The Guideline on Electricity Balancing (EB Regulation) lays down detailed rules on electricity balancing including the establishment of common principles for the procurement, activation and exchanges of balancing energy. The EB Regulation entered into force on 18 December 2017. You can find the EB Regulation here.
The EB Regulation has been developed pursuant to the network code development process established by the Article 6 of Regulation (EC) 714/2009. This means that it was developed in strong coordination between ENTSO-E, the Agency and stakeholders. It was later changed into a Commission guideline and adopted on the basis of Article 18 of Regulation (EC) 714/2009. You can find more about the historical development of the EB Regulation here.
The EB Regulation defines binding requirements for Transmission System Operators (TSOs), Distribution System Operators (DSOs) including closed distribution systems, National Regulatory Authorities (NRAs) and the Agency for the implementation and functioning of integrated electricity market in the balancing timeframe. The core elements of EB Regulation are:
Rules for Balancing Service Providers and Balancing Responsible Parties. The TSOs are obliged to define the roles of the actors in the balancing markets by developing the terms and conditions related to balancing for balancing service providers (BSPs) and balance responsible parties (BRPs), ensuring a fair, transparent and non-discriminatory approach. Moreover, the terms and conditions related to balancing should ensure adequate competition based on a level-playing field between market participants, including demand-response aggregators and assets located at the distribution level.
Common European Platforms. The integration of balancing energy markets is facilitated by the establishment of common European platforms for operating the imbalance netting process and enabling the exchanges of balancing energy from frequency restoration reserves (FRR) and replacement reserves (RR). The platforms for the exchange of balancing energy from FRR and RR will apply a model with common merit order list (CMOL) in order to ensure cost-efficient activation of bids. In order to allow an exchange of balancing services, the creation of CMOL and adequate liquidity in the balancing market, it is necessary to regulate the standardisation of balancing products, hence the EB Regulation lists the minimum set of standard characteristics and additional characteristics defining standard products, while setting principles for their pricing method. It should create positive incentives for market participants in keeping and/or helping to restore the system balance of their imbalance price area, reduce system imbalances and costs for society.
Exchange of balancing capacity and sharing of reserves. In order to enable TSOs to procure and use balancing capacity in economically efficient and market-based manner, there is a need to foster market integration. In this regard, the EB Regulation establishes three methodologies through which TSOs may allocate cross-zonal capacity for the exchange of balancing capacity and sharing of reserves: the co-optimisation process, the market-based allocation process and the allocation based on an economic efficiency analysis. The co-optimisation process should be performed on a day-ahead basis, whereas the market-based allocation process could be performed where the contracting is done not more than one week in advance of the provision of the balancing capacity and the allocation based on an economic efficiency analysis where the contracting is done more than one week in advance of the provision of the balancing capacity on the conditions that the volumes allocated are limited and that an assessment is done every year.
Harmonization in imbalance settlement. The EB Regulation requires the development of harmonisation on different methodologies including the imbalance settlement. The general objective of imbalance settlement is to ensure that balance responsible parties support the system's balance in an efficient way, to incentivise market participants in keeping and/or helping to restore the system balance. Hence the EB Regulation defines rules on imbalance settlement, ensuring that it is made in a non-discriminatory, fair, objective and transparent basis. Moreover, it requires the TSOs to develop a framework for the harmonization of issues related at least with the calculation of balance responsible parties' position, imbalance, imbalance price as well as the principles of the pricing method.