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The National Energy Regulatory Council (NERC) has approved the proposals regarding balancing capacity market submitted by LITGRID AB and the transmission system operators (TSOs) of Estonia, Latvia, Finland, Sweden and Poland:


  • The TSOs of Lithuania, Latvia and Estonia (hereinafter – 'Baltic States') have prepared a proposal for Exemption to the obligation to allow transfer of aFRR and mFRR balancing capacity for all bidding zones in the Baltic countries. A common Baltic balancing capacity market will ensure a level playing field for participants in the balancing capacity market, increase liquidity in the short-term markets by allowing more cross-border trading and more efficient use of the existing network for balancing energy. According to the approved document, the exemption will limit the contract period of the Baltic aFRR and mFRR capacity market to only one day and is expected to reduce the need for such flexibility among balancing service providers relative to a longer contracting period. The exemption will prohibit balancing service providers from transferring balancing capacity to other balancing service providers located in another bidding zone. However, it will remain possible to transfer balancing capacity within the same bidding zone (e.g. the Lithuanian bidding zone). The possibility to transfer obligations within the trading area will give potential balancing service providers more flexibility in managing risks to ensure capacity availability and potentially encourage greater market participation of balancing service providers with limited alternative options to manage risks in their portfolio, thus promoting competition in the balancing capacity market.
  • The Baltic electricity TSOs have submitted a proposal for a Baltic balancing capacity market. The proposal sets out how the Baltic Balancing Capacity Market will operate, replacing the current reserve model. The proposal includes common rules and processes for buying, sharing and exchanging balancing capacity. The proposal also provides framework for a market-based capacity allocation process. It should be noted that the Baltic TSOs foresee the use of demand reduction resources to reduce the amount of balancing capacity that needs to be procured from primary and reserve resources in order to meet the Baltic TSOs' demand. Baltic TSOs with demand reduction resources will not be remunerated for the capacity applied as a result of the optimisation. Back-up resources will be given lower priority than primary and demand reducing resources and will not increase the marginal price of the respective bidding zone. The proposal will ensure a level playing field for market participants in balancing capacity, increase the liquidity of short-term markets by allowing more cross-border trading and more efficient use of the existing network for energy balancing.
  • LITGRID AB, together with the TSOs of Estonia, Latvia, Finland, Sweden and Poland, has submitted a proposal to amend the methodology for calculating cross-zonal capacity within the balancing timeframe. The aim of the methodology is to regulate the coordinated and harmonised calculation of balancing period capacities. The methodology defines the possibilities for the interconnected electricity transmission systems of Estonia, Latvia, Lithuania, Finland, Sweden and Poland to activate balancing period services. The methodology describes the principles for the calculation of balancing period interconnection capacity when the Baltic countries are synchronously interconnected to the Continental European synchronous area and the principles when the Baltic countries are operating in isolated mode, as well as the calculation of the balancing period interconnection capacity during the operation phase of the balancing market and the capacity that is published after the close of the balancing period trading.


Please see the materials of the VERT meeting on 2024/03-.4 hearing here.​