The integration of EU balancing markets for electricity

A core target for EU energy policy is to integrate national electricity markets in Europe. The hope is that increased trade will increase the effectiveness of production, improve the reliability of the system, and help achieve climate policy objectives. The need for such integration has increased significantly with the increasing reliance on renewable energy, due to its stochastic nature. This project, conducted jointly with Thomas Tangerås (IFN), studies the incentives for national transmission system operators to contribute to such integration. It focuses in particular on operators’ incentives to “export” their balancing problems in domestic market to other countries by reducing transmission capacity.