Working Paper No. 1178

Cross-border Exchange and Sharing of Generation Reserve Capacity

Published: August 25, 2017Pages: 44Keywords: Cross-border balancing; Generation reserves, Multi-TSO interactions, Electricity transmission reliabilityJEL-codes: L94; D61; C78

Cross-border Exchange and Sharing of Generation Reserve Capacity Fridrik M. Baldursson, Ewa Lazarczyk, Marten Ovaere and Stef Proost


This paper develops a stylized model of cross-border balancing. We distinguish three degrees of cooperation: autarky, reserves exchange and reserves sharing. The model shows that TSO cooperation reduces costs. The gains of cooperation increase with cost asymmetry and decrease with correlation of real-time imbalances. Based on actual market data of reserves procurement of positive and negative automatic frequency restoration reserves in Belgium, France, Germany, the Netherlands, Portugal and Spain, we estimate the procurement cost decrease of exchange to be 160 million euro per year and of sharing to be 500 million euro per year. The model also shows that voluntary cross-border cooperation could be hard to achieve, as TSOs do not necessarily have correct incentives.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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