Markets
Market summary
UK
The UK balancing and flexibility structure operates independently from the rest of Europe. Traditional frequency and balancing products are difficult to access for DERs, while alternative products are both accessible and potentially lucrative.
The TSO (NGESO) operates a centrally-dispatched Balancing Mechanism, technically accessible to all assets. However, dispatch today frequently deviates from merit order in favour of large generating units, significantly limiting DER upside. Changes to the BM due later this year on pooling and bid selection should increase the attractiveness of DER participation.
Frequency products are today dominated by the Dynamic suite (DC, DM, DR), which aren’t well-suited to most DERs due to a very fast (\1s) response time for the majority of volume. Slower products (e.g., FFR) are accessible to DERs but are being phased out. New Reserve products (Quick Reserve and Slow Reserve) will be introduced in late 2023, and will likely be well-suited to DERs. The UK also has a Capacity Mechanism, but long bidding windows (min of 1yr) limit DER participation. These products are accessible from non-suppliers, via the VLP (Virtual Lead Party) role, equivalent to a BSP.
The UK has 3 products well-suited to DERs.
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Local network flex, managed by the 6 DSOs and traded on 2 common auction platforms. This product requires highly-local specificity (down to the LV-substation), but lenient rules on measurement (sub-boundary, or asset), lax penalties, and acceptance of non-supplier participation make this a favourite.
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The newly-launched Demand Flexibility Service (DFS), the UK’s load shedding programme to manage winter peaks. The DFS is highly lucrative (minimum of £3/kWh) but limited use (guarantee of only 12 hour-long ‘events’ per year) make this a make-or-miss product. The DFS also requires boundary metering, severely limiting the access & scalability of non-supplier offerings.
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The UK’s highly time-based approach to network charges. Both the Transmission (TNUoS) and Distribution (DUoS) network charges follow a time-based approach, with Transmission currently assigning charges predominating based on consumption during the 3 hours of highest annual consumption. Note that this structured will be significantly relaxed in 2023. Distribution charges follow a ‘red-amber-green’ framework, with consumption during evening peaks (’amber’) charged at ~10x the rate of off-peak consumption. Network charge avoidance is only available from the Supplier role.
Product
| Name | DER suitability | Access | Pooling | Min bid (MW) | Full Activation Time (m) | Payment |
|---|---|---|---|---|---|---|
| DSO flex | 4 | Any | No | 0.01 | 15 | Energy,Availability |
| Demand Flexibility Service (DFS) | 4 | Mostly BRP | No | 1 | 15 | Energy |
| Network charges | 4 | BRP | n/a | 0 | - | Energy |
| Balancing Mechanism (BM) | 2 | BRP or VLP | Yes | 1 | - | Energy |
| FFR (Static) | 3 | Any | Yes | 1 | 30s | Energy, Availability |
| Dx (DC, DM, and DR) | 2 | Any | Yes | 1 | 1-10s | Availability |
| Quick Reserve (Q4 23) | 3 | BRP or VLP | Yes | 1 | 1 | Energy, Availability |
| Slow Reserve (Q4 23) | 4 | BRP or VLP | Yes | 1 | 15 | Energy, Availability |
Netherlands
The Dutch market is mostly aligned with the ENTSO-E standard balancing products. The BSP role enables participation in balancing products (minus wholesale and imbalance) for non-suppliers, and lenient pooling rules streamline DER access. Fast response times and symmetrical requirements for frequency products remain a barrier.
Dutch balancing is mostly resolved passively, through imbalance pricing. The Dutch TSO (TenneT) publishes real-time imbalance prices, creating a market mechanism to resolve imbalance without calling upon balancing reserves. Imbalance prices are equivalent to the balancing energy price. DER assets may monetize their flexibility on the imbalance market if controlled via the BRP. When balancing isn’t required, the price for balancing products is set at the midpoint of ‘Up’ and ‘Down’ bids.
Products
| Product | DER suitability | Pooling | Direction | Min bid (MW) | Full Activation Time (s) | Measurement granularity (s) | Payment |
|---|---|---|---|---|---|---|---|
| FCR | 3 | Yes | Symmetrical | 1 | 30 | 4 | Availability |
| aFRR | 4 | Yes | Asymmetrical | 1 | 300 | 4 | Energy,Availability |
| mFRR | 3 | Yes | Asymmetrical | 1 | 300 | 4 | Energy,Availability |
France
France has a mixed balancing market. FCR is procured via the common EU framework, but strict symmetricality requirements limit DER participation. The aFRR market is currently suspended. mFRR and RR are not yet part of the common MARI platform, but do allow some DER access via specified programmes.
France has a country-specific load-shedding product (NEBEF) well-suited to DERs. BSP participation is allowed. Under NEBEF, assets are paid to reduce their consumption compared to their day-ahead forecast.
France also has time-based DSO charges, enabling further cost avoidance if in the BRP role.
Products
| Product | DER suitability | Pooling | Direction | Bidding | Min bid (MW) | Full Activation Time (s) | Measurement (s) | Payment |
|---|---|---|---|---|---|---|---|---|
| FCR | 3 | Yes | Symmetrical | Daily | 1 | 30 | 10 | Availability |
| NEBEF | 4 | Yes | Asymmetrical | Daily | 0.1 | Delivery | ||
| mFRR/RR | 2 | Yes | Asymmetrical | Year,Daily | 10 | 15 | 10 | Delivery,Availability |
| aFRR (suspended) | 0 | Yes |
Germany
The German balancing market participates in EU cooperation for FCR and aFRR products. The BSP role exists, but only BRPs are effectively able to participate. Pooling is allowed, within the same TSO area (4 TSOs in Germany). Burdensome prequalification and measurement requirements (including DSO approval) limit the scalability of DER participation.
Products
| Product | DER suitability | Pooling | Direction | Bidding | Min bid (MW) | Full Activation Time (s) | Measurement granularity (s) | Payment |
|---|---|---|---|---|---|---|---|---|
| FCR | 3 | Yes | Symmetrical | Daily | 1 | 30 | 1 | Availability |
| aFRR | 2 | Yes | Asymmetrical | Daily | 1 | 600 | 1 | Delivery,Availability |
| mFRR/RR | 2 | Yes | Asymmetrical | Year,Daily | 10 | 750 | 1 | Delivery,Availability |
Denmark
Denmark is split into 2 zones: DK1 (West) is closely aligned with EU balancing arrangements, and DK2 (East) is integrated into the common Nordic balancing zone. The BSP role is available without BRP consent for FCR in DK1 and FFR and FCR-D in DK2.
In DK2, the asymmetric FCR-D (Disturbance) product is particularly well-suited to DERs. FCR-D has small min bids (0.1MW), flexible bid durations (1 to 6 hours) and pooled measurement. Pools are capped at 3MW, adding a cost (metering) and administrative burden to large portfolios. FFR’s 1 second response time limits many DERs, but is otherwise accessible.
In DK1, BSP restrictions on pooling limit the market. Pooling is allowed, but only within the same BRP if mixing generation and demand. BSPs are able to participate in the FCR market, but only BRPs may realistically access the restricted aFRR and mFRR markets.
Products
| Product | DER suitability | Pooling | Direction | Bidding | Min bid (MW) | Pool size (MW) | Full Activation Time (s) | Bid duration (hrs) | Measurement granularity (s) | Payment |
|---|---|---|---|---|---|---|---|---|---|---|
| FCR (DK1) | 3 | Yes | Symmetrical | Daily | 1 | 3 | 30 | 4hrs | 1 | Availability |
| aFRR (DK1) | 1 | Yes | Symmetrical | Monthly | 1 | 10 | 600 | 1 | Delivery,Availability | |
| mFRR (DK1) | 2 | Yes | Asymmetrical | Year,Daily | 10 | 3 | 750 | 1 | Delivery,Availability | |
| FCR-D (DK2) | 4 | Yes | Asymmetrical | Daily | 0.1 | 3 | 30 | 1-6hrs | 1 | Availability |
| FCR-N (DK2) | 2 | Yes | Symmetrical | Daily | 0.1 | 3 | 30 | 1 | Availability | |
| FFR (DK2) | 2 | Yes | Asymmetrical | Daily | 0.3 | 3 | 1 | 1 | Availability |
Sweden
Sweden’s frequency and balancing products are broadly in-line with the Nordic cooperation model. FCR-D and aFRR are particularly well-suited to DERs due to small minimum bids, asymmetric acceptance, and flexible prequalification. Strict measurement rules require a wallbox connection for EV flexibility. In 2022, these products were typically more lucrative than in neighboring countries.
SVK, Sweden’s TSO, allows small (<0.1MW) assets to be type-qualified and therefore assed to a pool without pre-qualification. Although this type qualification is limited to 1MW of additional capacity, the relatively quick (<8 week) pre-qualification process means this isn’t an insurmountable barrier.
The BSP role is not yet active is Sweden, unlike neighboring countries, limiting participation to BRPs.
Products
| Product | DER suitability | Pooling | Direction | Bidding | Min bid (MW) | Pool size (MW) | Full Activation Time (s) | Bid duration (hrs) | Measurement granularity (s) | Payment |
|---|---|---|---|---|---|---|---|---|---|---|
| FFR | 2 | Yes | Asymmetrical | Daily | 0.3 | 1 | 1 | 1 | ||
| FCR-D | 4 | Yes | Asymmetrical | Daily | 0.1 | 1 | 30 | 1-6hrs | 1 | Availability |
| FCR-N | 2 | Yes | Symmetrical | Daily | 0.1 | 1 | 30 | 1 | ||
| aFRR | 3 | Yes | Symmetrical | Daily | 1 | 1 | 300 | Availability |