Public consultations on the market study of the electricity balancing reserves

The three transmission system operators of the Baltic States - Estonia 's "Elering", Latvia' s "Augstsprieguma tīkls" and Lithuania 's "Litgrid" are inviting the market participants to express their opinion on the electricity balancing reserve market study "Baltic Reserve Capacity Market Study".

The study is based on the request of the Baltic national regulatory authorities (Regulators) to allow the Regulators to decide on investment requests for the second stage of synchronization of the Baltic electricity grid, which includes the installation of battery storage systems for provision of reserves. According to the investment request, the successful implementation of electricity transmission network synchronization between Baltics and EU requires a total of four battery systems to be installed in Lithuania and Latvia. The aim of the study was to find out whether and what reserves can be offered by electricity market participants, as well as to identify the most optimal mechanism for ensuring balancing reserves from the system reliability and cost point of view.

Under the framework of the study possibilities to ensure the required amount of balancing reserves were modelled and evaluated for each country separately, for the Baltic States together in the single market, as well as for scenarios when the resources of neighbouring countries have been attracted after connecting to synchronous work with the networks of continental Europe.

The main conclusions of the study are:

• Considering market simulation data Estonian, Latvian and Lithuanian power systems individually are not able to maintain required reserve capacities: FCR, aFRR, mFRR downward, whereas only mFRR upward could be maintained. Must run generators are necessary to maintain FCR, aFRR and mFRR, however none of individual power systems can maintain all required reserves.
• Technical potential to maintain FCR and mFRR required reserve capacities within common Baltic LFC block is feasible, however provision of aFRR capacity will not be ensured during all periods. Results of feasible options show that must run generation in each power system will be necessary.
• Possible integration of reserve capacity markets with neighboring areas Finland, Sweden, Poland to exchange reserves through the interconnections could ensure Baltic power system a technical capability to maintain all required reserves on the expense of reducing available interconnection capacity for day-ahead and intra-day energy trade and would significantly decrease the need of must run generation However marginal effect of the most expensive reserve bid which sets the marginal price would not be mitigated. Considering complex and uncertain nature integrating two or more regional markets it is possible that integration of the Baltic, Nordic and Polish reserve capacity markets might not be achieved by 2025.

More detailed information on the research methodology and its results is available on the websites of the Baltic TSOs: https://elering.ee/en/current-consultations#tab0

The Baltic TSOs invite the electricity market participants to express their opinion on the possibility to provide required services by market participants in the period from March 12, 2021 to April 15, by filling in the questionnaire here.