Since mid-2013 APG has procured its primary control reserves together with the Swiss transmission system operator (TSO) Swissgrid, based on a TSO-TSO model. In April 2015 this successful cooperation was extended to the TSOs of Germany and the Netherlands. In July 2016 the Belgian TSO and in mid-January the French TSO RTE joined the cooperation.
The cooperation is based on the principle of equal rights and obligations. Furthermore local market models were harmonised in the proposal according to Article 33 of Electricity Balancing Guideline (2195/2017).
Figure 1: Basic principles and representation of the Common Merit Order (COM)
In the framework of this cooperation all bids received by the respective TSOs are pooled. Those bids whose combination reflects the overall cost optimum for the common procurement are awarded. According to the principle of marginal pricing, a marginal price (for each country) will be determined. Generally, a common marginal price will be determined, that is valid for all countries. The exception is when import or export limits of a country are hit. Then a local marginal price will be determined based on the local bids. Marginal prices are relevant for TSO-BSP settlement as well as TSO-TSO settlement.
All participating TSOs procure their required FCR demand in separate, market-based tenders on working days. The balancing service providers (BSP) continue to participate in the respective local tendering processes following a successful technical and organisational evaluation (prequalification process). After the bids have been collected in the local tenders (after gate closure), they are not directly awarded but submitted to a central clearing system (CCS). This system calculates the optimal combination of bids to be awarded, under consideration of local core shares and the maximum exchangeable volumes. The participating TSOs then are notified of which bids to award in their respective local tendering processes.
For this optimisation process the tenders of all participating TSOs are closed at the same time.
The results of the CCS optimisation are double-checked by the local tendering platforms. Only after the results are accepted by all local systems are the results final and valid. The awarding and settlement procedures are described in the document scheme of the cross-border award procedure.
Figure 2: Common market for FCR and schematic basic principles of the communication
If an exchange of bids is not possible (e.g. due to technical problems) the common procurement is decoupled and the awarding procedure is performed according to the national rules. Regarding an overall shortfall France has a special position. If the offered volume is not able to cover French demand, France decouples from the cooperation. After this decoupling the optimisation process will be re-run for the rest of the cooperation as described above.
The legal outlines for the cooperation are set out in a multilateral agreement between all participating TSOs. Market participants are not affected by the cooperation and all existing contracts and agreements remain unchanged. New participants furthermore have to complete the prequalification procedure and sign a framework agreement only with their connecting TSO.
In the financial settlement between the BSPs and TSOs, connecting TSOs are contracting partners including if the FCR is provided for a different control area. TSOs compensate each other in the TSO-TSO model for their crossborder exchanges.
The results of the Austrian national tenders are published on the tendering platform. As well as on the transparency platform EMFIP, according to EU regulation 543/2013
With the cooperation on frequency containment reserve based on a TSO-TSO model, all Austrian balancing service providers benefit from an enlarged market for FCR without new prequalification or contracts. Furthermore the Austrian market and the overall system benefit from an overall cost reduction due to a higher liquidity of the market for FCR (2018: ±1406 MW)¹.
¹ Belgium's demand changes each week. For simplicity reasons we assumed an average value of 47 MW.