New Cross-Border Electricity Balancing Arrangements in Europe

Casimir Lorenz and Clemens Gerbaulet

No 1400, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The European electricity system is undergoing significant changes, not only with respect to developments in generation and networks but also the arrangements for the operation of the system. These are specified in the Network Codes endorsed by regulators, network operators and the European Commission with the objective to create an \Internal Energy Market". In 2013, European network operators formulated the Network Code on Electricity Balancing (NC EB) which foresees arrangements to foster cross-border exchange of balancing services with the objective to lower overall costs and to increase social welfare. Assuming that Switzerland adopts the \Electricity Agreement" which would make EU Electricity rulings binding also in Switzerland, we perform an quantitative analysis of the region consisting of Switzerland, Austria, and Germany. To conduct our analysis, we use an electricity market model with a detailed representation of power plants, scheduled power withdrawals and localized imbalances leading to the need to reserve balancing capacity and activate balancing energy. We consider different levels of integration, as outlined in the NC EB. Our results show that coordinated procurement and activation of balancing services lead to cost decreases, but at the same time distributional effects, which might need to be compensated are incurred.

Keywords: balancing energy markets; regional cooperation; network code electricity balancing (search for similar items in EconPapers)
JEL-codes: C61 L94 Q40 (search for similar items in EconPapers)
Pages: 25 p.
Date: 2014
New Economics Papers: this item is included in nep-ene and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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