Information on the aFRR-Cooperation Germany/Austria

Common activation of automatic frequency restoration reserves in Germany and Austria

1. Background of the cooperation (pilot project/leading role within the EU)

The German and Austrian transmission system operators (TSOs) are already members of the International Grid Control Cooperation (IGCC). IGCC aims to prevent activation of automatic frequency restoration reserves (aFRR) by netting demands of the member countries.

In a next step the German and Austrian TSOs are fostering their cooperation by optimising the activation of aFRR with a common merit order list and based on a TSO-TSO model[1]. Here, both countries are able to use the most economically beneficial aFRR, taking into account possible operating restrictions on the common border. As a result the costs of activation of aFRR can be potentially reduced. With the coordinated optimisation of aFRR both countries already anticipate one of the requirements from the future Guideline on Electricity Balancing (EB GL).

The go-live of the cooperation was successfully completed at 2pm on 14 July 2016. In order to deepen the cooperation further, the possibility of a coordinated procurement of aFRR is currently being examined.

2. Harmonising the products and market rules

The products and tendering rules in Germany and Austria has been harmonised as far as required to enable the cooperation. The aFRR of the Austrian control block will be procured weekly through a national tender process, separately for peak and off-peak tariff, synchronously and in line with the currently existing applicable market rules in Germany. The gate opening and gate closure take place at the same time at the fortnight on Friday at 12 pm, or on Wednesday 3 pm of the previous week.

The minimum bid size is equal to 5 MW and can be increased incrementally in 1 MW steps.

Against the background of the ongoing aFRR consultation procedure in Germany, the participating TSOs already consider further common development of the market rules with respect to the granularity of the products and the tendering period.

3. Coordinated activation and netting

The nationally awarded aFRR bids are merged in a common merit order list (CMOL). Therefore all bids are ranked according to their energy prices in ascending order. For bids with equal energy prices the reserve price and, as a secondary criterion, the time stamp are considered in the ranking.

The activation of aFRR energy is based on the CMOL which aims to maximise the common economic benefits subject to operational restrictions at the AT-DE border. In the event of operational restrictions at the AT-DE border the activation of aFRR energy is based on the respective national merit order list and can deviate from the financial optimum.

4. Publication

With the beginning of the cooperation all results from the coordinated aFRR tender are published within one hour after the tender period ends on the respective tender platforms ( in DE and in AT).

The publication contains all awarded bids including their respective energy and power prices. Moreover the nationally activated aFRR, the quantities netted between Austria and Germany as well as the activated aFRR quantities which are exchanged at the common border are published too.

5. Settlement

The settlement between TSOs and the local aFRR providers is not affected by the cooperation.

The target of the cooperation is to minimise the costs for aFRR by coordinating the activation of aFRR from the common MOL. Hence it will be possible that one country, e.g. Austria, carries out an aFRR activation for the other control block, e.g. Germany, fitting with the cheaper aFRR bids. As a result, a settlement between the TSOs is required. The settlement is designed such that at the end the TSOs in both countries pay the same specific price for their requested aFRR energy in the respective direction.

Where there is a quarter-hour with no exchange of aFRR energy between the two countries, due to the price situation or any operational limitation, no settlement between the TSOs is applied and aFRR prices are entirely based on the prices of local bids.

The settlement of avoided aFRR activation due to netting is based on opportunity prices from the respective country.

Example of the settlement of aFRR energy

The following example illustrates both settlement situations assuming the same demand for aFRR energy. In Figure 1 a cross-border exchange of aFRR energy is performed. AT delivers, within a quarter-hour, 40 MWh of positive aFRR energy to DE and DE delivers 25 MWh of negative aFRR energy to AT. The resulting specific energy prices are 93.333 €/MWh for positive aFRR and -2.000 €/MWh for negative aFRR. With these prices and the requested aFRR energy in the respective control area the target costs are derived for each control area in each control direction. The difference between the target and actual costs (based on the settlement with aFRR providers) is compensated between the TSOs (in this example: 3,016.76 €).

>>>Figure 1: Example of cross-border exchange of aFRR energy

Where there is no exchange of aFRR between the control areas, the target and actual costs are equal. Therefore no financial compensation between the control areas is needed. Due to the deviation from the common aFRR-MOL the overall costs of activation are higher, as shown in Figure 2. As a result the target costs of at least one control area are increasing accordingly (compare the yellow shaded values).

>>>Figure 2: Example without cross-border exchange of aFRR energy

[1] In a TSO-TSO model the respective TSO is the first contact for each technically connected aFRR provider with respect to dimensioning, pre-qualification, procurement and activation of aFRR. The operational processes for activation of aFRR between the TSO and aFRR providers is not affected by the cooperation.