBGL, upon its adoption in EnC,
requires amendments in national energy legislation.

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4 CROSSBOW questionnaire on balancing markets in SEE countries

The aim of this deliverable is to provide a solid background for development of the CROSSBOW Wholesale
and Ancillary Market Toolset (AM) product. Therefore, the work for its preparation includes investigation of
the current BM organization, development and practices in the CROSSBOW countries from SEE. The findings
of this investigation will improve the design of the AM product and facilitate its implementation and use in
the region of SEE and other European countries.
The investigation was conducted by preparing a Questionnaire on electricity BMs and analysing the
responses. The Questionnaire was responded by the TSOs included in CROSSBOW from eight countries from
SEE (Bosnia and Herzegovina – NOSBiH, Bulgaria – ESO, Croatia – HOPS, Greece – ADMIE, Montenegro –
CGES, North Macedonia – MEPSO, Romania – TRANS and Serbia – EMS). In the preparation of the
Questionnaire the principles of the BM organisation defined in the market codes EBGL [1] and SOGL [2] were
considered. Furthermore, experiences from the Legislation and Regulatory Framework Questionnaire from
D1.1 [12] of the Project as well as surveys for Ancillary Services and BM Design [55] were used.
The Questionnaire on electricity BMs covers the following six topics:
1) Legislation;
2) Procurement of Balancing Capacity;
3) Procurement of Balancing Energy;
4) Cross-border balancing;
5) BSP settlement;
6) BRP settlement.
The following subchapters of this chapter provide more details for the questions on each topic as well as
explanations for the reasoning for the importance of further use of the collected data for the work in WP10.

Legislation
The topic on legislation includes two questions, as shown in Table 3. The aim of the first question is to provide
information regarding the legislative framework, which is a basis for the operation of the BMs. The second
question aims to provide brief overview of the state of development of the BMs particularly regarding its
competitiveness.
These questions were included in the Questionnaire knowing the fact that the survey includes non-EU
countries whose legislation may not be compliant with EU’s. Furthermore, in some countries full
competitiveness in the BM is not achieved and some forms of price regulation still exist.
Table 3: Questions on Topic 1 of the Questionnaire
Legislation
1 Please provide reference and details on the primary and secondary legislation for market-based and non-discriminatory pro-
curement of balancing services. Is it compliant with the EU legislation?
2 Please describe the current state of development of the balancing market. What are the major characteristics of the balancing
market in terms of competition (competitive or regulated)?

Procurement of Balancing Capacity

The second topic of the Questionnaire addresses the procurement of balancing capacity. The questions on
this topic are given in Table 4. For this topic, separate answers for each standard product are required for
each question. The following standard balancing capacity products are covered: FCR, aFRR, mFRR and RR.
The questions offer several possible answers (marked in bold) that can be provided.
The Questionnaire firstly examines the way of procurement balancing capacity, that can be by imposing
mandatory provision to all generation units connected to the system; by signing a bilateral contract with a

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generation company; or via organized market. Furthermore, the pricing rules, and the resolution of the
products are questioned. In this context, the use of marginal pricing, short product resolution in time and
small product resolution in quantity indicates more developed market. The timeframe i.e. the time ahead of
real-time when the auctions for balancing capacity are conducted is also an important indicator of the BM
development. This information could be important input for the design and development of the AM product.
The types of balancing reserve providers are also examined by the Questionnaire. In some markets the
provision of balancing capacity is reserved only for generators, but additionally balancing capacity can be
provided by load and storage units if regulatory barriers are removed. The symmetricity for each product is
also examined as well as the type of monitoring for ensuring the quality of delivery of the service. Lastly, the
possibility for transfer of the obligation for providing balancing reserve is considered. It is a precondition for
existence of secondary markets for balancing capacity.
Table 4: Questions on Topic 2 of the Questionnaire
Procurement of Balancing Capacity
1 Please provide information on the way of procurement of each type of balancing capacity for the offer which is closest to
real time. (mandatory provision, bilateral market, market (organized))
2 What pricing rule is applied for each balancing capacity product?
(marginal pricing, pay as bid, regulated price - please describe how the price is determined)
3 What is the minimum bid size in the balancing capacity market?
(product resolution in MW)
4 What is the maximum resolution for which the product can bid in the market (for instance 1 hour in the case of a 24 auctions
day ahead market for reserve provision)?
(product resolution in time)
5 Please provide the timeframe of procurement of balancing capacity (the time ahead from real time when auction/agree-
ment for a specific product takes place).
(year(s), month(s), week(s), day(s))
6 Please indicate the number of providers of balancing reserve on the market. Please describe the type of providers of prod-
ucts for balancing capacity for your TSO.
(generators, load, storage)
7 Please provide information if balancing capacity product is symmetrical (Upward regulation capacity and downward regula-
tion capacity has to be equal).
(symmetrical, asymmetrical)
8 What type of monitoring is in place to ensure performance in the service delivery?
(real-time monitoring, ex-post check, hybrid)
9 Is transfer of obligation allowed for each type of balancing capacity product?
(yes, no)
10 Is there a secondary market for capacity products as trading procedures between the BSPs (where at least one BSP has con-
tract with the TSO) to ensure the prescribed reserve amount of the TSO?
(yes, no)

Procurement of Balancing Energy

The questions on the procurement of balancing energy topic are shown in Table 5. The organisation of this
topic is similar to the previous one and answer for each standard product is expected for each question. The
standard products comprise energy from FCR, aFRR, mFRR and RR.
The questions are also similar to these from second topic with the difference that the products are related
to balancing energy, measured in MWh. The examination starts with the way of procurement of balancing
energy and the pricing methods. Additional question in this topic is the third one regarding the way of reserve
activation in order to provide balancing energy, which can be done by using pro-rata principle or merit order
list. Also, the activation time of each product is considered. This parameter is defined as period of time
between receipt of a valid instruction by the Activation Optimization Function and the end of ramping to
meet that instruction. Furthermore, the resolution in quantity and time of each product and the time ahead
of real time when the activation takes place are examined. At the end of this topic the type of providers,
performance of service delivery and transfer of obligation/existence of secondary markets are questioned.
Table 5: Questions on Topic 3 of the Questionnaire

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Procurement of Balancing Energy

1 Please provide the way of procurement of balancing energy for the offer which is closest to real operation time.
(mandatory provision, bilateral market, organized market - precontracted bids, free bids)
2 What pricing rule is applied for each balancing energy product?
(marginal pricing, pay as bid, regulated price - please describe how the price is determined)
3 How are the reserves activated i.e. by a Pro-Rata system or based on a Merit Order (cheapest being activated first)?
(pro-rata, merit order)
4 What is the activation time for each product? Activation time means the period of time between receipt of a valid instruc-
tion by the Activation Optimization Function and the end of ramping to meet that instruction.
(seconds – minutes)
5 What is the minimum bid size in the balancing energy market?
(product resolution in MW)
6 What is the maximum resolution for which the product can bid in the market (for instance 1 hour in the case of a 24 auctions
day ahead market for reserve provision)? (product resolution in time)
7 Please provide the time ahead from real time when activation takes place (for instance 15 minutes in the case of mFRR/ter-
tiary energy). (1 min, 5 min, 15 min, H-1, >H-1)
8 Please indicate the number of providers of balancing energy on the market. Please describe the type of providers of prod-
ucts for balancing capacity for your TSO. (generators, load, storage)
9 What type of monitoring is in place to ensure performance in the service delivery?
(real-time monitoring, ex-post check, hybrid)
10 Is transfer of obligation allowed for each type of balancing energy product?
(yes, no)
11 Is there a secondary market for balancing energy as trading procedures between the BSPs (where at least one BSP has con-
tract with the TSO) to ensure the required energy amount of the TSO?
(yes, no)

Cross-border balancing
The cross-border balancing is an important practice that can contribute to increased competition on the BMs
especially for the market conditions in the region of interest to this Questionnaire (SEE). The practicing of
cross-border balancing and especially the creation of regional BM requires harmonised legal framework as
first condition. Therefore, as it can be seen from the list of questions on this topic (Table 6), the Questionnaire
firstly examines the status of implementation of the TPEGM requirements for non-discriminatory, market-
based cross-border balancing and the existence of amendments of the VAT and Public Procurement Law that
are needed for the non-EU countries TSOs’ to procure services on a regional market level. The adoption and
implementation of secondary legislation for market-based balancing model allowing for the non-
discriminatory cross-border exchange of balancing service is also considered. In addition, the practical
implementation of market-based balancing model allowing cross-border exchange of balancing services is
questioned.
Table 6: Questions on Topic 4 of the Questionnaire
Cross-border balancing
1 What is the status of Implementation of the TPEGM requirements for non-discriminatory, market-based cross-border bal-
ancing?
2 Have any amendments to the VAT and Public Procurement Law been adopted so far? To what extent do these amendments
facilitate the use of balancing services from the regional market?
3 Is the required secondary legislation for market-based balancing model allowing for the non-discriminatory cross-border
exchange of balancing services adopted and to what extent? Please indicate what steps are still required.
4 Please describe possible secondary legislation implementation challenges (present and expected in future) and the chal-
lenges related to balancing practices.
5 What is the status of implementation of a market-based balancing model? Have you done any Dry-runs of new models for
provision of balancing services? Have you performed tests to evaluate imbalance settlement procedures? Please describe
briefly the outcomes of these tests.
6 If the Dry-run process is completed, has any additional fine-tuning been performed? In the same sense, are any of the new
models for provision of balancing services and imbalance settlement already in practice?
7 What is the status of development and adoption of coordinated balancing integration roadmap? What are the major chal-
lenges from the aspect of your company towards a coordinated integration path?
8 Please describe any actions taken so far to support balancing integration.

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Cross-border balancing
9 Please provide information regarding implementation of imbalance netting with neighbouring TSOs.
10 Please provide information regarding implementation cross-border exchange and sharing of reserves with neighbouring
TSOs.
11 What model for cross-border activation of reserves is applied?
(TSO-TSO model, TSO-BSP model)
12 Please provide information on participation in the EU platforms for exchange of balancing capacity and energy.

At the last part of this topic’s questions more precise information for implemented imbalance netting, cross-
border exchange and sharing of reserves with neighbouring TSOs is required. It is important to collect
information whether the TSO-TSO model for exchange of reserves and balancing energy is used.
At the end information on the participation of the examined TSOs in the EU platforms for exchange of
balancing capacity and energy (FCR Cooperation, IGCC, PICASSO, MARI, TERRE) is collected.

BSP settlement
The fifth topic of the Questionnaire is consisted of 17 short questions that should be answered with yes/no
or one of the offered answers should be chosen. The questions cover different aspects of the markets for
balancing services, but the focus is on the quality of provision of balancing services by the BSPs including the
measurement of the provided services and the settlement between BSPs and TSOs. The questions in this
topic are shown in Table 7. They can be grouped in four parts regarding the service that are related to (FCR,
aFRR, mFRR and RR) as shown in the first column of Table 7.
The first part of this topic (questions 1 to 4) is related to the FCR and address the contracts for provision of
FCR capacity, if the provision is mandatory and if it is remunerated. The existence of solution for
measurement and payment of the supplied energy is also questioned.
The next three parts of the fifth topic contain the same questions. The difference is the relation to type of
regulation (aFRR, mFRR and RR). Here it is examined if the contracts for reserve capacity provision are
bilateral or market based. Further on, the way of price formation for capacity is determined. It is important
to know if the prices for up and down regulation capacity are the same and if these prices are determined as
marginal prices of the auction or the pay as bid principle is applied.
Regarding the provided energy for frequency regulation the way of its measurement is examined. It is
important to determine if this energy is measured by meters or by information from SCADA. The
independence of up and down energy measurements is also an important fact to be brought by the
Questionnaire. The way of payment of the energy is determined by the last question in each group.
Table 7: Questions on Topic 5 of the Questionnaire
# Question Yes No
1 For primary reserve (FCR) you have specific contracts with BSP?
2 For primary reserve (FCR) all generators are obliged to supply a specific amount with no
separate payment?
FCR
3 Is there a specific solution to measure the really supplied energy for FCR?
4 Is there a specific solution to pay the generators based on really supplied energy for FCR?
5 How are the contracts for the aFRR capacity placed?
a) Market based
b) Regulated
6 How is the aFRR as stand by capacity paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
aFRR
c) As bid to each BSP?
7 The energy "supplied" within the aFRR is accurately measured?
a) By meters?
b) By SCADA?
8 The energy "supplied" within the aFRR is fully measured independent for both up and down?
9 How is the energy mobilised within aFRR paid?

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# Question Yes No
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
10 How are the contracts for the mFRR capacity placed? Market or Regulated?
a) Market based
b) Regulated
11 How is the mFRR as stand by capacity paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
mFRR 12 The energy "supplied" within the mFRP is accurately measured?
a) By meters?
b) By SCADA?
13 The energy "supplied" within the mFRP is fully measured independent for both up and down?
14 How is the energy mobilised within mFRP paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
15 How are the contracts for the RR capacity placed?
d) a) Market based
a) b) Regulated
16 How is the RR as stand by capacity paid?
a) Different prices for up and down?
RR b) Same price (marginal) to all BSP?
c) As bid to each BSP?
17 How is the energy mobilised within RR paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?

BRP settlement
The last topic of the Questionnaire is related to the settlement of BRPs. This topic incorporates three
questions shown in Table 8. The first question aims to acquire general overview of the balancing mechanism
clearing and settlement procedure and to examine which institution performs these procedures.
The next two questions are related to the way of cost recovery for provision of balancing services performed
by the balancing mechanism. It is important to determine to whom these costs are distributed. Possible
situations are to all grid users, BRPs only, end users only or generators only or maybe some combination. This
can vary for different services (FCR, aFRR, mFRR and RR – capacity and energy products) and therefore all
products are examined.
Table 8: Questions on Topic 6 of the Questionnaire
Legislation
1 Please describe the balancing mechanism, clearing and settlement procedure. Which institution is responsible for implementa-
tion of this procedure?
2 From whom are the costs for each balancing capacity product (FCR, aFRR, mFRR, RR) recovered?
(grid users, BRPs, end users, generators)
3 From whom are the costs for each balancing energy product (aFRR, mFRR, RR) recovered?
(grid users, BRPs, end users, generators)

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5 Analysis of CROSSBOW questionnaire data

Bosnia and Herzegovina
Current state of balancing market
BM in BiH is functional already for some time. From the beginning of 2016, NOSBIH lunched market-based
concept, particularly focused on BM operation and imbalance settlement, which enabled improvement of
competition.
Cross-border cooperation increases the efficiency of the balancing mechanism. There is an exchange of
balancing services (mFRR) with the TSOs of Croatia (HOPS) and Slovenia (ELES) operational since 2016. The
exchange of balancing energy from the mFRR with the TSO of Serbia (EMS) is signed and activated during
2017. NRA approved agreement on the exchange of balancing energy with CGES in March 2018.
Responsibility for system balancing is completely given to NOSBIH by adopted Law from 2005 and according
to Market rules as secondary legislation, the main operating principles are as follows:
• Market principles of balancing in the power system of BiH and procurement of ancillary services;
• Equal and non-discriminatory treatment of all market participants;
• Transparency.
The number of BRPs reached 18 in 2018, but as BSPs there are still just three power utilities as dominant
market participants.

Balancing capacity procurement scheme

Dimensioning of balancing capacity is performed for two types of balancing product: one for aFRR and the
other one for mFRR.
According to the Grid Code required aFRR capacity is determined on a monthly basis, for peak load hours
(from 6:00 to 24.00) and off-peak hours (from 0:00 to 6:00) separately. The required mFRR capacity is
determined on a monthly level and separately for upward and downward direction, taking into consideration
the existing arrangements for the joint reserve in the SHB control block.
In 2018, required reserve capacity determined for each month is given in Table 9.
Table 9: Required reserve in BiH for 2018
2018 aFRR mFRR
Peak hours Off-peak hours Upward Downward
Required capacity 50 MW 33 MW 196 MW 68 MW
Prices EUR/MW/h 20 21 2 0,25

NOSBIH procures aFRR and mFRR capacity through a public tendering procedure. Ranking of the submitted
bids is sorted by offered price. Paying method is pay-as-bid. SERC has determined and limited the price for
upward mFRR by its decision.
In case of missing capacities, additional capacity is paid by weighted average price of the accepted bids.
In 2018, contracted capacities presented 100% of the required volumes, but delivered capacity was 78% for
mFRR (both upward and downward) and aFRR during peak hours was 75% and 45% for off-peak hours.

Balancing products and prequalification for BSPs

There is no prequalification for provision of the aFRR or mFRR reserve although specific technical
characteristics of the units that provide balancing services present a part of the contract.

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Market rules do not determine any specific requirements related to balancing products and no standard
products are defined.
Offering of all available reserve capacity is mandatory for all participants (generating units).

Balancing energy procurement process, activation of balancing energy and pricing

Procurement of balancing energy is market-based process completely realized by NOSBIH.
Basic characteristics of the balancing energy procurement process are as follows:
• Balancing bids are provided daily;
• Bid Quantity for aFRR is not limited, but for mFRR minimum is 10MW;
• Price of bid for mFRR activation can be any price that is less than the cap determined by SERC.
Electricity price for upward mFRR control was limited to 213 EUR/MWh in 2018.
NOSBIH is responsible for balancing process and activation of the balancing energy but also for organization
of the BM. Activation of the aFRR is pro-rata, while activation of mFRR is according to merit order list.
Total engaged balancing energy in 2018 was 110 MWh.

Settlement of balancing energy between TSO and BSPs

Imbalance settlement period in NOSBIH balancing mechanism is 1 hour. There is separate accounting of
balancing energy quantity activated in upward direction and balancing energy quantity activated in
downward direction within the same imbalance settlement process.
Settlement mechanism for both aFRR and mFRR regulation can be characterized as pay-as-bid mechanism.

Bulgaria
State of legislation
The BM in Bulgaria started in 2014. The balancing energy market is organized as a single-buyer market with
the Bulgarian TSO, ESO, as the single buyer, instead of a two-sided auction. The demand is determined by
the system imbalance volume, which normally exhibits volatility, and must be met. In order to maintain the
balance, at every moment, ESO balances the unintentional random deviations, including those, which result
from accidents, electricity load, generation capacities and interconnection exchanges.
ESO organizes and manages the BM in Bulgaria in conformity with the Electricity Trading Rules. To perform
its core functions on the BM, as laid down by the Energy Act, ESO has introduced Market Management
System. The implementation and operation of an information system for balancing and for the procurement
and activation of ancillary services which ensures reliable operation of the power system and is compatible
with the provisions of ENTSO-E NCs, is considered as a basic prerequisite for achieving the Target Model and
for facilitating the market coupling. The Energy Act does not elaborate on criteria or rules in respect to
functional, technical or performance features of IT or system solutions applied by ESO. It rather sets the
general direction to maintain a secure, sustainable and efficient power system.

Procurement of Balancing Capacity

ESO administers the balancing market by applying technical and economic criteria based on bilateral
contracts with market participants – coordinators of balancing groups, generators, traders, consumers, with
a view to maintain the balance between generation and consumption, the security of the system and the
quality of the balancing energy supplied by the BSPs. In conformity with the Electricity Trading Rules, ESO
maintains a register on its website about the active BSPs from FCR, aFRR, mFRR and RR.
Unified principles for contracting and provision of balancing capacity apply on the BM.

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Reserve type can be:

• primary regulation reserve;
• secondary regulation reserve;
• tertiary regulation and cold reserve.
ESO does not pay for a fast tertiary reserve that could be activated for a maximum period of 15 minutes,
upon receipt of the dispatcher’s order. The market participants registered for participation in the BM as BSPs
of tertiary regulation, are obliged to submit upward and downward bids according to Electricity Trading Rules.
ESO does not pay for the provided reserve capacity because this is a relatively small amount of balancing
energy, while the price in the bid should include also the fix costs of the provider.
ESO enters into contracts with the BSPs on the local and cross-border markets.
There are different registers for the respective types of reserve capacity. Based on the technical requirements
for each type of reserve and the technology of the BSPs assets, BSPs can be registered by their request in the
corresponding registers (one, two or all reserve types).
ESO pays the available capacity for a slow tertiary reserve (cold reserve) by organizing tenders for providers
registered in a corresponding register in accordance to the Electricity Trading Rules and the Grid Code. The
availability for the cold reserve is provided in compliance with the Grid Code and the compensation of the
costs incurred by ESO is done through the access tariff.
Negotiation period:
• Primary and secondary regulation reserves are negotiated on an annual basis, but each month ESO
sets the range for every balancing energy provider;
• Cold reserve is purchased within auctions, usually for a month or longer period.
Reserve negotiation and provision:
• By the 10th day of the month preceding the month of delivery, ESO determines the availability for
participation in primary and secondary regulation of thermal plants for the next month;
• Generators are required to allocate certain capacity of aggregates scheduled to be operated and
inform ESO on a day ahead basis. Generators are not allowed to sell electricity on the market above
the capacity earmarked for the purposes of balancing.
By law, ESO is authorized to enter into contracts for ancillary services and cold reserve with domestic and
foreign suppliers. The contracted cold reserve should meet the power supply sustainability benchmarks
determined by an order of the Minister of Energy.
The generators are required mandatory to offer to ESO to purchase capacity for ancillary services not less
than half the regulated range of the units planned to work for the respective month. ESO decides on the
quantities to be purchased based on the identified needs of the power system, using the criteria of the lowest
price offered. The regulated ranges that are not purchased by ESO can be offered to supply electricity at
DAM, IDM and BM.
Amongst the electricity producers, the co-generators are allowed to decide whether to offer additional
services to ESO, or to the DSOs, respectively, if the provision of such services would be technically and
economically compatible with the operating mode of the co-generation plant.

Procurement of Balancing Energy

For each settlement period, ESO determines the prices of the balancing energy in conformity with the
Methodology set forth in the Electricity Trading Rules. The prices are determined on the base of prices
communicated by the BSPs, the activated energy from upward or downward bids and the imbalances within
the balancing groups for the settlement period. ESO does not pay in case of downward regulation. The

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upward bids reach steady value of 2.5 times respective market products (the main component is the base
load price of the Independent Bulgarian Energy Exchange DAM) for all providers. The 2.5 multiple is the cap
allowed by the local regulation. The balancing energy price in tertiary regulation is not capped – there is only
limited provision needed. The applied pricing mechanism of balancing energy bids is “pay–as-bid”.

Cross-border balancing
Agreement on sharing tertiary reserve based on BMs prices mechanism with the Romanian TSO -
Transelectrica (TRANS) exists and it is based on the TSO-TSO model.
Only emergency assistance exists with the rest of the neighbouring TSOs, but it is natural exchange without
payment.
Negotiations with the rest neighbouring countries were organised on political and TSO levels, but due to the
discrepancy between BM models (Greece, Turkey and Serbia) the cross-border exchange of balancing energy
is still not in place. Harmonisation of BMs rules is needed to go ahead.
The maximum prices do not apply for cross-border exchange of balancing energy with neighbouring power
systems under bilateral contracts or at the regional BM.
VAT and Public Procurement Law are in line with European legislation.
Preparation of plan and real participation in the EU platforms for exchange of balancing capacity and energy
is expected to happen by the end of 2019. The process of investigation has started. The current state is as
follows:
• Recently, there have been no considerations to join the FCR Cooperation;
• There have been no real activities to join the Platform for PICASSO initiative;
• There have been no real activities to join any imbalance netting pilot projects;
• Recently there have been no real initiatives to participate in MARI;
• There have been no real activities to participate in the TERRE project.

BSP Settlement
For FCR, aFRR, mFRR and RR there are specific contracts with BSPs that define the range, ramp rate, units,
scheduling, penalties, capacity and energy (BM) payment, settlement etc.
According to BM rules different prices for up and down are in place as “pay as bid” model. The energy
"supplied" as balancing services energy is accurately measured by meters on hourly basis. The Supervisory
Control and Data Acquisition System (SCADA) data (from both sides) agreed between ESO and BSPs is used
only to detect proper response in case of activation.
In case of wrong unit response:
• Providers are penalized for not provided capacity – 75% of fixed by NRA price for capacity, multiplied
by the range;
• Providers do not receive fixed by NRA price for capacity multiplied by the range;
• The unit is considered to be in deviation from the schedule and settlement rules are applied for the
difference between the scheduled and measured values for the entire hour.
In case of proper unit response:
• Providers receive fixed by NRA price for capacity multiplied by the range;
• The unit is considered to provide active energy from aFRR activation. The difference between the
scheduled and measured (by meters, not by SCADA) values, for the entire hour, is the active energy
from aFRR activation. The price is the same as offered by providers (pay as bid).

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The difference between activated and measured values can be close to zero (for example the half time “Up”
and the half time “Down”). NRA constitutes, by BM rules, that in this case the fuel usage is not affected, and
operational cost is covered by reserve capacity payment. Therefore, BSPs do not collect the difference
between the prices for up and down regulation during the hour. BRPs that are in deviations benefit from the
netted up and down regulation (quantity) during the hour. It is a simple procedure, but more beneficial for
the market participants that are in deviations, instead of BSPs. Reduction of market time period from 1 hour
to 15 minutes or less will be fairer for both BSPs and BRPs.

BRP Settlement (Balancing Mechanism)

The Energy Act considers Settlement as a system applied by ESO for individual calculation of deviations of
electricity that is actually consumed or generated compared to the contracted quantities for a particular
period. The Settlement rules are defined in the Electricity Trading Rules.
The allocation of the balancing responsibility is achieved primarily through the creation of balancing groups.
The creation of balancing groups is focused on:
• Improvement of the planning activities for generating plants and determination of the balancing
sources for maintenance of the electric energy balance system;
• Separation of the obligation regarding physical delivery of electric energy from the financial relations
in case of a deviation from actual production/consumption from the predetermined amounts,
submitted schedules and dispatching instructions from ESO;
• Aggregation of the imbalances of the market participants in order to reduce the economic
consequences regarding the balancing energy prices;
• Concentration of the responsibilities in relation to exchange of information with ESO in case of a
small number of market participants.
• The balancing responsibility lies with the market participants, who can transfer it to the BRP. The
categories of balancing groups are designated by the Energy Act, but the core rules on their
formation, structure and responsibilities, as well as the rules on the relations between the
participants are embedded in the Electricity Trading Rules.
The categories are defined by the Energy Act, as follows:
• “Standard balancing group’’ may include market participants different from the TSO, the DSOs and
the public supplier;
• “Special balancing group’’ may include the TSO, the DSOs, the public supplier, operators of RES
facilities and cogenerations (with total installed capacity of less than 4 MW), generators who are
parties to long-term PPAs, as well as generators who use primary local energy sources (of fuel);
• „Combined balancing group” may include market participants, except the TSO, the DSOs, the public
supplier, operators of RES facilities and cogenerations (with total installed capacity of less than 4
MW).
For each Schedule Time Unit, two imbalance prices are determined, one for BRPs with a shortage (negative
imbalance) and one for BRPs with a surplus (positive imbalance).
The payments due by the market participants are secured by bank guarantees or deposits to ESO’s bank
account.
Main operational rules on the balancing energy market:
• Inclusion of time schedules for all deals, regardless of whether they are concluded in line with
regulated or market prices;
• Notification of the time schedules on daily basis in day-ahead.

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• Inclusion of balancing groups in the energy market structure and new registration procedure for the
BRPs;
• Implementation of a separate settlement for the BRPs and the supplies of balancing energy;
• The energy market participants will incur additional expenses if the submission of the time schedules
for production/consumption differs from the actual production/consumption; The amount of those
additional expenses depends on two main factors: accuracy of the predetermined
consumption/production and the balancing energy prices.
ESO executes transactions to settle the imbalances between the BRPs.

Croatia
State of legislation
In Croatia, procurement of balancing services currently is regulated by following primary and secondary
national legislation acts:
• Energy Act,
• Electricity Market Act,
• Electricity Market Rules,
• Rules on Balancing the Electric Power System,
• Amendments to the Rules on Balancing the Electric Power System.
HOPS, local MO (HROTE) and NRA are in the process of development and approval of Terms and conditions
related to balancing according to Art 18. of EBGL. This includes:
• Terms and conditions for BSPs, and
• Terms and conditions for BRPs.
In Croatia, there is still partly regulated internal BM, with only one BSP for both balancing capacity and
energy, in case of aFRR. However, there are four BSPs in case of mFRR (only for energy) and only one BSP for
balancing capacity for mFRR.
In accordance with Rules on Balancing the Electric Power System, in order to maintain power system balance,
HOPS ensures the balancing energy on the market principles by concluding the Balancing Service Agreement
with the market participants, which have concluded Electricity Market Participation Agreement with HROTE.
HOPS actively participates in executing the requirements defined by EBGL. This includes:
• Definition of standard products for providing balancing energy,
• Setting of accounting to be at 15 minutes’ interval,
• European platforms for coordination of locally available balancing energy bids and TSO needs,
• Activation of optimization function (AOF),
• Common merit order list (CMOL).
According to above mentioned requests, in Croatia there is also ongoing pilot project on Demand Side
Response, DSR for mFRR and various TSO – TSO balancing mechanisms: imbalance netting, XB tertiary within
control block, emergency delivery.
From 1 October 2018 HOPS is a full member of ENTSO-E implementation projects for EU platforms for
exchange of balancing energy from mFRR (MARI) and aFRR (PICASSO).
IGCC project is in a successful operation from 1 February 2019. IGCC project aims at:

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• Fostering the cooperation between IGCC Members;

• Lowering the amount of activated aFRR;
• Strengthening security of supply;
• Generating social welfare for each IGCC Member.
Huge demand for integration of renewable energy resources into transmission grid and lack of measuring
data from DSO generate occasionally high imbalance costs for BRPs, which impose higher need for better
electricity supply and RES production planning. However, smart meters roll-out in the beginning phase and
further development and implementation of electricity BM are currently in progress.

Procurement of Balancing Capacity

The procurement of balancing capacity for the offer is assigned as a mandatory provision for FCR, while for
aFRR and mFRR is provided through bilateral market.
Prices for both balancing capacities (aFRR and mFRR), are regulated by The methodology for determining the
prices for ancillary services (HOPS 7/2016), developed by HOPS and approved by NRA. It is important to
mention that the availability of transfer obligation for any type of balancing capacity product is not allowed.
Furthermore, there is no a secondary market for capacity products as trading procedures between the BSPs
to ensure the prescribed reserve amount of HOPS, where at least one BSP has a contract with HOPS.
The concept procurement of balancing capacity is as follows:
1. The minimum bid size:
a) FCR does not have;
b) 1 MW for both aFRR and mFRR.
2. The maximum resolution for which the product can be bided in the market:
a) FCR does not have;
b) Yearly reservation for balancing capacity with hourly resolution for both aFRR and mFRR.
3. The timeframe of the procurement of balancing capacity (the time ahead from real time when
auction/agreement for a specific product takes place:
a) FCR does not have;
b) Yearly - for both aFRR and mFRR.
4. The number and the type of BSPs on the market:
a) FCR: Generators only - 1 participant on the BM;
b) aFRR: Generators only - 1 participant on the BM;
c) mFRR: Generators (including Pumped hydro power plant) and Demand Side Response (DSR) - 4
participants on the BM.
5. The symmetry of the balancing product (Upward regulation capacity and downward regulation
capacity):
a) Symmetrical for both FRC and aFRR;
b) Asymmetrical for mFRR.
6. Type of monitoring which ensures performance in the service delivery:
a) Hybrid for both FCR and aFRR;
b) Ex-post for mFRR.

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Procurement of Balancing Energy

The procurement of balancing energy for the offer is assigned as a mandatory provision for FCR, while for
aFRR and mFRR is provided through bilateral market. The prices for balancing energy are regulated by
methodologies developed and approved by NRA. They are: The methodology for determining the price for
the provision of balancing (NN 85/2015) and The methodology for determining the price for the calculation
of balancing energy (NN 71/2016, 112/2016). It is important to mention that the availability of transfer
obligation for any type of balancing energy product is not allowed. Furthermore, there is no secondary
market for balancing energy as trading procedures between the BSPs to ensure the prescribed energy
amount by HOPS, where at least one BSP has a contract with HOPS.
The concept procurement of balancing energy is as follows:
1. The activation of reserves:
a) FCR does not have;
b) aFRR is activated by a Pro-Rata system;
c) mFRR activation is based on a merit order system.
2. The activation time for each product:
a) FCR does not have;
b) aFRR: minimum 90 seconds and less than 5 minutes;
c) mFRR: minimum 5 minutes and maximum 15 minutes.
3. The minimum bid size:
a) FCR does not have;
b) 1 MW for both aFRR and mFRR.
4. The maximum resolution for which the product can bid in the market:
a) FCR does not have;
b) Hour for both aFRR and mFRR.
5. The timeframe of the procurement of balancing energy (the time ahead from real time when
activation takes place:
a) FCR does not have;
b) aFRR: greater than H-1;
c) mFRR: greater than 15 minutes and less than H-1.
6. The number and the type of providers of balancing energy on the market:
a) FCR: Generators only - 1 participant on the BM;
b) aFRR: Generators only - 1 participant on the BM;
c) mFRR: Generators (including Pumped hydro power plant) and Demand Side Response (DSR) - 4
participants on the BM.
7. Type of monitoring which ensures performance in the service delivery:
a) Hybrid for both FCR and aFRR;
b) Ex-post for mFRR.

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Cross-border balancing
The implementation of the Clean Energy Package requires for non-discriminatory market-based cross-border
balancing. However, in Croatia market-based balancing is not possible now, due to the lack of competition
on generation side. The improvement was made by establishing TSO – TSO cross-border balancing inside the
SHB control block. Further development of cross-border balancing is currently in progress.
Croatia is EU MS, so there is no need for any additional VAT and Public Procurement Law adaptation. Existing
Rules on Balancing the Electric Power System and Amendments to the Rules on Balancing the Electric Power
System allow cross-border market-based balancing model, additionally the above-mentioned rules will be
adjusted accordingly to Art 18 of EBGL, soon. Major challenge for implementing national market-based
balancing model is lack of competition on BSP side. This problem is expected to be solved by the
implementation of a single EU BM through implementation projects for EU mFRR and aFRR platforms (MARI,
PICASSO, and IGCC). And also potentially some regional BM cooperation as a result of CROSSBOW project.
Therefore, the implementation of a market-based balancing model is still in the beginning phase. The prices
of balancing energy and imbalance prices are still connected with the DAM prices. However, demand side
response pilot project has already given some results. Three industry companies assigned contracts with
HOPS in order to be providers of mFRR balancing energy. This is a kind of test operation. The other important
project already in implementation is IGCC project. It has been implemented successfully on the Croatia -
Slovenia border. Croatia - Hungary border will be implemented soon. Serbian and Bosnian TSOs are also
interested in IGCC cooperation. HOPS is a full member of pan-European balancing projects PICASSO and
MARI. Full membership of HOPS within these projects starts from 1 October 2019. Progress of the projects
are defined by Articles 20-22 of EBGL.

BSP Settlement
FCR does not have specific contracts with BSP because all generators are obliged to supply a specific amount
at no payment. There is a specific solution to measure all supplied energy for FCR.
The following details are the same for both aFRR and mFRR: the contracts for capacity are regulated with
different prices for up and down and the same prices (marginal) to all BSP. The provided energy is measured
by both meters and SCADA where the measures are independent for both up and down.

BRP Settlement (Balancing Mechanism)

The responsibility within balancing mechanism is as follows: HOPS is responsible for balancing and settlement
process, while HROTE is responsible for imbalance calculation process. Furthermore, –the NRA is responsible
for imbalance calculation methodology. The costs of all balancing capacity products are recovered through a
hybrid model which includes grid users, end users and generators.

Greece
The harmonization of the Greek electricity market with the provisions of ENTSO-E NC is mandatory and
necessary to achieve Europe-wide coupling with the other European wholesale electricity markets, in
accordance with the Target Model. Based on the National Regulation Decision 67/2017, Hellenic Electricity
Transmission System Operator (ADMIE) is requested to implement the appropriate infrastructure for the
management and operation of the Balancing and Ancillary Services Market. The implementation and
operation of an Information System for Balancing and for the activation of Ancillary Services, compatible with
the provisions of NCs, by ADMIE is a basic prerequisite for the achievement of the reorganization of Greek
wholesale electricity market28 in accordance with the Target Model.

28
http://www.admie.gr/fileadmin/groups/EDRETH/Manuals/Codes/Balancing_Code.pdf,
http://www.admie.gr/uploads/media/Balancing_Detailed_Design_-_Public_Consultation_201712.pdf

D10.1 National balancing and wholesale electricity markets structure and principles 44
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The BM is a very important market function which lies at the junction of the financial and physical activities
that is about to take place at the Greek electricity market and is directly related to the procurement of market
products and services that affect the reliability and the security of the power system. Thus, special attention
must be paid to this market function, since at the present time there is no actual operational experience of
a separate balancing platform in accordance with the Target Model in the Greek electricity sector.

State of legislation
The BM in Greece is governed by the applicable law, including the principles and provisions of Laws
4001/2011 and 4425/2016 and EBGL, as applicable each time. BM is defined as the market where participants
offer electricity used by ADMIE to maintain the system frequency within a predetermined range, as well as
the electricity generation and demand balance, while observing the electricity exchange programs with
neighbouring countries. The BM includes the Balancing Capacity Market, the Balancing Energy Market and
the Imbalances Settlement. The BSPs submit balancing energy offers and balancing capacity offers in the BM
on behalf of the BSEs (as mentioned in Greek Balancing Code) which they represent. In the context of the
BM, ADMIE executes the Integrated Scheduling Process (ISP) for the commitment (synchronization) or de-
commitment of BSEs and for the balancing capacity commitment. The ADMIE operates the BM for the
activation of the aFRR and mFRR Balancing Energy Offers and issues aFRR and mFRR dispatch instructions to
BSEs. The BM operates throughout the year, for each calendar day and its regulation aims to define the terms
and conditions for the operation of the BM and in particular to:
• Designate the participants in the BM, and describe the corresponding registration process,
• Set out detailed rules and conditions under which participants may participate in the BM, including
their rights and obligations, as well as to determine the dispute settlement procedures between the
participants and ADMIE,
• Define the rights and obligations of ADMIE towards the participants regarding their participation in
the BM,
• Describe the interface between the BM, the DAM and the IDM, including the exchange of information
between the Power Exchange and ADMIE,
• Define in detail the validation rules for Balancing Energy Offers and Balancing Capacity Offers by
ADMIE,
• Describe the input data, the operation and the results of the ISP,
• Describe the interface between the ISP and the BM,
• Describe the input data, the operation and the results of the BM,
• Define the Accounting Accounts kept by ADMIE for the purposes of the BM Settlement,
• Define the BM Settlement procedures,
• Determine the penalties for the participants in the event of non-compliance with the provisions of
the regulation,
• Define the procedure for the settlement of the BM, the imbalances and the non-compliance charges,
• Define the procedure for exchanging information with the other stakeholders,
• Specify the reporting and monitoring obligations of ADMIE in relation to the BM, and
• Define the procedures for the protection of commercially sensitive information.

Participants
The entities participating in the BM are categorized into BSEs and Balance Responsible Entities (BREs) (as
mentioned in Greek Balancing Code). The BSEs shall be represented by BSPs, while the BREs shall be

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represented by the contracted BRPs. The BSEs shall be entitled to provide balancing energy and/or reserve
capacity and shall include the following categories:
1. Generating Unit: Conventional Dispatchable Generating Unit with an installed capacity above 5 MW,
which offers balancing services to the ADMIE. This category shall also include Dispatchable CHP Units
above 35 MW. A Generating Unit shall be represented by one producer.
2. Dispatchable RES Units Portfolio: RES Units portfolio, that includes one or more RES Units with
market participation obligation connected to a particular bidding zone and which, based on their
technical capacity, offer Balancing Services to ADMIE. A Dispatchable RES Units Portfolio shall be
represented by one RES producer or a RES Aggregator.
3. Dispatchable Load Portfolio: Load portfolio, that includes one or more loads connected to a particular
bidding zone and which, based on their technical capacity, offer Balancing Services to ADMIE. A
Dispatchable Load Portfolio shall be represented by a Demand Response Aggregator. Dispatchable
Load Portfolio that includes only one load can be represented by one consumer.
Entities with Balance Responsibility shall be the entities that assume responsibility for the imbalances they
cause and include the BSEs as well as the following:
1. Non-Dispatchable RES Units Portfolio: RES units’ portfolio, that includes one or more RES units with
market participation obligation connected to a particular bidding zone and which do not offer
Balancing Services to ADMIE. Every Non-Dispatchable RES Units Portfolio shall be represented by one
RES producer or a RES Aggregator.
2. Non-Dispatchable Load Portfolio: Load portfolio, that includes one or more loads connected to a
particular bidding zone and which do not offer Balancing Services to ADMIE. Every Non-Dispatchable
Load Portfolio shall be represented by one supplier or one consumer.
3. RES Units Portfolio without Market Participation Obligation: RES Units Portfolio without market
participation obligation connected to a specific bidding zone. RES Units Portfolios without Market
Participation Obligation shall be represented by the operator of RES units’ portfolios has balance
responsibility without Market Participation Obligation.
4. Import Portfolios and Export Portfolios.
5. Regarding the Balance Service Contract or Balance Responsible Party Contract, respectively, the
participants can be natural or legal persons, in one or more of the following capacities: a) Producer,
holder of a Production License or a relevant Exemption, b) Supplier, holder of a Supply License, c)
Marketer (as mentioned in Greek Balancing Code) , holder of Marketing License, d) RES Producer,
holder of an RES Production License or a relevant Exemption, for RES units with Market Participation
Obligation, e) RES Aggregator, holder of RES Aggregator License, for RES units with Market
Participation Obligation, f) Demand Response Aggregator, holder of Demand Response Aggregator
license, g) Consumer, h) the Operator of the RES Units Portfolio without Market Participation
Obligation.
The total of participants shall be entitled to register in the Balancing Service Provider Registry or Balance
Responsible Parties Registry kept by ADMIE. The interested parties shall apply for registration and shall be
obliged to comply with the terms and conditions as described in the Terms and Conditions of Balancing
Service Providers or Terms and Conditions of Balance Responsible Parties, which are approved by decision of
NRA, upon the recommendation of ADMIE, by means of Article 18(4) of Law 4425/2016. Upon their
registration in the Balancing Service Provider Registry or Balance Responsible Parties Registry, the above
natural or legal persons (BSPs or BRPs) shall conclude a Balancing Service Agreement with ADMIE, the content
of which shall be identical. The Balancing Service Contract shall be deemed to have been concluded between
the parties upon the registration in the Balancing Service Provider Registry or Balance Responsible Parties
Registry and shall be not subject to any other formality.

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1. For the scope of execution of the ISP and the BM, ADMIE shall keep a separate Registry for all Entities.
It is noted that all technical operating characteristics of entities in the following registries that involve
timings (e.g. time off load before going into longer standby conditions, time to synchronize, soak
time, time from technical minimum generation to de-synchronization, etc.), should be converted to
half-hours from hours to facilitate the half-hourly time resolution of the ISP. The interested party
that wishes to register in the Balancing Service Providers Registry and/or the Balance Responsible
Parties Registry shall submit the following to ADMIE:
2. Registration application.
3. Solemn declaration, declaring that:
i. it expressly and unconditionally accepts the Regulation and the Technical Decisions
ii. it is not subject to bankruptcy declaration proceedings or any other proceedings pursuant to the
bankruptcy law or other legislation affecting its solvency and the rights of its creditors,
iii. it is not subject to bankruptcy, compulsory administration proceedings or any other similar legal
proceedings affecting the rights of its creditors,
4. For the consumers, additional solemn declaration that they accept the right of ADMIE to discontinue
the supply of electricity to them if the consumer is unable to meet the financial obligations arising
from its participation in the BM,
5. Documents proving the legal representation of the applicant by the person signing the application
and the above declarations,
6. Signed contract with the Clearing House in accordance with the applicable law, if a corresponding
body operates for the BM,
7. Guarantees in accordance with Article 111 in case no Clearing House operates, for any reason, for
the BM.
Together with the application, the applicant pays the application fee, determined by decision of NRA, upon
the recommendation of ADMIE. ADMIE shall register the applicant participant in the Balancing Service
Providers Registry or the Balance Responsible Parties Registry within fifteen (15) business days from the day
of submission of the corresponding complete application. Upon registration, ADMIE shall issue a relevant
certificate. The certificate shall be notified to the NRA, the Distribution Network Operator, the Clearing House
and the Power Exchange. Upon registration in the Balancing Service Providers Registry or the Balance
Responsible Parties Registry, ADMIE shall create and maintain a record that includes the entities for which
the BSP or the BRP is responsible, respectively.

Procurement of Balancing Capacity and Balancing Energy

The Balancing Services Procurement function is about the provision of balancing services from eligible BSPs,
and the procurement and dispatch of these services by ADMIE within the scope of Balance Management.
Firstly, ADMIE needs to ensure that it will always be able to activate a sufficient amount of energy to balance
the deviations between supply and demand in real time. This defines the concept of “balancing energy”,
which is dispatched by means of real-time upward or downward adjustment of balancing resources in order
to resolve the system imbalance. In general, balancing energy can be provided by a wide range of
technologies including small-scale generation, energy storage, demand side response, renewable and
intermittent resources. In the BM, the BSPs will typically offer for activation their capacity which was secured
in advance from contracted reserve capacity or any residual capacities that are still available after the closure
of all the other wholesale markets. In general, each offer consists of a volume in MW and a price in €/MWh.
More complex product formats may involve additional product attributes to allow for activation through the
central balancing algorithm, such as a minimum offered quantity, a minimum duration of the delivery period
of the requested power, or linked blocks of balancing energy offers.

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In any case, balancing energy offers are submitted by the BSPs in both directions, upwards and downwards.
Therefore, for each dispatch period, at least two bid ladders can be formed; one for upward and one for
downward activation. ADMIE will have to look at the system imbalance and activate the required amount of
offers (in the direction needed) to remove that system imbalance. The balancing energy offers are activated
according to economic criteria (the less expensive offers activated first), however also depending on system
conditions (e.g. congestion), and on possible limitations incurred due to the BSPs’ operating constraints (e.g.
ramping constraints) or due to the abovementioned product attributes (e.g., minimum delivery period). If
there is a power shortage in the system, ADMIE will activate upward offers so that more power is generated
in the system (from generating entities) and/or less power is withdrawn from the system (from demand
entities) to resolve the shortage. In case of a power surplus in the system, ADMIE will activate downward
offers so that less power is generated in the system (from generating entities) and/or more power is
consumed in the system (from demand entities) to resolve the surplus.
The BM is cleared for each real-time dispatch period (ISP), which leads to balancing energy prices (utilization
payment) that are paid to successful providers (in €/MWh/Dispatch Period). As per the adopted
compensation methodology in the ENTSO-E NC, the selected BSPs shall be compensated by the market price
(price of the marginal balancing energy offer). Marginal pricing has the obvious advantage of reflecting costs
at the margin and gives better incentives to bid at marginal costs. Also, the marginal pricing regime provides
more encouragement for resources to invest in appropriate generation capacity and gives robust price signals
and incentives for the development of demand response. Only out of-order balancing energy offers (e.g.
offers activated due to congestion or BSPs’ technical/operating constraints) shall be compensated based on
their offer price (pay-as-bid principle).
Notably, if downward balancing energy is activated to resolve a system surplus, ADMIE shall receive, rather
than pay, a revenue. That is, the generating (or demand) entities will pay ADMIE for the profits they gain
because they have to generate less (or consume more) compared to their wholesale market schedules, thus
avoiding variable generation costs (or consuming energy for which they have not previously paid). In any
case, the balancing energy prices shall form the proper incentive for BSPs to offer their resources in the BM.
Finally, we should mention that the BM by nature is a real-time market, since the respective quantities shall
be activated as a response to the deviations occurring in real-time operation, in order to restore the system
balance. Under certain national BM regimes, however, as is the case in Central Dispatch systems, ADMIE may
act “proactively” and schedule an amount of balancing energy in advance of real time, namely during the
day-ahead or intraday scheduling process (referred to as the ISP), in order to update the positioning of the
various resources and optimally arrange the latest load and renewable injections forecasts. Such process (ISP)
constitutes the main design pillar of the Greek Balancing and Ancillary Services Market, which shall also
consider the Dispatchable RES Portfolios and the Dispatchable Load Portfolios (additionally to conventional
generating units) in the provision of balancing services.
Furthermore, as ADMIE is faced with the risk that it will not have enough balancing energy offers from BSPs
to cope with real-time deviations (occurring, for example, due to forecast errors or unit outages), ADMIE shall
hedge this uncertainty by securing in advance a sufficient amount of reserves available in its responsibility
area. An option which gives ADMIE the possibility to activate a certain amount of balancing energy within a
certain timeframe is referred to as “reserve capacity”. It is typically defined as the available generation or
demand capacity which can be activated either automatically or manually to balance the system in real time.
Balancing capacity, as defined in the EBGL, refers to the contracted part of the reserve capacity. Thus,
balancing energy in real time can be provided either by the balancing resources which were secured in
advance as balancing capacity, or by other balancing resources that can offer balancing energy based on their
availability in real time.
According to the EBGL, the different types of reserve capacity that shall be secured by ADMIE as balancing
capacity, namely, that shall be procured in the ancillary services market and maintained for real-time
activation, are recorded in the Figure 6. These types of reserve capacity essentially reflect the successive

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“layers” of control that are activated to ensure system security after a disturbance of the balance between
generation and demand.

Types of Reserve Capacity Control layers

Frequency Containment Reserve (FCR) Frequency Containment Process

Frequency Restoration Reserve with

Automatic Frequency Restoration Process
automatic activation (aFRR)

Frequency Restoration Reserve with

Manual Frequency Restoration Process
manual activation (mFRR)

Replacement Reserve (RR) Reserve Replacement Process

Figure 6: Different types of reserve capacity procured by ADMIE

Strict sequential rules are applied for the deployment and exhaustion times of the successive layers of
control, and the “replenishment” (or releasing) of their respective reserves, once the next layer takes over.
This is because those reserves with the fastest response time are usually more valuable and therefore should
be replaced by successively “cheaper” resources.
In this frame, the BSPs shall offer their free capacity to ADMIE, by submitting offers for the above types of
reserve capacity, according to their technical capability to provide each type of reserve capacity. As stated
by the ENTSO-E NC, the offers for each type of reserve capacity shall be submitted in both directions, upwards
and downwards. Each offer consists of a volume in MW and a price in €/MW. The demand in the Ancillary
Services Market is the “reserve requirement” of the system (determined by ADMIE for each type of reserve
capacity), which represents the minimum amount of reserves that needs to be available at all times to ensure
system security. Thus, ADMIE buys the required amount of reserve capacity in the Ancillary Services Market
by selecting the cheapest offers submitted by the BSPs. The clearing of the Ancillary Services Market results
in reserve capacity prices (availability payment), which are paid to successful providers (in €/MW/Dispatch
Period). The selected BSPs shall be compensated by pay-as-bid, according to the respective practice of many
European countries. Finally, it should be noted that the Ancillary Services Market by nature is rather not a
real time market, since the respective quantities shall be secured in advance of real time.

Cross-border balancing
In the event of a difference between the market schedule concerning imports/exports of a participant and
the corresponding Long-Term Physical Transmission Rights Declaration for the import/export of electricity
through an interconnection for which there is an obligation for physical delivery, ADMIE shall charge the
corresponding participant for each Imbalances Settlement Period, with an amount equal to the absolute
value of the above deviation multiplied by the unitary charge for Cross-border Trade Physical Rights
Imbalance UNCIR for imports and UNCER for exports. In the event of a difference between the market
schedule concerning imports/exports of a participant and the corresponding implemented schedule for the
import/export of electricity through an interconnection, ADMIE shall charge the corresponding participant
for each Imbalances Settlement Period, with an amount equal to the absolute value of the above deviation
multiplied by the unitary charge for Cross-border Trade Imbalance for imports and for exports. The numerical
values of the unitary charges for Cross-border Trade Imbalances, shall be determined by decision of NRA,
upon recommendation by ADMIE. This decision shall be published at least two months prior to the
implementation of the new values of the above parameters.
Certainly, cross-border balancing activities shall start in the Greek BM in a second implementation phase.
The mFRR process shall change, and shall consist of two distinct steps: a) the ranking of mFRR balancing
energy bids from the BSPs in order to create a merit order list in each balancing direction (upwards,

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downwards) for mFRR, and b) the clearing of the mFRR process and possibly the aFRR process at the pan-
European level, including cross-border transfer of balancing energy. Such scheme shall foster cross-border
competition and liquidity and avoid undue market fragmentation (in the European control areas).

Balancing market settlement

The balancing energy, the imbalances, and the balancing capacity are cleared every 15 minutes. The above
period is defined as Imbalances Settlement Period. ADMIE shall keep the following BM accounts: a) Balancing
Energy Account, b) Energy Account provided for purposes other than balancing, c) Imbalances Account, d)
Balancing Capacity Account, e) Premium Account, f) Non-compliance Charges Account, g) BM Fees Accounts.
Settlement of the BM means the transparent calculation of the quantities of energy and capacity and the
calculation of the monetary value of the charges and credits of the participants. BM Settlement includes the
calculations for each Dispatch Day presented in Table 10.
Table 10: BM Settlement calculations for each Dispatch Day

Balancing Market Settlement calculations for each Dispatch Day

1. Balancing energy calculation for mFRR for each BSE and for each Imbalances Settlement Period
on the Dispatch Day.
2. Balancing energy calculation for aFRR for each BSE, for each Imbalances Settlement Period on
the Dispatch Day.
3. Calculation of energy supplied for purposes other than balancing, for each BSE, for each
Imbalances Settlement Period on the Dispatch Day.
4. Imbalances calculation, for each BRE, for each Imbalances Settlement Period on the Dispatch Day.

5. Imbalances adjustment calculation, for each BRE, for each Imbalances Settlement Period on the
Dispatch Day.
6. Calculation of charges and credits of the BSP for Balancing Energy for each of the BSEs it
represents and for each Imbalances Settlement Period on the Dispatch Day.

7. Calculation of charges and credits of the BSP for energy supplied for purposes other than
balancing for each of the BSEs it represents and for each Imbalances Settlement Period on the
Dispatch Day.
8. Calculation of charges and credits of the BRP for imbalances for each of the BREs it represents
and for each Imbalances Settlement Period on the Dispatch Day.

9. Calculation of the cost of the system losses, for each Imbalances Settlement Period on the
Dispatch Day.
10. Calculation of any imposed Non-Compliance Charges.
11. Calculations of charges and credits related to Premium Accounts.
12. Calculation of BM fees for each participant.
13. Calculation of amount that ensures the financial neutrality of the BM.

For the performance of the BM settlement, ADMIE uses the following information: 1) the market schedule
of every BRE, as it is configured in the DAM and the IDM, 2) the balancing energy offers for mFRR (quantity
and price) per mFRR Time Unit, awarded in the balancing energy market, 3) the balancing energy offers for
aFRR (quantity and price) per mFRR Time Unit, awarded in the balancing energy market, 4) the activated
energy offers for purposes other than balancing, 5) the dispatch instructions, 6) the SCADA measurements
for the BSEs that supply aFRR balancing energy, 7) the balancing energy offers of the BSEs not awarded on
the balancing energy market, 8) the DAM clearing prices per Physical Delivery Period, 9) the indications
highlighting the energy supplied for purposes other than balancing, 10) the Certified Energy Measurement
Data for the BSEs and the interconnections, 11) the quantity of electricity absorbed by Low and Medium
Voltage consumers, as notified to ADMIE by Distribution Network Operators, 12) the energy profiles per

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consumer category for non-telemetered entities by the Distribution Network Operator, 13) the total
injections of the RES production units connected to the Low Voltage Network, as notified to ADMIE by the
Distribution Network Operators, 14) the declared characteristics of the BSEs, 15) any submitted declarations
of total or partial availability of the BSEs, 16) the ISP results for upward and downward FCR, aFRR and mFRR
balancing capacity for the BSEs, in MW, 17) the balancing capacity buds for the BSEs, and 18) the actual
availability of the BSEs for the supply of any type of balancing capacity.
In settlements framework ADMIE is responsible to:
• develop, maintain and operate the BM settlement system,
• calculate the debits and credits of each BSEs/BREs concerning the settlement of balancing energy
and reserve capacity the imbalance settlement and other market settlements,
• issue the Initial Balancing Settlement Statement and the Reconciliation Balancing Settlement
Statements to the respective participants, and
• send to the Clearing House the final debits and credits per participant.
The BM settlement process is implemented on a monthly basis. The clearing months correspond to calendar
months. The initial and the corrective clearings of the BM shall be performed as follows: i) ADMIE performs
the necessary calculations. The results of the calculations (clearing results) and the relevant clearing data are
communicated to the participants concerned via electronic means. ii) The participants have the right to
submit a reasoned objection to ADMIE within two (2) business days from the notification of the clearing
results to the participants. iii) ADMIE decides on any objections and proceeds to any necessary corrections
within four (4) business days from the notification of the clearing results to the participants. iv) ADMIE sends
the clearing results to the Clearing House within five (5) business days from the notification of the clearing
results to the participants.
The clearing data, notified to the BSPs and/or to the BRPs for the initial clearing performance and for any
corrective clearing performance, include the details presented in Table 11.
Table 11: Clearing data notified to the BSPs and/or to the BRPs

BSPs BRPs
The name and the ID of the BSP The name and the ID of the BRP

The Market Schedule of each BSE The Market Schedule of each BRE represented by the
participant per Imbalances Settlement Period

The dispatch instruction of each BSE per mFRR Timed The total measured quantities of energy for all BREs
Unit represented by the BRP per Imbalances Settlement
Period
The measured quantity of energy of the BSE per The Imbalance quantity of all BREs represented by the
Imbalances Settlement Period BRP per Imbalances Settlement Period
The activated aFRR and mFRR balancing energy of the The charge or credit to the BRP for each Imbalances
BSE per Imbalances Settlement Period Settlement Period

The balancing capacity supplied by the BSE per

Imbalances Settlement Period and per balancing
capacity type
The imbalances and imbalances adjustment quantities
for the BSE per Imbalances Settlement Period

The charge or credit for balancing energy and balancing

capacity to the BSP for the BSE per Imbalances

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Settlement Period

The charge or credit to the BSP for imbalances for the

BSE per Imbalances Settlement Period
Any non-compliance charge imposed on the BSP per
sanction type and Imbalances Settlement Period

The balancing fee corresponding to the BSP

When performing any corrective clearing, ADMIE: a) shall make any necessary adjustment or revision of the
measurement data, b) shall make any necessary adjustment or revision of the data resulting from any dispute
settlement, c) shall use updated or revised data submitted by the Power Exchange or the Distribution
Network Operators, d) shall use revised balancing services data.

Montenegro
State of legislation
Montenegrin electric power system represents one control area, whose balance is managed by CGES, and
which constitutes the SMM control block with control areas of Serbia and North Macedonia where
coordination of work of the control block in the interconnection is performed by EMS. In Montenegro, BM is
regulated and based on an adequate legal framework for a functional national BM, which is in line with EU
legislation and operated by CGES. The related legal framework consists of:
• Law on Cross Border Exchange of Electricity and Natural Gas;
• Methodology for setting prices and conditions for provision of ancillary services and balancing
services for electricity transmission system;
• Balancing market rules;
• Rules for electricity transmission system operation (transmission grid code).
According to the transmission grid code, CGES shall regulate exchange power with neighbouring electric
power systems by keeping unintended deviations within the range -20MW to +20 MW. In cooperation with
TSOs in the interconnection, CGES shall ensure that the frequency of electric power system under normal
conditions is 50,00 Hz and allowed deviation ±0,2 Hz. For maintaining unintended deviations between
defined limitations, CGES is supplied by following balancing services: primary control - FCR, secondary and
tertiary reserve – aFRR, mFRR and tertiary reserve for more than 15 min - RR.
Law on Cross Border Exchange of Electricity and Natural Gas was adopted in 2016. by the Montenegrin
Parliament, and it is in line with the TPEGM in the field of electricity with the aim to set rules for cross-border
exchanges in electricity.
Methodology for setting prices and conditions for provision of ancillary services and balancing services for
electricity transmission system is developed by NRA in order to prescribe the method for setting prices,
deadlines and conditions for providing ancillary and system services and balancing services for electricity
transmission system. Balancing market rules, also developed by NRA are defining conditions and obligations
for all participants in procedure of balancing (TSO, MO, BSPs). And the Rules for electricity transmission
system operation (transmission grid code) shall govern electricity transmission system operation in
accordance with the Energy Law and Law on Cross-border Exchange of Electricity and Gas.
Ancillary and system services include the following:
1. primary regulation;

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2. secondary regulation;
3. tertiary regulation;
4. providing electricity for compensation programs;
5. regulation of voltage - reactive power;
6. delivery of reactive energy and
7. ability to restore the electric power system to operation from non-voltage status (Black start), i.e.
the possibility of island operation of a system part.
Service providers (electricity producers) are obliged to provide the following services without compensation:
1. primary regulation,
2. voltage regulation, and
3. restoring the system to operation after disturbance (Black start),
pursuant to the Rules of Operation.
Service providers shall provide the following services with compensation:
1. secondary regulation,
2. tertiary regulation,
3. providing electricity for compensation programs,
4. delivery of reactive energy, and
5. balancing services,
pursuant to the Rules of Operation, Market Rules and Methodology.

Procurement of Balancing Capacity and Balancing Energy

Internal BM is regulated, and two main providers are EPCG and one industrial consumer - KAP. EPCG is the
main provider of balancing services (FCR, aFRR, mFRR). Primary regulation is mandatory for each generation
unit and the range of activation is ±2MW in time less than 1 second. Power plants connected to the
transmission system, are obliged to provide secondary regulation service in accordance with the Law, Rules
of Operation and Methodology. Secondary regulation is an automatic, centralized function whose purpose is
to provide maintaining of frequency, by increasing generation (upward regulation) or decreasing generation
(downward regulation) in generation facilities of BSPs, and program of power exchange with neighbouring
regulation areas on the set point. Secondary regulation service is paid based on:
1. Capacity availability (reservation) for upward regulation - Price of secondary regulation reserve
(capacity availability) is the same for all generators and it is defined in the Methodology;
2. Secondary regulation capacity use - Price of use of secondary regulation is set on annual basis by the
contract which the BSP concludes with CGES and cannot be higher than the average price of
electricity imports or than the average export price if such price is higher than import price, realized
in the year preceding the year of contract conclusion.
The activation range of secondary regulation is ±20 MW.
Electricity producers in Montenegro are obliged to provide a tertiary regulation service in accordance with
the Law, Rules of Operation and the Methodology. The positive tertiary goes up to 50 MW, and the negative
- up to -60 MW.
Tertiary regulation service is paid based on:

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1. Capacity availability (reservation) for upward regulation - where BSPs shall be obliged to provide
availability, and CGES shall be obliged to pay the total contractual capacity based on the price
regulated in Methodology; In case of unavailability or inadequate delivery of the service, at the
certain hour, the BSP is obliged to compensate CGES in the amount of one sixtieth part of the monthly
fee for provision of the tertiary reserve for each hour of unavailable reserve; and
2. Tertiary regulation capacity use - For BSPs in Montenegro, to the level of tertiary regulation reserve,
which must be provided from sources in Montenegro, the price for using tertiary regulation shall be
set by the contract which the BSP concludes with CGES and cannot exceed double average price of
imported electricity, or double average price of export, if the price is higher than the price of import
realized in the year preceding the year of conclusion of the contract.
Besides the producer, replacement reserve (up to 50 MW) can also be provided by the biggest consumer of
energy, KAP (aluminium factory), which is connected to the transmission network. Price for the availability
of reserves shall not be higher than the double average price of imported electricity, or double average price
of export, if the price is higher than the price of import realized in the year preceding the year of conclusion
of the contract.
Costs for availability (capacity reservation) for both (EPCG and KAP) shall be compensated trough the tariff
for the use of the transmission system, paid by all users of the transmission system, but costs for activation
(secondary and tertiary) shall be paid by users of the transmission system, represented by their BRPs, who
have caused imbalance, in accordance with the balancing mechanism which is closely regulated by the
Market Rules.

Cross-border balancing
TSO can conclude the contract on provision of tertiary regulation services, for the part of the reserve that
cannot be provided in Montenegro, with other TSOs or energy entities in other control areas.
Contract on allocation of right of access to cross-border capacities shall regulate in particular the following
matters:
1. manner of granting access to the transmission network,
2. treatment in the event of unforeseen disturbances in the power system,
3. method of calculation and invoicing,
4. payment terms and conditions, and
5. dispute settlement.
Currently, CGES have signed bilateral agreements with EMS and NOSBiH (pursuant to the Law on Cross Border
Exchange of Electricity and Natural Gas) for cross-border exchange (mFRR), and CGES is expecting the same
with the Albanian TSO - OST by the end of this year. Applied model is TSO-TSO model.
A solution for imbalance netting process within SMM block is currently in dry run and it is also expected to
be in operation by the end of this year.

BSP and BRP settlement

The pricing is regulated as it is presented in subchapter 5.5.2 and 5.5.3. Accounting and invoicing for services
are carried out on a monthly basis.

North Macedonia
State of legislation
In June 2018 a new Energy Law entered into force which completely transposed the TPEGM. This law sets
the requirement for new Balancing Rules that still need to be approved by the NRA. Until then, a real BM is

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not established in the country and the incumbent energy producer provides the balancing services. This is
also an impediment for the development of the BM in the country.

Procurement of Balancing Capacity

The objective of the process of balancing is to maintain a balance between generation and consumption
(demand) within the system. Any frequency deviation away from the nominal frequency results from an
imbalance between generation and demand. MEPSO may use the three types of balancing capacity: FCR,
aFRR and mFRR. Additionally, MEPSO may also implement an independent process for activation of RR, which
represents the active power reserve available to restore or support the required level of FRR to be prepared
for additional system imbalances, including generation reserves.
MEPSO implements and operates an electronic platform capable of receiving bids for the balancing capacity
by matching the bids and the needs that are previously defined.
5.6.2.1 Capacity for FCR
The product of FCR is a symmetric, which means that upward and downward balancing capacity are procured
together. As defined in MEPSO Grid Code all hydro and thermal generation units must be equipped with
turbine control system with automatic speed regulation and capable of supplying primary control power. All
hydro generation units, with installed capacity higher than 10 MW and all thermal generation units with
installed capacity higher than 30 MW must take part in the system primary control.
5.6.2.2 Capacity for aFRR
The products for the aFRR balancing capacity are different for each direction and are different for each pre-
defined product. The product for the aFRR balancing capacity is a monthly product with band values (the
same value in all hours of the day). MEPSO performs yearly auction for each month separately, at least thirty
(30) calendar days before the first delivery day of the monthly product. MEPSO shall implement a market
based method of matching bids using merit order list. The merit order list is a list of balancing capacity bids
sorted in order of their bid prices, used for the selection of the balancing capacity. The bids with the lowest
price are selected in the matching process in the amount defined by MEPSO.
5.6.2.3 Capacity for mFRR
The product for the mFRR balancing capacity is a monthly product with band values (the same value in all
hours of the day). MEPSO performs monthly auctions for every month at least fifteen (15) calendar days
before the first delivery day of the monthly product. Minimum balancing capacity in positive or negative
direction is 5 MW.

Procurement of Balancing Energy

5.6.3.1 Energy for FCR
The FCR capacity is activated automatically on generation units, in accordance with the technical instructions
laid down by MEPSO Grid Code. The BSP shall provide information to MEPSO for each of its FCR providing
units, which information indicates if FCR is on or off.
5.6.3.2 Energy for aFRR
The products for the aFRR balancing energy are different for each direction and are different for each
predefined product. The product for the aFRR balancing energy is an hourly product. BSP may enter any
number of the bids with any volume of aFRR balancing capacity. MEPSO is allowed to set the maximum value
of the bid prices that are acceptable for the activation. The bids in the merit order list are activated cascading,
the bids with the lowest price first until the needed volume balancing energy is activated. In case of more
than one bid with the same price, the bid with the lowest time stamp is activated first.

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5.6.3.3 Energy for mFRR

The hourly products for the mFRR balancing energy are different for each direction and are different for each
predefined product. BSP may enter any number of the bids, with any volume of mFRR balancing capacity.
MEPSO is allowed to set the maximum value of the bid prices that are acceptable for the activation by the
TSO. MEPSO will define general definitions of the products of mFRR balancing energy in the Rules for
procurement of mFRR. The bids in the merit order list are activated cascading, the bids with the lowest price
first, until the needed volume balancing energy is activated. In case of more than one bid with the same price,
the bid with the lowest time stamp is activated first.

Cross-border balancing
The cross-border balancing principle is not defined in the new Balancing Rules. However, in the MEPSO Grid
Code it is stated that the TSO has the right to provide a reserve for secondary regulation outside the
boundaries of its control area in the amount not greater than 34% of the total value of the reserve for
secondary regulation within its area and that can partially obtain reserve for tertiary regulation from
neighbouring power systems through agreements for the provision of tertiary reserve. Currently no contract
on exchange of Cross-border balancing energy is in place.

BSP Settlement
MEPSO calculates the basic imbalance prices on the basis of the prices of activated balancing energy within
the imbalance price area of MEPSO.
The imbalance price can be positive, zero or negative, as defined in the Table 12:
Table 12: The imbalance prices in the control area of MEPSO
Positive imbalance price Negative imbalance price Imbalance price
Positive imbalance Payment from TSO to BRP Payment from BRP to TSO HUPX – 50%
Negative imbalance Payment from BRP to TSO Payment from TSO to BRP HUPX + 50%

The costs are settled separately by MEPSO through the imbalance settlement for each accounting period.
For the imbalance prices the single price mechanism is used. For positive and negative imbalances, the same
price is used.

BRP Settlement (Balancing Mechanism)

MO implements imbalance settlement according to the Register of Balance Responsible Parties and Balancing
Groups and using the received data from the TSO, by performing the next steps:
1. calculation of total Balance Groups’ allocated volume,
2. calculation of total Balance Groups’ adjusted volumes,
3. calculation of Balance Groups’ imbalances.
For each Balance Group, MO calculates imbalances that equal to the difference between the final position of
that Balance Group and the total allocated volume attributed to that Balance Group, including any imbalance
adjustment applied to that Balance Group:
Wimbalances=W(final position)-W(allocated volume)
Where:
Wimbalances are the quantities of imbalances of a Balance Group;
Wfinal position is the final position of a Balance Group;
Wallocated volume is the total allocated volume of a Balance Scheme Member.

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A negative imbalance means that the allocated volume is higher than the final position of a Balance Group
(higher consumption or lower production than planned). A positive imbalance means that the allocated
volume is lower than the final position (lower consumption or higher production than planned).

Romania
State of legislation
In Romania, the BM is managed by the Romanian TSO - CNTEE Transelectrica SA (TRANS) and is operated in
accordance with EU and Romanian legislation.
The main normative acts on which the functioning of the BM is based on are the following:
• Commercial Code of the Wholesale Energy Market;
• Regulation for Programming of Dispatchable Units;
• Regulation for calculation and settlement of imbalances of the Balancing Responsible Parties;
• Regulation of functioning and settlement of the BM;
• ANRE (Romanian NRA) Order regarding the approval of the Rules on the monthly settlement of the
payment obligations in the BM and the imbalances of the parties responsible for balancing;
• Order for the approval of the Settlement Transparency Rules within Balancing Responsible Parties.
In addition to the normative acts listed above, certain procedures specific to this market are also used in the
functioning of the Romanian BM. These procedures are approved by the ANRE, the Romanian NRA.

Procurement of Balancing Capacity

The Terms and Conditions for Balancing Service Providers norm is published for public consultation on the
ANRE website. After the public consultation and ANRE approval the norm will come into force.
This norm represents the proposal of TRANS of the Clauses and Conditions for BSPs in accordance with the
provisions of the Article 18 of EBGL.
According to the norm specified above, the procedure for procurement of balancing capacity is the following:
1. TRANS acquires balancing capacity through market mechanisms from qualified BSPs who have signed
with the TSO the balancing capability agreement under transparent, unhindered access and
economic efficiency;
2. Prior to purchasing the required balancing capacity, TSO:
a) established one or more procurement periods;
b) determine, on a periodic basis or annually, the quantities of capacity required for balancing,
separately for increase and decrease, for each settlement period of the corresponding purchase
period, on the basis of the sizing rules as referred to in Articles 127, 157 and 160 of SOGL;
3. Purchase periods for balancing capacity may be continuous annual, quarterly, monthly, and other
time periods. A purchase period may be limited to days and/or settlement intervals during that
period, such as working days, non-working days and legal holidays, day or night hours, peak or
overtime hours or other types of intervals;
4. TSO may set different acquisition periods for different types of balancing capacities;
5. The required balancing capacity is acquired by the TSO through market mechanisms, competitive
bidding over the entire acquisition period, separately for upward and downward for each balancing
capacity category and for each settlement period in that period;

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6. The TSO shall publish the quantities of balancing capacity required to be procured during the relevant
procurement period and shall notify details of the auction no later than:
a) one (1) month before the start of the acquisition period in the case of auctions for acquisition
periods of one (1) month and more than one (1) month;
b) ten (10) business days before the start of the procurement period for auctions for one (1) month
acquisition periods;
c) one (1) week before the start of the procurement period for auctions for procurement periods
of less than one (1) month;
d) three (3) days before the start of the procurement period for auctions for procurement periods
of less than one (1) week;
7. Participation in auctions organized by TSO is only allowed for BSPs qualified to provide that service;
8. Each BSP shall transmit its balancing capacity offerings to the TSO; Balancing capacity bids will be
aggregated for all reserve/reserve supply groups for the provision of that service that are allocated
to the same party;
9. Each BSP that participates in the balancing acquisition process transmits and has the right to update
its balancing capacity bids before the closing time for the procurement process;
10. TSO establishes and publishes the content and format of the bids and the manner in which bids are
submitted; Following the approval by ANRE, the TSO informs the BSPs in an appropriate manner;
11. TSO validates bids of BSPs immediately after receipt and rejects bids that do not meet the frame
format requirements. If a bid is rejected, TSO informs the respective BSP and notifies the reasons for
the rejection;
12. Immediately after the closing time for the procurement process, TSO shall allocate balancing capacity
bidding to that auction to BSPs based on the marginal price as follows:
a) tenders are ranked according to price; Tenders with the same price are chronologically ordered
according to the time of receipt;
b) if the amount of capacity offered by BSPs is less than or equal to the balancing capacity to be
allocated through the auction, all bids will be fully accepted. The difference to the required
balancing capacity is acquired by TSO in other bid rounds;
c) if the amount of capacity bided by BSPs exceeds the balancing capacity to be allocated through
the tender, bids shall be accepted, respecting the order presented in point a), until the last tender
completing the required balancing capacity, which can be accepted totally or partially;
13. The price of the last accepted bidis the auction price paid by TSO to all BSPs with accepted bids;
14. BSPs may challenge the results of the auction only if there are strong indications of non-compliance
in the auction evaluation process. The contestation will be sent to the TSO within 24 hours of the
auction evaluation in the case of auctions over a procurement period of more than one month and
one hour after the auction evaluation for the other auctions;
15. The outcome of the appeal review will be communicated by the TSO to the BSP within:
a) forty-eight (48) hours in the case of auctions for a period of acquisition longer than one month;
b) three (3) hours for other auctions;
16. The outcome of each balancing allocation auction shall be recorded in the annexes to the balancing
capacity contracts concluded between the TSO and the BSPs;
17. Each BSP with a balancing capacity supply agreement shall provide to the TSO the balancing energy
bids corresponding to the volume, products and other requirements of the balancing capacity

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agreement; The price of these balancing energy bids from standard and specific products is not
predetermined in the balancing capacity supply agreement;
18. TSO is responsible for developing rules and procedures on:
a) offering balancing capacity by qualified BSPs;
b) accepting bids and transferring balancing capacity between qualified BSPs;
c) TSO deadlines and payments for accepted capacity offerings of qualified BSPs;
d) the consequences for BSPs in the event of non-compliance with balancing capabilities acquired
by TSO;
19. The rules and procedures referred to in point 18 must ensure:
a) a transparent and non-discriminatory acquisition of balancing capacity;
b) reduction of the cost of acquiring balancing capabilities to a reasonable minimum level.

Procurement of Balancing Energy

According to the norm specified above, the procedure for procurement of balancing energy is the following:
1. Each BSP, which bids for balancing capacity have been accepted, shall submit to the TSO the
balancing energy bids corresponding to the volume, products and other requirements provided in
the balancing capacity supply agreement. The price of these balancing energy bids from standard
and specific products is not predetermined in the balancing capacity supply agreement;
2. Any BSP shall be entitled to transmit to the TSO balancing energy bids from standard products or
from specific products for which the qualification process has passed;
3. Balancing energy bids from standard and specific products may be transmitted and/or updated at
any time between the closing of the DAM and the closing time of the balancing energy gate; The gate
closing time for balancing energy for standard products will be harmonized by all TSOs at EU level;
The closing time of the balancing energy gate for specific products will be similar to the closing time
of the balancing energy gate for standard products;
4. After the closing time of the balancing energy gate, BSPs will no longer be allowed to put or update
their balancing energy bids;
5. After the closing time of the balancing energy gate, BSPs shall, without delay, report to the TSO any
unavailable volumes of the balancing energy bids in accordance with Article 158 (4) (b) and Article
161 (4) (b) of SOGL;
6. TSO establishes and publishes the content and format of the balancing energy bids for standard and
specific products and the mode of transmission of bids/reporting of unavailable volumes including:
a) the conditions for the award of each balancing bid from a BSP to a balancing party;
b) the definition of a network location for each standard product and for each specific product
taking into account the conditions of aggregation of the network location of consumption, of the
energy storage facilities and of the electricity generating installations;
7. TSO treats all balancing energy bids received indiscriminately; After the closing time of the balancing
energy gate, balancing energy bids from standard products are transmitted to European platforms
established under Articles 19, 20 and 21 of the EBGL, in order to optimize the activation of balancing
energy bids in common merit order lists; Balancing energy bids from specific products are not
transmitted to European platforms and can be activated according to local merit order;
8. Any partial or total activation of a balancing energy bid from the common/local merit order lists is a
transaction between that BSP and TSO;

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9. Transactions shall establish the obligation of that BSP to provide balancing energy to other TSOs in
accordance with the tender specifications and dispatch provisions issued by the TSO. Each
transaction will be specific to a specific settlement interval.
10. TSO is the contracting party for each BSP in all transactions concluded on the BM;
11. Establishment of payment obligations on the BM shall be based on transactions concluded on the
BM;
12. TSO sets and publishes the rules for determining the volume of balancing energy to be settled with
the BSP, including:
a) the maximum period for completing the settlement of balancing energy with a BSP for any given
imbalance settlement range;
b) the consequences in the event of non-compliance with the terms and conditions applicable to
BSPs;
c) rules on the suspension and restoration of market activities pursuant to Article 36 of Regulation
(EU) 2017/2196 and rules on settlement in case of market suspension pursuant to Article 39 of
Regulation (EU) 2017/2196.

Cross-border balancing
According to Romanian BM Legislation, TRANS may, in cooperation with the TSOs of other countries, develop
procedures to allow the mutual use of energy purchased on the BM or through similar mechanisms in other
countries. These procedures shall comply with the provisions of the EBGL. This is implemented in cooperation
related with Cross-border exchange of balancing energy with ESO and EMS.

BSP Settlement and BRP Settlement (Balancing Mechanism)

The procedures for BSP Settlement and BRP Settlement are conducted according to the Romanian Regulation
for calculating and settling imbalances of the Balancing Responsible Parties as stated in following
subchapters.
5.7.5.1 General Principles
The concept of balancing responsibility and the establishment of the BRPs provides:
• performing electricity transactions on the electricity market in an orderly manner;
• setting before the interval of dispatch of the electricity balance in the power systems;
• the separation of financial and physical transactions;
• a fair settlement of the electricity transactions on the market.
License holders who become active on the national electricity market must assume financial responsibility
for the impact of their actions to the safe, stable and economic operation of the national power system;
The concept of balancing responsibility optimizes the allocation of financial responsibility for the imbalances
between net production and planned and consumed consumption, also taking into account notified
electricity exchanges, and reducing the application of punitive measures to license holders by granting
permission to aggregate imbalances.
5.7.5.2 Obligation to take responsibility for balancing, rights and limitations
Under the Romanian “Regulation for calculation and settlement of imbalances of the BSPs” the responsibility
for balancing rests with license holders for:
• Ensuring the balance between the measured output, the notified contract purchases and the notified
electricity imports, on the one hand, and the measured consumption, the notified contract sales and

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the notified electricity exports, on the other hand, for one or more points of connection under their
responsibility and/or for one or more bilateral transactions;
• Taking financial responsibility towards the TSO for all physical imbalances arising due to the lack of
equality between the net production achieved, the notified contract purchase, the notified import,
on the one hand, and the consumption, the notified contract sales and the notified export of
electricity, on the other hand, for one or more connection points under their responsibility and/or
one or more bilateral transactions.
Each license holder must assume responsibility for balancing with TSO for its entire production, acquisition,
import, consumption, sale and/or export of electricity.
License holders assume financial responsibility for balancing with TSO by registering as BRPs.
In order to facilitate the operation of the wholesale energy market, license holders registered as BRPs are
allowed to transfer the responsibility for balancing a BRP which has been registered with the TSO by a
licensee who is not a grid operator.
5.7.5.3 Rules for calculating BRP imbalances
The objective of the rules for calculating imbalances is to define how to determine the imbalances between
the realized values of production and those notified under procurement contracts, including imports, on the
one hand, and the realized values of consumption and those notified under the sales contracts, including
exports, on the other hand, also taking into account physical exchanges between networks, in the case of
BRPs which have assumed the responsibility for balancing for the technological consumption of the networks.
Notified values are considered as those of the contractual commitments that market participants have
assumed before the dispatching interval, including transactions on DAM and IDM, or as a result of closing the
final transactions on the BM, and the realized values of production, consumption and exchange which
occurred physically during the ISP.
In order to allow for mutual compensation, limited to forecast errors/unexpected events, reasonable
deviations between realized and notified values, without prejudice to the requirement that license
holders/producers of electricity exempted by law from the licensing obligation to predict the best
consumption and production and to ensure the consumption/production coverage by contract, the
imbalances are determined for their aggregated values at the BRP level.
Determining imbalances also requires consideration of unplanned exchanges with interconnected countries.
The imbalance of a BRP is determined on the basis of the contracted net position and the notified net position
of the BRP.

Serbia
State of legislation
Energy Law, Grid Code and Market Code govern BM in Serbia. Current version of Energy Law is adopted in
2014 and is in line with TPEGM in the field of electricity. The Energy Law stipulates that TSO organizes and
administers the BM, where it buys and sells electricity on BM for the purpose of system balancing and
providing secure power system operation and that energy prices for system balancing and dispatching are
market based. Detailed provisions for balancing capacity and balancing energy are given in Market code and
Grid code.
Market based balancing mechanism is in place since 2013. Serbian TSO acts as single buyer for balancing
energy and activates balancing energy based on market bids given by BSPs on hourly level. EMS activates
balancing energy from the incumbent producer - Electric Power Company of Serbia (EPS) as well as from

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neighbouring TSOs. There is no balancing capacity market for aFRR and RR, but EMS procures balancing
capacity on regulated prices determined by NRA.

Procurement of Balancing Capacity

Offering of balancing capacity is mandatory in Serbia. As Serbia has only one BSP (EPS), which BSP is obliged
to give to TSO an amount of reserve that is required. Each generation unit whose nominal active power is
above or equal to 50 MW, except for those that are able to combine generation of thermal and electric
power, must have primary control capability. Each hydro generation unit with Pnom ≥ 50 МW must have
secondary control capability and the minimum 0.3 Pnom control band must be provided. Each thermal
generation unit with Pnom ≥ 150 МW, except for those that are able to combine generation of heat and
electricity, must have secondary control capability. For tertiary control it is stated that all hydro generators
and pump storage units must have synchronization time to transmission grid less than 15 minutes. There are
also requirements on minimum level of active power on which operation of generator is stable. The NRA
regulates prices for aFRR and mFRR while FCR is paid as service. Yearly based contracts for acquiring reserves
are signed. Capacity is provided from generators (FCR, aFRR, mFRR) and pump storage units (mFRR).
Balancing reserve includes:
• all available capacities of BSEs, which are left after accepting daily schedules;
• available capacities stipulated in an ancillary service contract between the TSO and supplier, and
wholesale supplier;
• available capacities stipulated in a contract regulating the purchase and sale of cross-border tertiary
regulation energy and imbalance netting between TSOs.
Balancing entity means:
a) production unit – a separate generator within a generation site;
b) group of production units – within one or more generation sites;
c) controllable load – means reversible hydro power plant or pumped storage plant when it is in
pumping regime, or a customer’s facility having the capability of controlling its consumption upon
instruction of the TSO;

Procurement of Balancing Energy and BSP Settlement

Each BM participant (BSP with signed contract for participating on BM) that has BSEs in the market area of
Serbia submits aggregated explicit bid for engagement of upward/downward tertiary regulation for all BSEs
under its competence. In Serbia, currently, there is only one dominant market participant (EPS). BM
participants, who do not have the dominant participant status, should submit an explicit bid for each BSE
separately, while the dominant participant submits an explicit bid that includes all balancing entities under
its competence. The aggregated explicit bid contains a set of energy-price pairs from which the price of
engaged upward/downward regulation can be directly determined. The dominant participant submits, along
with the explicit bid, a priority merit order list for engagement of its BSE in the tertiary regulation and the
price for engagement of respective BSEs downward and upward when they are engaged in order to ensure
the secure operation of the transmission system (redispatching). Prices are capped from 0.1 EUR/MWh to
500 EUR/MWh. Since TSO receives prices for tertiary regulation only, prices for secondary regulation are
determined from prices of engaged tertiary regulation and set of rules described in Market code. Settlement
between BSP and TSO is done on pay as bid principle and issued orders for secondary and tertiary regulation.
Payment for balancing energy is done according to the following scheme:
Positive balancing energy Payment from TSO to BSP
Negative balancing energy Payment from BSP to TSO

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Cross-border balancing
Additionally, TSO can also get balancing energy from cross-border balancing cooperation. Cross border
exchange of tertiary energy (mFRR) is implemented on two borders (Montenegro and BiH) based on bilateral
agreements. Additionally, this is extended to borders with Hungary, Romania, Croatia and Bulgaria, where
an exchange of RR is implemented. Applied model is TSO-TSO model. Besides that, EMS is planning to join
pan-European balancing cooperation and now is a member of IGCC and has an observer status in MARI.

BRP Settlement (Balancing Mechanism)

Most important product from balancing mechanism is imbalance settlement price. For each accounting
interval it is determined as weighted price of activated explicit bids from the tertiary regulation, contractually
engaged balancing reserve, in case when the TSO purchases balancing energy from a TSOs from another
market areas, suppliers or wholesale suppliers, engaged secondary regulation and engaged secondary
regulation for the purposes of imbalance netting process. The imbalance settlement price cannot be negative
and cannot be higher than 1.5 times of the maximum price for the engaged balancing energy in regulation
upward in one accounting interval.
Payment for imbalance is done according to the following scheme:
Positive imbalance Payment from TSO to BRP
Negative imbalance Payment from BRP to TSO

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6 Cross-border balancing principles

Both, common usage of balancing reserve and energy can only be realized, if there are enough CZC available
between two LFC areas. Exchange or sharing of reserves is highly dependent on the availability of CZC long
term. There are three different ways of TSOs reserving CZC for exchange or sharing of balancing reserves.
One of the following processes can be set up by two or more wiling TSOs , [1], [56]:
- Co-optimised allocation process: TSOs can participate on the ordinary Transmission Capacity Auction
to ensure balancing CZC for exchange or sharing. By implementing co-optimised allocation process,
there are two types of market participants, ordinary and TSOs. The two types have different
motivations, market arbitrage (forecasted electricity price difference margin for long term auctions)
and biding based on available balancing capacity bids, respectively. This process ensures equal
treatment of all bids for the exchange of energy. Co-optimised allocation process should be
performed on a DA basis. Actual market and balancing reserve bids are used in this process.
- Market-based allocation process: Market-based allocation can be used, where TSOs intend to
allocate CZC in order to secure an exchange of balancing reserves. A maximum of 10 % of the
available CZC for the exchange of energy from the previous relevant calendar year between the two
LFC areas can be allocated with a market-based allocation process. Market-based allocation is based
on comparison of actual market value CZC for exchange of balancing reserves with the forecasted
market value of CZC for the exchange of energy. This process could be performed when the
contracting is done not more than one week in advance of the provision of balancing reserves.
Forecasted market bids and actual balancing reserve bids are used in this process.
- Allocation process based on economic efficiency analysis: A maximum of 10 % of the available CZC
for the exchange of energy from the previous relevant calendar year between the two LFC areas can
be allocated with an economic efficiency analysis. Forecasted market value of CZC for balancing
reserves will be compared with the forecasted market value of CZC for exchange of energy. Economic
efficiency-based analysis could be done more than one week ahead of the provision of balancing
reserves, provided that volumes allocated are limited and assessed every year. Market bids and
balancing reserve bids are used in this analysis.
Imbalance netting and exchange of FRR and RR balancing energy is highly dependent on the availability of
short term CZC. One of the following processes can be set up by two or more willing TSOs, [1], [56]:
- CZC reserved earlier, used for exchange/sharing of balancing energy
- Free capacity after the allocation at commercial markets
- Update of CZC calculation (intraday or close to real-time) and enabling CZC at a short term level

Common usage of balancing reserve

Historically, TSOs procured reserves for their LFC area from BSPs located in their LFC area. TSOs were
responsible for the security of their power system and used upward/downward reserves to deal with
disturbances and imbalances caused by deviations from scheduled generation or scheduled consumption.
When cross-border cooperation on markets (forward, day-ahead and intraday) was made possible, some
countries in Europe started with cross-border reserve procurement. Monitoring areas represent a part or the
whole LFC area. Usually, only one TSO is responsible for monitoring of the whole LFC area. LFC area
represents a part of LFC block, or LFC block as a whole. Each LFC block can be a part of only one synchronous
area. LFC block represents a zone in the network for which the balancing reserves are being procured. The
TSO responsible for the LFC area should maintain the deviations of power exchanges with neighbouring areas
and frequency in predefined limits, [57], [58].
In CROSSBOW countries that are a part of SEE, there are five LFC blocks. TSOs responsible for the LFC blocks,
areas and monitoring are presented in Table 13.

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LFC block LFC area Monitoring Area TSO Country

(Responsible)
ESO ESO ESO ESO Bulgaria
IPTO IPTO IPTO IPTO Greece
HOPS HOPS HOPS Croatia
SHB (ELES) NOS BiH NOS BiH NOS BiH Bosnia and Herzegovina
ELES ELES ELES Slovenia
CGES CGES CGES Montenegro
SMM (EMS) EMS EMS EMS Serbia
MEPSO MEPSO MEPSO North Macedonia
TRANS TRANS TRANS TRANS Romania
Table 13: List of LFC blocks, areas and monitoring areas
As it can be seen in the Table 13, there are two LFC blocks that contain more than one LFC Area in SEE from
CROSSBOW countries. Slovenian TSO (ELES) is Control Block Operator and responsible for one LFC block
(SHB), containing Slovenia, Croatia and BiH. Serbian TSO (EMS) is Control Block Operator and responsible for
the second LFC block (SMM), containing Serbia, Montenegro and North Macedonia.
Connecting multiples LFC Areas in one LFC block can increase reliability of the power system. Adjacent LFC
areas often establish a control block to enable easier control and reduction of the amount of reserve needed
compared to each LFC area by itself, [59].
Mostly FRR and RR, but sometimes also FCR are used with common usage of balancing reserve among TSOs.
There are three possibilities of common usage [60]:
- Common Dimensioning: Only relevant if two or more TSOs (LFC areas) are present in the same LFC
block.
- Exchange of Reserve: One TSO procures a part of its balancing reserves in a different LFC area. The
overall amount of balancing reserves does not change, a part of it is just procured elsewhere.
- Sharing of Reserve: The overall amount of balancing reserves in the system reduces due to a certain
part of reserves being shared between two TSOs. Low probability of scenario where both TSOs would
need to activate all of their reserves at the same time events enables the sharing of reserves between
TSOs.
Generally, the reduction in the amount of reserves that TSOs need to procure is reflected in the reduction of
costs and presents an economic gain. The reduction in the amount can be acquired through sharing of
reserves of common dimensioning. Additionally, reserves that are not used (because of the reduction) can
be used on various markets. This causes additional reduction of operating costs, and represents an indirect
benefit of common usage of balancing reserves, [60].

Common dimensioning
Common dimensioning of balancing reserve within LFC blocks can be considered as the first step of
integration and is especially attractive since there are two LFC blocks present in CROSSBOW countries in SEE.
In principle, it is similar to sharing of balancing reserve but can have higher cost savings and can be achieved
only in LFC blocks with multiple TSOs.
In the LFC block, the largest dimensioned balancing reserve is sufficient for the whole LFC block. Comparing
with the individual dimensioning, where each LFC area is needs to have balancing reserve procured in order

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to cover the outage of its largest generation unit, in case of common dimensioning, only the largest LFC area
balancing reserve is needed to cover the whole area. TSOs from the LFC block should have an operational
agreement where they would set a ratio of the balancing reserve procured by each of them. In case of LFC
blocks SHB and SMM, where the LFC area borders are also bidding area borders, the CZC also needs to be
taken into account as the TSOs would need it in proportion to the ratio of splitting among the countries. Due
to the lower capacity requirement, once common dimensioning is set, the overall balancing capacity costs
are lower and less generation resources are reserved for balancing. With less generation resources reserved
for balancing, the competition on other commercial markets could increase, which would represent an
indirect benefit of common dimensioning, [56], [60].

Exchange of balancing reserve

There are technical and economic reasons behind the exchange of balancing reserves for TSOs. TSO can
procure a part of its balancing reserve from another area, if the offer from the other area is more cost
effective compared to procuring the balancing reserve from its own area. The overall amount of balancing
reserves for both TSOs together should not change when applying exchange of balancing reserve, but only
its geographical distribution. There are also some technical limitations that limit TSOs when procuring the
reserves in specific time (e.g. Full activation time, …) and that can also be one of the reasons for procuring
balancing reserve elsewhere, [56], [60].
The option to procure balancing reserves elsewhere does not entitle TSO to procure all of its reserves abroad.
A minimum of 50 % of the FRR and RR needs to be physically located within their own LFC block in order to
remain independent and in case a connection between two LFC blocks fails. Similar to common dimensioning,
CZC needs to be taken into account in the amount of the reserve procured. TSOs would only procure
balancing reserve in other LFC block if it reduces overall balancing costs, [56], [60].
In the EBGL [1], TSOs willing to exchange balancing capacity shall develop a proposal with harmonised rules
for exchange of balancing reserve. Exchange of balancing reserves should always be performed based on a
TSO-TSO model, where CZC and operational limits need to be taken into account. TSOs exchanging balancing
reserves should ensure availability of CZC and that operational security requirements are well defined.
In the SOGL [2], TSOs can participate and exchange balancing reserves for FCR, FRR and RR, but need to
establish an exchange agreement that needs to include the roles and responsibilities of reserve connecting
and receiving TSOs.
At least 30% of the total FCR requirements need to be physically provided inside the LFC block. In case there
are more TSOs (LFC areas) in the same LFC block, the percentage of FCR reserve ratio among LFC areas has
to be decided in the LFC block operational agreement. Internal limits, such as congestions in case of FCR
activations and even distribution of reserve capacity in case of network splitting need to be considered, [2].
At least 50% of the total FRR requirements need to be physically located inside the LFC block, before any
reductions due to sharing of FRR. In case there are more TSOs (LFC areas) in the same LFC block, they need
to specify the internal limits for the exchange of FRR between LFC areas in the LFC operational agreement.
Internal limits, such as congestions in case of activations of FRR and even distribution of FRR through LFC
block in case of network splitting, [2].
At least 30% of the total RR requirements need to be physically provided inside the LFC block. In case there
are more TSOs (LFC areas) in the same LFC block, the percentage of FCR reserve ratio among LFC areas has
to be decided in the LFC block operational agreement. Internal limits, such as congestions in case of FCR
activations and even distribution of reserve capacity in case of network splitting need to be considered, [2].

Sharing of reserve
A reduction in the amount of balancing reserve procured by two TSOs can be replaced by sharing of reserves.
The total amount of balancing reserve needed in the region decreases when two TSOs share reserves

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between themselves. The goal is to decrease the overall costs in LFC blocks while the operational security
requirements remain. The amount of reserve required in the region reduces.
Sharing of reserves does not impact operational security requirements because of a very low probability that
two LFC blocks would be required to activate the full amount of procured reserves at the very same time.
In the SOGL [2], TSOs can participate and exchange balancing reserves for FCR, FRR and RR, but need to
establish a sharing agreement that needs to include the roles and responsibilities of all TSOs involved in
sharing of reserve.
The LFC block can reduce the total amount of balancing reserve of FRR and RR by sharing, when the difference
in the size of positive dimensioning incident (equal to tripping of a largest single power generating unit in the
LFC block) and reserve capacity of FRR and RR necessary to cover 99% of LFC block imbalances during the
representative historical record of LFC block is positive. The reduction of the positive reserve capacity should
not be higher than 30% of the positive dimensioning incident, [2].
Due to the reduction of balancing reserve requirements, once the sharing of reserves takes place, the overall
cost of balancing decreases. Similar to the common dimensioning inside a LFC block, with less generation
resources reserved for balancing, the competition on other commercial markets could increase, which would
represent the indirect benefit of common dimensioning, [56], [60].

Common usage of balancing energy

Imbalance netting
Imbalance netting represents a process agreed between TSOs that serves for avoiding the counteracting
activation of FRR in different participating LFC areas, simultaneously. The goal of the imbalance netting
process is to reduce the overall amount of activated balancing energy reserves, [2].
According to SOGL [2], TSOs can participate in the imbalance netting process for FRR and RR, but need to
establish an imbalance netting agreement that needs to include the roles and responsibilities of the TSOs.
The imbalance netting process should be implemented in such a way that it does not affect the stability of
frequency containment process of the synchronous area and the stability of frequency restoration process
and reserve replacement process of each participating LFC area.
The imbalance netting process is highly dependent on the availability of CZC between the involved TSOs. The
reduction of activated balancing energy has direct effect on reducing the overall cost of balancing in the
region.

Exchange of balancing energy with Common Merit Order List

The target model for transnational European BM integration is a TSO-TSO model for balancing energy
platform with a CMOL. The TSO-TSO model indicates that BSPs from different LFC areas cannot provide direct
balancing services to a TSO in a different LFC area. Their own TSO has to be used as a contracting party. The
BSPs forward bids to their TSOs and TSOs are responsible for all activations of balancing services from BSPs.
If the TSO requests activation, the best and the most economically efficient bids is activated with the help of
Activation Optimisation Function. Price and available CZC are taken into account.
The CMOL concept ensures that the cheapest balancing energy bids are used first and provides an
economically efficient process. Nevertheless, this concept also requires the highest level of harmonization of
balancing processes and a highly sophisticated IT infrastructure for the activation of aFRR, which has
activations every couple of seconds, [21], [60].
All European platforms planned for the exchange of balancing energy for RR, mFRR, aFRR and imbalance
netting process should be applied on a multilateral TSO-TSO model with CMOL to exchange all balancing
energy bids from all standard products, [1].

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7 Conclusion
The report first describes the recent changes in the way electricity balancing market is structured in EU and
the way a common European balancing market will be structured in the future. To create a common
vocabulary and definition of balancing mechanisms between countries and partners in the SEE region, where
legislation does not always match EU’s, a literature review and a review of relevant European Regulation was
done. The review included the types of balancing services and their sequence in balancing markets as well as
standard products on the market and their parameters.
The above-mentioned literature review of relevant regulation on balancing market structure and principles,
combined with the work done in CROSSBOW’s Deliverable 1.1: Legislation and Regulatory Frameworks
served as a guideline for specifically and individually made questionnaire for each participating TSO. The
questionnaire addressed the following six topics:
- Current state of legislation
- Procurement of Balancing Capacity
- Procurement of Balancing Energy
- Cross-border balancing
- BSP Settlement
- BRP Settlement (Balancing Mechanism)
The first topic, Current state of legislation, was included in the Questionnaire knowing the fact that the
survey includes non-EU countries whose legislation may not be compliant with EU’s. Furthermore, in some
countries full competitiveness in the BM is not achieved and some forms of price regulation still exist.
Questionnaire responses sorted by topics can be found in the appendix. An overview for the first topic can
be observed in the subchapter 9.1.
Under the second topic, Procurement of Balancing Capacity, the types of balancing reserve providers are
examined by the Questionnaire. In some markets the provision of balancing capacity is reserved only for
generators, but additionally balancing capacity can be provided by load and storage units if regulatory
barriers are removed. Lastly, the possibility for transfer of the obligation for providing balancing reserve is
considered. It is a precondition for existence of secondary markets for balancing capacity. The following
standard balancing capacity products are covered: FCR, aFRR, mFRR and RR.
Similar questions were included in the third topic, Procurement of Balancing Energy. An overview for the
second topic can be observed in the subchapter 9.2 and an overview of the third topic responses by country
can be observed in subchapter 9.3.
Under the fourth topic, Cross-border balancing is included, that can contribute to increased competition on
the BMs especially for the market conditions in the SEE region. The practicing of cross-border balancing and
especially the creation of regional BM requires harmonised legal framework as the first condition. An
overview for the fourth topic can be observed in subchapter 9.4.
The fifth topic, BSP Settlement, covered various aspects of balancing services markets with the focus on the
quality of provision of balancing services by the BSPs including the measurement of provided services and
the settlement between BSPs and TSOs. An overview for the fifth topic can be observed in subchapter 9.5.
In the last topic, BRP Settlement, it was identified from whom are the costs for each balancing
capacity/energy product (FCR, aFRR, mFRR, RR) recovered. Institution responsible for implementing
balancing mechanism, clearing and settlement procedure were identified. An overview for the sixth topic can
be observed in subchapter 9.6.
The analysis of questionnaire responses concluded in an overview of the status of electricity balancing market
in CROSSBOW SEE countries, on a national and regional level.

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Additionally, principles for cross-border balancing cooperation was addressed and common usage of
balancing reserve and energy were presented. Due to the fact that five countries with TSOs participating in
the CROSSBOW project are connected in two LFC blocks, the most straightforward way of a common usage
of balancing reserve is common dimensioning. Exchange of balancing energy with a Common Merit Order
List, that all European platforms plan for the exchange of balancing energy for standard products (RR and
FRR), applied on a multilateral TSO-TSO model plan was mentioned.
The aim of the report was to provide a solid background for development of the CROSSBOW AM products
(System market platform for the aFRR and mFRR, Balancing energy market platform, Measurement of aFRR
energies). The findings of this investigation will improve the design of the AM products and facilitate its
implementation and use in the region of SEE and other European countries, starting with this report serving
as an input to the second deliverable of Work Package 10: Novel balancing and wholesale electricity market
design, where a minimum set of harmonized rules for participation on the common market and technical
specifications will be made.

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8 References and Acronyms

References

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[26] Eurelectric, ‘ENTSO-E Network Code on Electricity Balancing: A EURELECTRIC comments

paper’, vol. 6, no. 714, pp. 1–59, 2013.

[27] CROSSBOW project consurtium, ‘CROSSBOW Annex I’, 2017.

[28] Energy Community Secretariat, ‘Treaty establishing Energy Community’. [Online]. Available:
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[29] European Commission, ‘Commission Regulation (EU) 2016/1719 of 26 September 2016

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establishing a guideline on forward capacity allocation’, Off. J. Eur. Union, no. July, pp. 24–72,
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[30] European Commission, ‘Commission Regulation (EU) 2015/1222 of 24 July 2015 establishing
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[31] Energy Community Secretariat, ‘Bringing system operation and electricity balancing
guidelines in the Energy Community’, Vienaa, 2018.

[32] Energy Community Secretariat, ‘Annual Implementation Report’, 2018.

[33] Energy Community Secretariat, ‘WB6 Electricity Monitoring Report’, no. November, 2018.

[34] T. Schittekatte, V. Reif, and L. Meeus, The EU electricity network codes, no. February. 2019.

[35] ENTSO-E, ‘Supporting Document for the Network Code on Electricity Balancing’, no. August,
pp. 1–108, 2014.

[36] NOSBiH, ‘Law Еstablishing an Independent System Operator for the Transmission System of
Bosnia and Herzegovina’, Off. Gatezze BiH, no. July, 2002.

[37] NOSBiH, ‘Market rules’, no. April, pp. 1–30, 2015.

[38] NOSBiH, ‘Ancillary Services Procedures’, pp. 1–35, 2017.

[39] NOSBiH, ‘Rules on daily Balancing Energy Market Operations’, 2017.

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[46] CGES, ‘Methodology for setting prices and conditions for provision of ancillary and system
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[47] ‘Energy Law’, Off. Gaz. Repub. Maced., vol. No. 96/18.

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[50] MEPSO, ‘Grid Code – Rules for Electrical Transmission System Operation’, 2014.

[51] 115/18 Official Gazette of the Republic of Macedonia No. 38/14, 42/14, 57/14, 194/14, 80/17,
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[52] Official Gazette of RS no. 145/2014, ‘Energy Law’. [Online]. Available:

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[54] EMS, ‘Market Code, Regulation No. 917/5, Class No. 14 of November 2016’. [Online].
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[55] ENTSO-E WGAS, ‘Survey on Ancillary Services Procurement, Balancing Market Design’, no.
May, 2018.

[56] Energy Community, ‘Final Report of SEE Regional Balancing Integration Study’, Electr. Coord.
Cent., no. December, 2014.

[57] ENTSO-E, ‘All TSOs ’ proposal for the determination of LFC blocks for the Synchronous Area
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[58] F. M. Baldursson, E. Lazarczyk, M. Ovaere, and S. Proost, ‘Cross-Border Exchange and Sharing
of Generation Reserve Capacity’, Energy J., vol. 39, no. 4, 2018.

[59] M. Đurđević, Z. Rudić, N. Obradović, G. Jakupović, and N. Čukalevski, ‘Implementation and

Testing of AGC SMM Control Block in NDC in Serbian TSMO within the Project of
Modernisation and Upgrading of Existing SCADA/EMS System’, no. November 2017, 2017.

[60] Black Sea Transmission Planning Project (BSTP) and Black Sea Regulatory Initiative (BSRI),
‘Analysis of the Potential to Provide Cross-Border Balancing Services and Energy in the Black
Sea Region’, 2018.

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Acronyms
Acronyms List
ACER Agency for Cooperation of Energy Regulators
ADMIE TSO of Greece
aFRR Automated Frequency Restoration Reserve
AM CROSSBOW Wholesale and Ancillary Services Market Toolset
BiH Bosnia and Herzegovina
BM Balancing Market
BRE Balance Responsible Entity
BRP Balancing Responsible Party
BSE Balancing Service Entity
BSP Balancing Service Provider
Regulation (EU) 2015/1222 establishing a Guideline on Capacity Allocation and
CACM
Congestion Management
CGES TSO of Montenegro
CMOL Common Merit Order List
COTEE Electricity Market Operator of Montenegro
CP Contracting Party to the Energy Community Treaty
CZC Cross-Zonal Capacity
DAM Day Ahead Market
EBGL Regulation (EU) 2017/2195 establishing a Guideline on Electricity Balancing
EC European Commission
ELES TSO of Slovenia
EMS TSO of Serbia
EnC Energy Community
EnCS Energy Community Secretariat
EnCT Energy Community Treaty
ENTSO-E European Network of Transmission System Operators for Electricity
EPCG Electric Power Company of Montenegro
EPS Electric Power Company of Serbia
ERC Energy Regulatory Commission of the Republic of North Macedonia
ESO TSO of Bulgaria
EU European Union
FCA Regulation (EU) 2016/1719 establishing a Guideline on Forward Capacity Allocation

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FCR Frequency Containment Reserve

IDM Intraday market
IGCC International Grid Control Cooperation
ISP Integrated Scheduling Process
HOPS TSO of Croatia
HROTE Croatian Energy Market Operator
LFC Load Frequency Control
MARI Manually Activated Reserves Initiative
MEPIX Montenegrin Electricity Exchange Company
MEPSO TSO of North Macedonia
mFRR Manual Frequency Restoration Reserve
MO Market Operator
MoU Memorandum of Understanding
MS European Union Member State
NOSBIH TSO of Bosnia and Herzegovina
NRA National Regulatory Authority
Platform for the International Coordination of Automated Frequency Restoration and
PICASSO
Stable System Operation
Questionn
CROSSBOW questionnaire on balancing markets in SEE countries
aire
RR Replacement Reserve
SCADA Supervisory Control And Data Acquisition System
SEE South East Europe
SEE CAO South East Europe Coordinated Auction Office
SERC State Energy Regulatory Commission of Bosnia and Herzegovina
SHB Slovenian-Croatian-Bosnia and Herzegovina control block
Regulation (EU) 2017/1485 establishing a Guideline on Electricity Transmission
SOGL
System Operation
TERRE Trans European Replacement Reserves Exchange
TPEGM Third Package for Electricity and Gas Markets
TRANS Transelectrica, the TSO of Romania
TSO Transmission System Operator
WB Western Balkans
WIP Withdrawal/Injection points of networks
WP Work Package

D10.1 National balancing and wholesale electricity markets structure and principles 75
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

9 Appendix 1: Questionnaire responses

Legislation
1. Please provide reference and details on the primary and secondary legislation for market-based and
non-discriminatory procurement of balancing services. Is it compliant with the EU legislation?
ADMIE - The Balancing Market is governed by the applicable law, including the principles and provisions of Laws 4001/2011
Greece29 and 4425/2016 and Regulation (EU) 2017/2195, as applicable each time.
Montenegro has an adequate legal framework for a functional national BM, which is in line with EU legislation and
operated by CGES – the Montenegrin TSO.
• Law on Cross Border Exchange of Electricity and Natural Gas
CGES -
• Methodology for setting prices and conditions for provision of ancillary services and balancing services
Montenegro
for electricity transmission system
• Balancing market rules (NRA)
• Transmission system code
Balancing and wholesale markets in Serbia are defined by three legal documents:
• Energy Law (Official Gazette of RS no. 145/2014) adopted in 2014 which is harmonized with TPEGM;
• Grid Code, December 2018 (last version harmonized with EnC/EU connection codes, SOGL and Network
EMS - Serbia Code on Emergency and Restoration); and
• Market Code (Reg.No. 917/5, Class No. 14)
TSO organises and administers the balancing electricity market, while an energy entity performing the activity of
organised electricity market management (MO) organises and administers the organised electricity market
ESO - Energy Act: http://www.eso.bg/?did=186#Energy%20Act (Articles 21,1), 8a and 105
Bulgaria Market rules: http://www.eso.bg/fileObj.php?oid=1720
In Croatia, procurement of balancing services currently is regulated by following primary and secondary national
legislation acts:
• Energy Act
• Electricity Market Act
HOPS - • Electricity Market Rules
Croatia • Rules on Balancing the Electric Power System
• Amendments to the Rules on Balancing the Electric Power System
Croatian TSO (HOPS), local market operator (HROTE) and local NRA (HERA) are in the process of development and
approval of Terms and conditions related to balancing according to Art 18. Commission regulation (EU) 2017/2195
of 23 November 2017 establishing a guideline on electricity balancing (EBGL)
The new Energy Law in Macedonia sets the requirement for adoption of new balancing rules by September of 2018
MEPSO –
that will enable the TSO to acquire balancing services in a market-based manner. Until then, a real BM is not
North
established in the country and the incumbent energy producer provides the balancing services. This is also an
Macedonia
impediment for the development of the BM in the country.
NOSBiH – The secondary legislation provides market-based and non-discriminatory procurement of balancing services
Bosnia and compliant with Article 15 of Directive 2009/72/EC
Herzegovina
TRANS – Balancing Market in Romania is compliant with EU legislation
Romania

2. Please describe the current state of development of the balancing market. What are the major
characteristics of the balancing market in terms of competition (competitive or regulated)?
In Greece, the independent market operator Hellenic Energy Exchange is responsible for the day ahead schedule.
ADMIE, the TSO, is responsible for clearing the imbalance of the day-ahead schedule through a special imbalance
mechanism in which deviations from the day-ahead schedule are charged or compensated for, based on the
ADMIE -
imbalance price. The system marginal price is computed by Hellenic Energy Exchange and the imbalance price is
Greece
derived ex-post from ADMIE. The imbalance price is based on actual, metered values and corresponds to the
uniform market clearing price. Although the described system is market-based, in 2018 a BM operated by ADMIE
shall replace it, aiming to reach the European Target Model. The preparatory activities are underway.

29
Currently, in Greece there is no balancing market operating separately and thus it is considered regulated.
More details about the forthcoming Greek balancing market will be given in the required draft analysis.

D10.1 National balancing and wholesale electricity markets structure and principles 76
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

A balancing market, operated by ADMIE, is expected to function in mid-2018. The new market will remunerate the
real scarcity of electricity and can incentivize all parties to remain in balance, hence reducing the need for the TSO
to contract reserves and rendering intraday markets more liquid. The actual implementation requires a
comprehensive set of regulations and other preparatory work, which is under process currently.
In Montenegrin Control Area balancing market is regulated and there are two providers of balancing services. One
is EPCG – bulk producer that provides Frequency Containment Reserve (up and down) automatic and manual
CGES -
Frequency Restoration Reserve (up and down) and the other one is UNIPROM – Aluminium industry (Largest
Montenegro
consumer in Montenegro) that provides manual Frequency Restoration Reserve (up). Cross border TSO/TSO
balancing mechanisms with EMS and NOS BiH (up and down).
Market based balancing mechanism is in place from 2013. Serbian TSO acts as single buyer for balancing energy
and activates balancing energy based on market bids given by Balancing Service Provider(s) on hourly level. EMS
EMS - Serbia activates balancing energy from EPS Generation as well as from neighbouring TSOs. There is no balancing capacity
market for aFRR and RR, but Serbian TSO procures balancing capacity on regulated prices determined by Serbian
NRA.
Competitive balancing market is in place, merit order approach.
Price caps still exist (for downward and upward balancing) set by the NRA.
ESO -
It is expected that the price caps will be removed.
Bulgaria
BM and settlement process in Bulgaria have been implemented since June 2014. The Bulgarian BM is operated by
ESO – the Bulgarian TSO. It is a BM for energy and its operation is based on the Market Rules adopted in 2017.
In Croatia, there is still partly regulated internal balancing market, only one provider of balancing services (both
balancing capacity and energy).
In accordance to Electricity Balancing Rules, in order to maintain the balance of the system, HOPS ensures the
electricity on the market principles by concluding the Balancing Service Agreement with the Market Participants,
which have concluded Electricity Market Participation Agreement with the Croatian Energy Market Operator i.e.
by purchasing the electricity between HOPS and Market Participant (only for balancing energy).
HOPS - There is also ongoing pilot project on Demand Side Response, DSR for mFRR. Various TSO/TSO balancing
Croatia mechanisms (Imbalance netting, XB tertiary within control block, emergency delivery).
From 1/10/2018 HOPS is a full member of ENTSO-E implementation projects for EU platforms for exchange of
balancing energy from mFRR and aFRR (MARI, PICASSO).
IGCC project is in successful operation from 1st of February 2019.
Occasionally high imbalance costs for market participants. Lack of data form DSO level needed for better supply
planning. Smart meter roll-out in the beginning phase.
Further development and implementation of electricity balancing market is currently in progress.
Memorandum of Understanding on regional electricity market development of the Western Balkans (MoUWB6) is
signed, thus Macedonia takes part in the initiative for cross border balancing cooperation under competitive
conditions. According to the MoUWB6 parties agreed to create the framework for implementation of programs
and projects arising from the MoUWB6 as defined, listed in Annex 2 of the MoU WB6.
MEPSO –
Until entering in force of the new Balancing Rules, a real balancing market does not exist as ELEM is the main
North
provider of balancing services. The new Balancing Rules are providing legal possibility for TSO to acquire balancing
Macedonia
services from all operators in the national and in perspective of a regional market under competitive conditions.
The balancing model according to the changes provides non-discriminatory and market-based exchange of
balancing cervices and establishment of national balancing market.
The possible obstacle is a lack of balancing service providers, limiting to one dominant service provider.
Balancing market is a part of the wholesale market and presents the central market for electricity procurement
and its trade. This market is managed by NOSBiH with purpose of maintaining continuous balance of supply and
NOSBiH – consumption in real time. Engagement of balancing reserves is organized by merit order lists. NOSBiH signed
Bosnia and contracts with neighbour TSOs (CGES and EMS) and also within coordination SHB block in providing cross-border
Herzegovina balancing reserve exchange. All contracts are conceived in way that involved TSO’s have to engage their own
reserve first (even if price is higher). Total opening of cross-border balancing market will lead to decrease prices of
balancing reserves.
Balancing Market is dedicated to offset deviations from the Net Positions of the Balancing Responsible Parties and
to fix congestions within the grid. It is organized and operated by the transmission and system operator, who is
TRANS -
purchasing the balancing services from Balancing Service Providers (mostly generators).
Romania
Balancing market is managed by Transelectrica, the Romanian TSO. It has the responsibility for the operation,
maintenance and development of the transportation network.

D10.1 National balancing and wholesale electricity markets structure and principles 77
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

Procurement of Balancing Capacity

1. Please provide information on the way of procurement of each type of balancing capacity for the
offer which is closest to real time. (mandatory provision, bilateral market, market (organized))
FCR aFRR mFRR RR
ADMIE Market only Market only Mandatory only N/A
CGES Mandatory Bilateral Bilateral Bilateral
EMS Mandatory only Mandatory only Mandatory only N/A
ESO Mandatory Mandatory Mandatory Auction procedure
HOPS Mandatory only Bilateral market Bilateral market N/A
MEPSO / Mandatory Mandatory N/A
NOSBiH Market only Market only Market only N/A
Mandatory only. Legislation under
Market and Regulated (under
TRANS change to make this also based on Market only Market only
the agreed limits within EU)
Contracts based on competition.

2. What pricing rule is applied for each balancing capacity product?

(marginal pricing, pay as bid, regulated price - please describe how the price is determined)
FCR aFRR mFRR RR Price
The system marginal price is computed by Hellenic Energy Ex-
change and the imbalance price is derived ex-post from AD-
ADMIE Marginal Marginal N/A N/A
MIE. The imbalance price is based on actual, metered values
and corresponds to the uniform market clearing price.
Free of
CGES Regulated Regulated Regulated Prices of capacity reservation are defined by the Methodology
charge
EMS N/A Regulated Regulated N/A Prices are regulated by Serbian NRA
the Bulgarian NRA – EWRC, defines the methodology for de-
termining balancing energy prices on the national BM. In
some cases, when imbalance prices were lower than the
prices on IBEX, market participants preferred to be in a short
position. Starting in February 2018, by decision of EWRC, the
BM is tied to the DAM. This has been done to prevent foul
ESO Regulated Regulated Regulated Pay as bid
play from market participants. The price cap for shortage is to
be 2.5 times the base load price from IBEX DAM and the price
for surplus is 0 EUR/MWh. The price caps do not apply for bal-
ancing energy purchased (or sold) from neighbouring energy
systems under bilateral agreements or on a regional balancing
market.
Prices are regulated by methodology developed by TSO and
HOPS N/A Regulated Regulated N/A approved by Croatian NRA (HERA): The methodology for
determining the price for ancillary services (HOPS 7/2016)
MEPSO N/A Pay as bid Pay as bid N/A /
Prices are regulated by NRA. Price of aFRR or secondary re-
serve is regulated in way that is defined max difference be-
NOSBiH N/A Pay as bid Pay as bid N/A
tween the price of aFRR UP and aFRR DOWN. Price of mFRR
UP is limited, price of mFRR DOWN is not limited.
TRANS N/A Marginal Pay as bid Pay as bid /

D10.1 National balancing and wholesale electricity markets structure and principles 78
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

3. What is the minimum bid size in the balancing capacity market?

(product resolution in MW)
FCR aFRR mFRR RR
ADMIE <= 1 MW <= 1 MW N/A N/A
CGES 1 MW 1 MW 1 MW 1 MW
EMS 1 MW 1 MW 1 MW N/A
ESO 10 MW 10 MW 10 MW 5 MW
HOPS No minimum bid 1 MW 1 MW N/A
MEPSO N/A N/A 5 MW N/A
NOSBiH No minimum bid 1 < x <= 5 MW 5 < x <= 10 MW N/A
N/A. Is percentage from
TRANS 10 MW (+/-5 symmetrical) 5 MW 5 MW
current generation

4. What is the maximum resolution for which the product can bid in the market (for instance 1 hour in
the case of a 24 auctions day ahead market for reserve provision)? (product resolution in time)
FCR aFRR mFRR RR
ADMIE Hour(s) Hour(s) N/A N/A
CGES Yearly reservation for balancing capacity with hourly resolution.
EMS Yearly reservation for balancing capacity with hourly resolution N/A
ESO Hour(s) Hour(s) Hour(s) Hour(s)
HOPS N/A Yearly reservation for balancing capacity with hourly resolution N/A
MEPSO N/A Month Month N/A
NOSBiH N/A Day Day N/A
TRANS N/A 1 Hour 1 Hour 1 Hour

5. Please provide the timeframe of procurement of balancing capacity (the time ahead from real time
when auction/agreement for a specific product takes place). (year(s), month(s), week(s), day(s))
FCR aFRR mFRR RR
ADMIE Day(s) Day(s) N/A N/A
CGES Year Year Year Year
EMS Year Year Year N/A
ESO Month Month Month Months from 2 to max. 5
HOPS N/A Year Year N/A
MEPSO N/A 30 days 15 days N/A
NOSBiH N/A Month Month N/A
TRANS N/A 1 Day 1 Day 1 Day

D10.1 National balancing and wholesale electricity markets structure and principles 79
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

6. Please indicate the number of providers of balancing reserve on the market. Please describe the
type of providers of products for balancing capacity for your TSO. (generators, load, storage)
FCR aFRR mFRR RR
ADMIE Generators only Generators only Generators only N/A
Generators + load – 2 pro-
CGES Generators 1 provider Generators 1 provider Generators 1 provider
viders
Generators + pumped hy-
EMS Generators only - 1 Generators only - 1 N/A
dro - 1
18providers (13 genera-
7 providers (6 generators 7 providers (6 generators
ESO 5 providers (generators) tors, 4 loads and 1 storage
and 1 storage PHS) and 1 storage PHS)
PHS)
Generators + Pumped hy-
HOPS Generators only - 1 Generators only - 1 N/A
dro, Load 4 participants
MEPSO Generators Generators Generators N/A
NOSBiH 5 – generators only 5 – generators only 5 – generators only N/A
Generators only – more
Generators only - all dis- than 9 participants, but Generators only – more Generators only – more
TRANS
patchable units (150) one participant can have than 20 participants. than 20 participants.
more generators

7. Please provide information if balancing capacity product is symmetrical (Upward regulation capac-
ity and downward regulation capacity has to be equal). (symmetrical, asymmetrical)
FCR aFRR mFRR RR
ADMIE Asymmetrical Asymmetrical Asymmetrical N/A
CGES Symmetrical Symmetrical Asymmetrical Asymmetrical
EMS Symmetrical Symmetrical Asymmetrical N/A
ESO Asymmetrical Asymmetrical Asymmetrical Asymmetrical
HOPS Symmetrical Symmetrical Asymmetrical N/A
MEPSO N/A Symmetrical Symmetrical N/A
NOSBiH N/A Symmetrical Asymmetrical N/A
TRANS Symmetrical Symmetrical Asymmetrical Asymmetrical

8. What type of monitoring is in place to ensure performance in the service delivery?

(real-time monitoring, ex-post check, hybrid)
FCR aFRR mFRR RR
ADMIE Hybrid Hybrid Hybrid N/A
CGES / Ex-post Hybrid Hybrid
EMS Hybrid Hybrid Hybrid N/A
ESO Hybrid Hybrid Hybrid Hybrid
HOPS Hybrid Hybrid Ex-post N/A
MEPSO N/A Hybrid Hybrid N/A
NOSBiH Real-time Ex-post Ex-post N/A
TRANS N/A Real-time Real-time Real-time

D10.1 National balancing and wholesale electricity markets structure and principles 80
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

9. Is transfer of obligation allowed for each type of balancing capacity product? (yes, no)
FCR aFRR mFRR RR
ADMIE No No No N/A
CGES No No No No
EMS No No No N/A
ESO No No No No
HOPS No No No N/A
MEPSO N/A No No N/A
NOSBiH No No No N/A
TRANS Yes Yes Yes Yes

10. Is there a secondary market for capacity products as trading procedures between the BSPs (where
at least one BSP has contract with the TSO) to ensure the prescribed reserve amount of the TSO?
(yes, no)
FCR aFRR mFRR RR
ADMIE No No No N/A
CGES No No No No
EMS No No No N/A
ESO No No No No
HOPS No No No N/A
MEPSO N/A No No N/A
NOSBiH No No No N/A
TRANS Not yet Not yet Not yet Not yet

Procurement of Balancing Energy

1. Please provide the way of procurement of balancing energy for the offer which is closest to real op-
eration time.
(mandatory provision, bilateral market, organized market - pre-contracted bids, free bids)
FCR aFRR mFRR RR
ADMIE N/A Hybrid – free bids Market - free bids N/A
CGES Mandatory Bilateral Bilateral Bilateral
EMS Mandatory only Mandatory only Mandatory only Free bids
ESO Pre-contracted bids Pre-contracted bids Pre-contracted bids Pre-contracted bids
bilateral market, organized
HOPS Mandatory only bilateral market N/A
market - pre-contracted bids
MEPSO Mandatory Mandatory + market
NOSBiH N/A Market - free bids Market - free bids N/A
Mandatory only and Market – pre-contracted Market – pre-contracted
TRANS Market – pre-contracted bids
not paid yet bids bids and regulated

D10.1 National balancing and wholesale electricity markets structure and principles 81
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

2. What pricing rule is applied for each balancing energy product?

(marginal pricing, pay as bid, regulated price - please describe how the price is determined)

D10.1 National balancing and wholesale electricity markets structure and principles 82
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

FCR aFRR mFRR RR Price

The system marginal price is computed by Hellenic
Energy Exchange and the imbalance price is derived
ADMIE / N/A N/A N/A ex-post from ADMIE. The imbalance price is based
on actual, metered values and corresponds to the
uniform market clearing price.
Price of use of secondary/tertiary regulation is set on
annual basis by the contract which the service pro-
vider concludes with TSO and cannot be higher than
Pay as bid Pay as bid Pay as bid Pay as bid the average price of electricity import or than the av-
CGES
/Regulated /Regulated /Regulated /Regulated erage ex-port price if such price is higher than import
price, realized in the year preceding the year of con-
tract conclusion. Accounting and invoicing for ser-
vices carried out is carried out on a monthly basis.
Engaged balancing energy in the power system
based on engagement in the tertiary regulation up-
ward and downward from balancing entities for the
purposes of system balancing is purchased/sold on
the basis of offered price approach, in accordance
with explicit offers for each accounting interval.
Engaged balancing energy in the power system
based on engagement of contractual balancing re-
serve for the purposes of system balancing is calcu-
lated as a result of issued and confirmed orders for
the balancing energy purchase from the Supplier,
the Wholesale supplier and Transmission system op-
erators from other market areas.
Price of engaged balancing energy in the power sys-
tem in the Secondary regulation for each accounting
interval is equal to:
Marginal - maximum price of the engaged balancing energy in
pricing and the Tertiary regulation at accounting intervals, when
hybrid de- Tertiary > 0 and Secondary > 0;
EMS / pending on Pay as bid Pay as bid - minimum price of the engaged balancing energy in
directions of the Tertiary regulation at accounting intervals, when
aFRR and Tertiary < 0 and Secondary < 0;
mFRR - price quoted in the explicit offer of the dominant
participant, pertaining to the regulation downward
amounting to 100 MWh when Tertiary > 0 and
Secondary < 0;
- price quoted in the explicit offer of the dominant
participant, pertaining to the regulation upward
amounting to 100 MWh when Tertiary < 0 and Sec-
ondary> 0;
- price quoted in the explicit offer of the dominant
participant, pertaining to the regulation downward
amounting to 100 MWh when Tertiary = 0 and
Secondary < 0;
- price quoted in the explicit offer of the dominant
participant, pertaining to the regulation upward
amounting to 100 MWh when Tertiary = 0 and Sec-
ondary> 0;
- zero when Secondary = 0
Pay as bid Pay as bid Pay as bid Pay as bid According to declared coefficient by the providers
ESO
but no more than 2.5 x baseload DAM IBEX price

D10.1 National balancing and wholesale electricity markets structure and principles 83
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

FCR aFRR mFRR RR Price

Prices are regulated by methodologies developed
and approved by local NRA (HERA):
The methodology for determining the price for the
HOPS / Regulated Regulated N/A provision of balancing (NN 85/2015)
The methodology for determining the price for the
calculation of balancing energy (NN 71/2016,
112/2016)
MEPSO / Pay as bid Pay as bid /
Pay as bid Pay as bid Prices are regulated by NRA. Price of aFRR or sec-
ondary reserve is regulated in way that is defined
NOSBiH / N/A max difference between the price of aFRR UP and
aFRR DOWN. Price of mFRR UP is limited, price of
mFRR DOWN is not limited.
TRANS Not paid Marginal Pay as bid Pay as bid /

3. How are the reserves activated i.e. by a Pro-Rata system or based on a Merit Order (cheapest being
activated first)? (pro-rata, merit order)
FCR aFRR mFRR RR
ADMIE / Pro-rata Merit order N/A
CGES / Merit order Merit order Merit order
EMS / Pro-rata Merit order Merit order
ESO Pro-rata Pro-rata Merit order Merit order
HOPS / Pro-rata Merit order N/A
MEPSO / Merit order Merit order
NOSBiH / Pro-rata Merit order N/A
On merit order they define generators to be in-
cluded for regulation (looking to reach the desig-
TRANS / Merit order Merit order
nated band). After that those selected are mobi-
lised pro rata

4. What is the activation time for each product? Activation time means the period of time between
receipt of a valid instruction by the Activation Optimization Function and the end of ramping to
meet that instruction. (seconds – minutes)
FCR aFRR mFRR RR
ADMIE / N/A N/A N/A
CGES 1s <= 60 s <= 5 min <= 15 min
EMS / 2 s < x < 15 min 5 min < x < 15 min 30 min
Start: <= 30s; End: <= 15
ESO Seconds 5 min < t <= 15 min t >= 15 min
min
HOPS / 90 s < x < 5 min 5 min < x < 15 min N/A
MEPSO <=30s 5 min < t <= 15 min
NOSBiH / <= 90 s 5 min < x < 15 min N/A
Complete latest after max Starts latest after max 15
TRANS Seconds 1 - 7 hours
15 min min

D10.1 National balancing and wholesale electricity markets structure and principles 84
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

5. What is the minimum bid size in the balancing energy market? (product resolution in MW)
FCR aFRR mFRR RR
ADMIE N/A N/A N/A N/A
CGES 1 MW 1 MW 1 MW 1 MW
EMS <= 1 MW 1 MW 1 MW 1 MW
ESO 1 MW 1 MW 1 MW 1 MW
HOPS N/A 1 MW 1 MW N/A
MEPSO N/A 5 MW
NOSBiH N/A 1 MW < x <= 5 MW 5 MW < x <= 10 MW N/A
TRANS N/A 10 MW 5 MW 5 MW

6. What is the maximum resolution for which the product can bid in the market (for instance 1 hour in
the case of a 24 auctions day ahead market for reserve provision)? (product resolution in time)
FCR aFRR mFRR RR
ADMIE / N/A N/A N/A
CGES / Hour(s) Hour(s) Hour(s)
EMS / Hour(s) Hour(s) Hour(s)
ESO Hour(s) Hour(s) Hour(s) Hour(s)
HOPS / Hour(s) Hour(s) N/A
MEPSO / Hour(s) Hour(s)
NOSBiH / Hour(s) Hour(s) N/A
TRANS / Hour(s) Hour(s) Hour(s)

7. Please provide the time ahead from real time when activation takes place (for instance 15 minutes
in the case of mFRR/tertiary energy). (1 min, 5 min, 15 min, H-1, >H-1)
FCR aFRR mFRR RR
ADMIE / N/A N/A N/A
CGES <1s 1 min 15 min H-1
EMS / 1 min 15 min H-1
ESO Seconds 1 min >= 5 min H-1, >H-1
HOPS / > H-1 15 min < x < H-1 N/A
MEPSO <=30s 5 – 15 min
NOSBiH / > H-1 > H-1 N/A
Impulses on line, up and
down and reaction time Min 15 minutes in ad-
TRANS / Min 1 - 7 hours in advance
with maximum 15 vance
minutes for full activation

D10.1 National balancing and wholesale electricity markets structure and principles 85
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

8. Please indicate the number of providers of balancing energy on the market. Please describe the
type of providers of products for balancing capacity for your TSO. (generators, load, storage)
FCR aFRR mFRR RR
ADMIE Generators only Generators only Generators only N/A
Generators + cross border
CGES Generators – 1 provider Generators – 1 provider Generators, load – 2 providers
– 2 providers
Generators + Pumped hy-
dro – 1 (additional possi-
EMS Generators – 1 provider Generators – 1 provider Neighbouring TSOs
bility to activate offer
from neighbour)
7 providers (6 genera- 7 providers (6 generators 18providers (13 generators, 4
ESO 5 providers (generators)
tors and 1 storage PHS) and 1 storage PHS) loads and 1 storage PHS)
Generators + Pumped hy-
dro - 1, Load – 4, market
HOPS Generators only, 1 Generators only, 1 N/A
participants for balancing
energy only - 3
MEPSO Generators Generators Generators
NOSBiH 5 – generators only 5 – generators only 5 – generators and load N/A
Generators only – more
Generators only – all dis- than 9 participants, but Generators only – more Generators only – more than
TRANS
patchable units (150?) one participant can than 20 participants 20 participants
have more generators

9. What type of monitoring is in place to ensure performance in the service delivery?

(real-time monitoring, ex-post check, hybrid)
FCR aFRR mFRR RR
ADMIE Ex-post Hybrid Hybrid N/A
CGES / Hybrid Ex-post Ex-post
EMS Hybrid Hybrid Hybrid N/A
ESO Hybrid Hybrid Hybrid Hybrid
HOPS Hybrid Hybrid Ex-post N/A
MEPSO Hybrid Hybrid
NOSBiH N/A Ex-post Ex-post N/A
TRANS N/A Real-time Real-time Real-time

D10.1 National balancing and wholesale electricity markets structure and principles 86
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

10. Is transfer of obligation allowed for each type of balancing energy product? (yes, no)
FCR aFRR mFRR RR
ADMIE No No No N/A
CGES No No No No
EMS No No No N/A
ESO No No No No
HOPS No No No N/A
MEPSO No No
NOSBiH No No No N/A
TRANS No No No No

11. Is there a secondary market for balancing energy as trading procedures between the BSPs (where at
least one BSP has contract with the TSO) to ensure the required energy amount of the TSO?
(yes, no)
FCR aFRR mFRR RR
ADMIE No No No N/A
CGES No No No No
EMS No No No N/A
ESO No No No No
HOPS No No No N/A
MEPSO No No
NOSBiH No No No N/A
TRANS No No No No

Cross-border balancing
1. What is the status of Implementation of the 3rd Package requirements for non-discriminatory, mar-
ket-based cross-border balancing?
The network codes are prepared and given for public consultation.
The national balancing market, which is expected to operate in 2018, is prerequisite for the implementation of the
ADMIE
market-based cross-border balancing. The balancing market will be operated by ADMIE and is expected to function
mid-2018
Cross-border balancing with adjacent TSOs (EMS, NOS BiH) based on bilateral agreements. CGES is working on imple-
CGES mentation balancing code. Cross border TSO/TSO balancing mechanisms with OST and imbalance netting are ex-
pected to be implemented by the end of this year.
Cross border exchange of tertiary energy (mFRR) is implemented on two borders (ME and BA) based on bilateral
agreements. Additionally, this is extended to borders with HU, RO, HR and BG where there is exchange of RR imple-
EMS
mented. On national level market-based balancing mechanism (mFRR and aFRR) is in force. Balancing capacity mar-
ket is regulated. Development of IN process in SMM block is expected.
3rd Package requirements for cross-border balancing have been adopted by the Energy Act and secondary legisla-
tion, but there is no any real market-based cross-border balancing with neighbouring countries. Only emergency as-
ESO sistance exists with neighbouring TSOs, but it is natural exchange without payment. Agreement on sharing tertiary
reserve based on BMs prices mechanism with Transelectrica (RO) exists. Negotiations with the rest neighbouring
countries are planned on political and TSO levels.
Market-based balancing not possible now due to the lack of competition on generation side. TSO – TSO cross-border
HOPS balancing established inside the SHB Control Block. There is lack of competition on the generation side. Further de-
velopment of cross-border balancing in progress.
In the new Balancing Rules cross-border balancing has not been mentioned. However, in the MEPSO Grid Code it is
stated that the TSO has the right to provide a reserve for secondary regulation outside the boundaries of its control
MEPSO area in the amount not greater than 34% of the total value of the reserve for secondary regulation within its area
and that can partially obtain reserve for tertiary regulation from neighbouring power system through agreement for
the provision of tertiary reserve.
Market-based balancing is established in Bosnia and Herzegovina partly. Five main providers of balancing services
participate on balancing market in BiH. Also, NOSBiH signed contracts with neighbour TSO’s in providing cross-border
NOSBiH
balancing reserve exchange. All contracts are conceived in way that involved TSO’s have to engage their own reserve
first (even if price is higher). Total opening of cross-border balancing market will lead to decrease prices of balancing

D10.1 National balancing and wholesale electricity markets structure and principles 87
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

reserves. NRA is considering improvement of existing rules regarding the cross-border balancing in way to equal na-
tional and cross-border balancing services providers
TRANS Involved in European Projects TERRE, PICASSA, MARI, Imbalance Netting

2. Have any amendments to the VAT and Public Procurement Law been adopted so far? To what ex-
tent do these amendments facilitate the use of balancing services from the regional market?
ADMIE Compliant with the EU regulations/directives.
There are no obstacles for cross-border balancing regarding VAT and public procurement procedures. Montenegrin
Parliament adopted the Law on Cross Border Exchange of Electricity and Natural Gas. According the law CGES have
CGES
possibility to acquire balancing energy from adjacent TSO.
Further development of cross-border balancing projects in progress
There are no obstacles for cross-border balancing regarding VAT and public procurement procedures. Introduction of
EMS
negative prices could require analysis whether VAT Law needs to be changed or not.
ESO VAT and Public Procurement Law are in line with European legislation.
HOPS Croatia is a member of EU, so there is no need for any additional VAT and Public Procurement Law adaptation.
The VAT changes are adopted only for the cross-border capacity, as needed for participation in a coordinated capac-
MEPSO
ity allocation process.
NOSBiH New law or amendments are under preparation.
TRANS VAT and Public Procurement Law are in line with European legislation.

3. Is the required secondary legislation for market-based balancing model allowing for the non-dis-
criminatory cross-border exchange of balancing services adopted and to what extent? Please indi-
cate what steps are still required
ADMIE Currently the proposed legislation is in public consultation
Montenegrin Parliament adopted the Law on Cross Border Exchange of Electricity and Natural Gas. According the
CGES law CGES have possibility to acquire balancing energy from adjacent TSO. Further development of cross-border bal-
ancing projects in progress. Currently, CGES is working on adoption of two network codes: CACM, FCA.
Market Code allows cross-border exchange of tertiary energy (mFRR). Serbian TSO has implemented this type of ex-
EMS change on borders with Montenegro and Bosnia and Herzegovina. Additionally, this is extended to borders with Hun-
gary, Romania, Croatia and Bulgaria where there is exchange of RR implemented.
ESO Secondary legislation is adopted in line with European legislation.
Existing Rules on Balancing the Electric Power System and Amendments to the Rules on Balancing the Electric Power
HOPS System allow cross-border market-based balancing model, additionally above mentioned rules will be adjusted ac-
cordingly to Art 18 of EBGL soon.
MEPSO Secondary legislation is adopted in line with European legislation.
Secondary legislation is adopted and allows cross border balancing in way described in previous answers. NOSBIH
NOSBiH proposed new secondary legislation to the NRA which will allow non-discriminatory cross-border exchange of balanc-
ing services
TRANS Secondary legislation is in process to be in line with European legislation.

4. Please describe possible secondary legislation implementation challenges (present and expected in
future) and the challenges related to balancing practices.
ADMIE ADMIE is waiting the results of the public consultation
CGES CGES is still working on adoption of CACM so that can be recognized as the main challenge for legislation.
In the process of implementation of IN process there shall be a modification of Market Code, but even today this
EMS process is supported. Participation of Serbian TSO in pan-European platforms needs to be further dealt in following
months.
After European parliament approves the new energy package “clean energy”, adaptation of the Energy Act, RES Act
ESO
and secondary legislation is needed. Consultation with affected market participants is organized.
Major challenge for implementing national market based balancing model is lack of competition on BSP side, which
are expected to be solved by implementation of single EU balancing market through implementation project for EU
HOPS
mFRR & aFRR platforms (MARI, PICASSO, IGCC) and potentially some regional balancing market cooperation as a re-
sult of CROSSBOW project…
MEPSO The lack of BSP can be very challenging in a manner to have market based balancing price.
Possible challenges: different timeframe in providing balancing services, negative prices etc. Secondary legislations
NOSBiH
harmonisation of included TSOs.

D10.1 National balancing and wholesale electricity markets structure and principles 88
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

TRANS /

5. What is the status of implementation of a market-based balancing model? Have you done any Dry-
runs of new models for provision of balancing services? Have you performed tests to evaluate im-
balance settlement procedures? Please describe briefly the outcomes of these tests.
Network codes are prepared and given for public consultation; no Dry-run tests have been done yet. Dry-run is the
ADMIE
last step before the lie implementation.
Prices of balancing energy are sent on daily basis by balancing energy provider. For domestic supplier maximum and
CGES
minimal prices are regulated (Methodology), and imbalance prices are calculated according to the Methodology.
Functioning national balancing market (for balancing energy) is established based on the provisions of the Market
Code. Serbian TSO operates balancing mechanism and buys/sells tertiary balancing (mFRR) energy from BSP in Serbia
EMS
as well as from neighbouring TSOs. Imbalance Settlement procedures are in force and operation from Jan 2013.
There is no balancing capacity market. Balancing capacity is procured by TSO based on regulated prices.
Balancing market and settlement process have been implemented since 01.06.2014. In some cases when the imbal-
ance prices are lower than IBEX prices, market participants prefer to be in short position. Starting from 1st January
ESO
2018, NRA bound IBEX and balancing market prices in order to prevent foul play by the market participants. Intraday
market is implemented at the end of April 2018.
Prices of balancing energy and imbalance prices connected to day-ahead market prices. Lack of competition on gen-
HOPS eration side. Demand side response pilot project and EU implementation project are in progress. IGCC project has
been implemented successfully.
According to the dry-run tests performed during 2018, MEPSO is ready to perform the market-based balancing
MEPSO
model after entering into force of the new Balancing Rules.
Balancing market and settlement process are established since 01.01.2016. NOSBiH operates balancing mechanism
NOSBiH and sells and buys balancing energy from 5 registered balancing services providers and two neighbouring TSOs (CGES
and EMS) as well as inside the SHB coordination block
TRANS /

6. If the Dry-run process is completed, has any additional fine-tuning been performed? In the same
sense, are any of the new models for provision of balancing services and imbalance settlement al-
ready in practice?
ADMIE The dry-run process has not been completed yet. Not applicable.
CGES No dry run
Fine tuning is regularly done through updates of Market Code since it entered into force in December 2012. There
are no new models for provision of balancing services or imbalance settlement. Depending on decision of Serbian
EMS NRA when to launch market-based procurement of balancing capacity (aFRR and mFRR) the changes in the model
will be introduced. In addition, possible participation of Serbian TSO in pan-European platforms/tools for Imbalance
Netting, aFRR, mFRR and RR will require adjustment of the of the model.
Balancing market and settlement process require permanent monitoring and adaptation in case of market misbehav-
ESO
iour by the participants.
Demand side response pilot project is in test operation. IGCC project has been operational from 1st of February
HOPS
2019.
MEPSO The models of provisions of balancing services and imbalance settlement are according to the new Balancing Rules
Balancing market and settlement process is working without larger obstacles and it is monitored constantly and all
NOSBiH
noticed lacks of model will be improved through Market rules improvement
TRANS /

7. What is the status of development and adoption of coordinated balancing integration roadmap?
What are the major challenges from the aspect of your company towards a coordinated integration
path?
ADMIE Not applicable.
CGES CGES is an active member of WB6 balancing group (pilot project), and takes a role as an observer in IGCC.

D10.1 National balancing and wholesale electricity markets structure and principles 89
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

Coordinated balancing integration plans are related to SMM (Serbia – Macedonia - Montenegro) Control Block. So
far, EMS and CGES (Montenegrin TSO) established mFRR cross-border activation. There are no LR prerequisites to
establish SMM Control Block common Merit Order List. Also, this is related with possibility to organize common FRR
EMS procurement in SMM Control Block, which is not presently on TSO agenda. It is planned to establish in 2019 SMM CB
imbalance netting between EMS and CGES and its integration in European imbalance netting mechanism. MEPSO
(Macedonia) is expected to join mFRR and imbalance netting mechanisms after necessary amendments in domestic
regulatory framework.
There is no coordinated balancing integration roadmap. Coordination between different market models and second-
ESO
ary legislation is required. Negotiations with neighbouring countries are required on political and TSO levels.
HOPS is a member of pan-European balancing projects MARI, PICASSO and IGCC. Progress of the projects are defined
HOPS
by Articles 20-22 EBGL.
MEPSO At the moment the major challenge is to establish a well operating balancing market.
Program Steering Committee for the Cross-border Balancing WB6 selected EKC (Elektroenergetski koordinacioni cen-
tar Beograd) as a technical assistance to implement platforms for imbalance netting and cross-border exchange of
NOSBiH balancing energy by end 2018. The platforms will be developed based on European rules and practice, as an interme-
diary step towards full integration into European platforms for balancing cooperation. Major challenges from our
aspect are different rules and timeframes of engaging balancing services.
TRANS /

8. Please describe any actions taken so far to support balancing integration

ADMIE Not applicable.
CGES Currently, for balancing services, CGES use cross-border balancing energy exchange.
EMS applied for operational member in IGCC and is a part of MARI working group. PICASSO project shall be next pro-
EMS
ject where EMS shall take part.
ESO Agreement on sharing tertiary reserve based on BMs prices mechanism with Transelectrica (RO) exists.
HOPS From 01/10/2019 HOPS is a full member of pan-European balancing projects MARI and PICASSO.
MEPSO Establishing a balancing market is the key step forward to start a balancing integration.
NOSBiH Regional group was established to support balancing integration process in WB6.
TRANS /

9. Please provide information regarding implementation of imbalance netting with neighbouring

TSOs.
ADMIE Not applicable.
CGES Imbalance netting hasn’t been implemented yet, but CGES have dry run model for SMM block
EMS Year 2019/2020 shall be the year when the IN cooperation in SMM block shall be established.
ESO In process of conceptual design.
EU IGCC project has been implemented successfully on the HR-SI border; HR-HU border will be implemented soon.
HOPS
Serbian and Bosnian TSO are also interested in IGCC cooperation.
According to the new Energy Law MEPSO has a general obligation to cooperate with the TSOs of other countries in
MEPSO
order to ensure the efficient operation of the regional balancing services market.
NOSBiH /
TRANS /

D10.1 National balancing and wholesale electricity markets structure and principles 90
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

10. Please provide information regarding implementation cross-border exchange and sharing of re-
serves with neighbouring TSOs.
FCR aFRR mFRR RR
ADMIE Not applicable
/ / Exchange of mFRR ME- /
CGES
RS, ME-BA
EMS / / Borders with BA and ME Borders with HU, RO, BG and HR
Not implemented Not implemented Not implemented Agreement on sharing tertiary reserve
ESO based on BMs prices mechanism with
Transelectrica (RO) exists.
No exchange No exchange Exchange of mFRR in /
HOPS the SHB control block
(SI-HR-BA)
MEPSO / / / /
/ / Agreement signed with /
NOSBiH
CGES, EMS and HOPS
Part of all TSO pro- Part of all TSO pro- Part of all TSO proposal Part of all TSO proposal on ENTSO-E
TRANS
posal on ENTSO-E posal on ENTSO-E on ENTSO-E

11. What model for cross-border activation of reserves is applied?

(TSO-TSO model, TSO-BSP model)
FCR aFRR mFRR RR
ADMIE Not applicable
CGES / / TSO - TSO /
EMS / / TSO - TSO TSO - TSO
/ / / TSO-TSO model to Roma-
ESO
nian border.
HOPS / / TSO - TSO /
MEPSO / / / /
NOSBiH / / TSO-TSO /
TRANS TSO - TSO TSO - TSO TSO - TSO TSO - TSO

D10.1 National balancing and wholesale electricity markets structure and principles 91
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

12. Please provide information on participation in the EU platforms for exchange of balancing capacity
and energy.
FCR - Cooperation aFRR - PICASSO Imb. Netting - IGCC mFRR - MARI RR - TERRE
ADMIE participates
ADMIE participates
Future participa- as an observer in Future participation is pos- Future participation
ADMIE as a member in
tion is possible the PICASSO 8 initia- sible is possible
MARI12
tive
Still no but CGES is Still no but CGES is
Still no but CGES is Still no but CGES is
planning to take a planning to take a
CGES planning to take a Observer planning to take a
role as an ob- role as an ob-
role as an observer. role as an observer.
server. server.
Member of TF
EMS / / Member of TF IGCC /
MARI
Recently there Recently, there Recently there Recently, there
have been no con- have been no real have been no real have been no real
Recently, there have been
siderations to join activities to join the initiatives to partic- activities to partici-
no real activities to join any
the FCR Coopera- PICASSO initiative. ipate MARI. The pate in the TERRE
imbalance netting pilot
tion. The process The process of in- process of investi- project. The process
project. The process of in-
ESO of investigation has vestigation has gation has started. of investigation has
vestigation has started.
started. Prepara- started. Preparation Preparation of plan started. Preparation
Preparation of plan and
tion of plan and of plan and real par- and real participa- of plan and real
real participation is ex-
real participation is ticipation is ex- tion is expected till participation is ex-
pected till the end of 2019.
expected till the pected till the end the end of 2019. pected till the end
end of 2019. of 2019. of 2019.
Yes, HOPS is a full Yes, HOPS is a full
Yes, HOPS is a full member Not foreseen, HOPS
HOPS NO, currently member in the pro- member in the pro-
in the project does not have RR
ject ject
Yes, MEPSO plan to There are activities for im-
join PICASSO as an balance netting in SMM
observer, as soon as block which is one step for-
MEPSO is planning MEPSO is planning
possible. As a mem- ward towards joining IGCC
to participate in to participate in
MEPSO At this moment, no ber of ENTSO-E, in the future. Currently
MARI project as an TERRE project as an
MEPSO have an in- there is a platform that
observer. observer.
vitation to be ob- makes calculations for im-
server on this plat- balance netting for the
form. SMM region.
NOSBiH signed agreement
to be observer in IGCC pro-
cess in January 2019. Ac-
There are no plans cording to implementation
yet to join the Plat- plan, NOSBiH expects full
form for the Inter- implementation during the
national Coordina- second half of 2020. Prior
NOSBiH No activities yet. No activities yet. No activities yet.
tion of Automated to full implementation
Frequency Restora- IGCC, NOSBiH will do some
tion and Stable Sys- analysis to see how IGCC
tem Operation. will affect to the costs of
balancing services (aFRR)
and to the balancing re-
sponsible parties.
Transelectrica Transelectrica is
joined the project one of the ten TSOs
as observer in Octo- Transelectrica joined the Transelectrica is al- performing reserve
TRANS ber 2017. project as observer in Janu- ready member in replacement pro-
ary 2017. MARI project. cess. TRANS got the
status of observer
in this project.

BSP Settlement

D10.1 National balancing and wholesale electricity markets structure and principles 92
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

YES NO N/A or No answer

# Question ADMIE CGES EMS ESO HOPS MEPSO NOSBiH TRANS
1 For primary reserve (FCR) you have specific
contracts with BSP?
2 For primary reserve (FCR) all generators are
obliged to supply a specific amount with no
separate payment?
3 Is there a specific solution to measure the really
supplied energy for FCR?
4 Is there a specific solution to pay the generators
based on really supplied energy for FCR?
5 How are the contracts for the aFRR capacity
placed?
a) Market based
b) Regulated
6 How is the aFRR as stand by capacity paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
7 The energy "supplied" within the aFRR is
accurately measured?
a) By meters?
b) By SCADA?
8 The energy "supplied" within the aFRR is fully
measured independent for both up and down?
9 How is the energy mobilised within aFRR paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
10 How are the contracts for the mFRR capacity
placed? Market or Regulated?
a) Market based
b) Regulated
11 How is the mFRR as stand by capacity paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
12 The energy "supplied" within the mFRR is
accurately measured?
a) By meters?
b) By SCADA?
13 The energy "supplied" within the mFRR is fully
measured independent for both up and down?
14 How is the energy mobilised within mFRR paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
15 How are the contracts for the RR capacity
placed?
d) a) Market based
a) b) Regulated
16 How is the RR as stand by capacity paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?
17 How is the energy mobilised within RR paid?
a) Different prices for up and down?
b) Same price (marginal) to all BSP?
c) As bid to each BSP?

D10.1 National balancing and wholesale electricity markets structure and principles 93
 CROSS BOrder management of variable renewable energies
and storage units enabling a transnational Wholesale market

BRP Settlement (Balancing Mechanism)

1. Please describe the balancing mechanism, clearing and settlement procedure. Which institution is responsi-
ble for implementation of this procedure?
ADMIE /
TSO is responsible for balancing, market operator COTEE is responsible for imbalance calculation and settlement
CGES
process. NRA is responsible for imbalance calculation methodology.
Based on activated balancing energy Serbian TSO determines imbalance price on hourly level which is then applied
EMS when calculating financial obligations of Balance Responsible Parties regarding their imbalances. Serbian TSO acts as
Balancing market operator and Imbalance Settlement operator.
ESO See market rules: http://www.eso.bg/fileObj.php?oid=1720
Cost of balancing used in the imbalance settlement process. TSO responsible for balancing, market operator HROTE
HOPS responsible for imbalance calculation, TSO responsible for settlement process. NRA responsible for imbalance
calculation methodology.
TSO is responsible for operating balancing market and EMO is responsible for administrating the BRP’s and imbal-
MEPSO
ance settlement procedure.
NOSBiH is responsible for settlement procedure which is defined by the Market rules and Procedures for balancing
NOSBiH
market.
There is a Settlement Operator for Balancing Market who defines the obligations to pay/charge between TSO and
TRANS Balancing Market Participants or between TSO and BRP. Balancing Market Participants are Dispatchable Units/Dis-
patchable Consumers.

2. From whom are the costs for each balancing capacity product (FCR, aFRR, mFRR, RR) recovered?
(grid users, BRPs, end users, generators)
FCR aFRR mFRR RR
ADMIE 100 % BRPs 100 % BRPs N/A N/A
CGES Generators TSO TSO TSO
EMS Grid users 100 % grid users 100 % grid users N/A
ESO End users End users End users End users
HOPS Hybrid Hybrid Hybrid N/A
MEPSO generators BRPs BRPs /
NOSBiH N/A 100% Grid users 100% Grid users N/A
100% Consumers (as part 100% Grid users Consum- 100% Grid users Consum-
TRANS NA yet
of TSO tariff) ers (as part of TSO tariff) ers (as part of TSO tariff)

3. From whom are the costs for each balancing energy product (aFRR, mFRR, RR) recovered?
(grid users, BRPs, end users, generators)
FCR aFRR mFRR RR
ADMIE N/A N/A N/A N/A
CGES Generators BRPs BRPs BRPs
EMS N/A 100 % BRPs 100 % BRPs N/A
ESO BRPs BRPs BRPs BRPs
HOPS Hybrid 100 % BRPs 100 % BRPs N/A
MEPSO / BRPs BRPs /
NOSBiH N/A 100% Grid users 100% Grid users N/A
100 % BRPs and dispatch- 100 % BRPs and dispatcha- 100 % BRPs and dispatcha-
TRANS NA yet
able units/consumers ble units/consumers ble units/consumers

D10.1 National balancing and wholesale electricity markets structure and principles 94