2018

Cross-Border Exchange and Sharing of Generation Reserve Capacity

Reprint No. 2018:39

Author(s): Fridrik M. Baldursson, Ewa Lazarczyk, Marten Ovaere and Stef ProostYear: 2018 Title: Energy Journal Volume (No.): 39 (4) Pages: 57–84
Online article (restrictions may apply)
Preliminary version


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 €165 million per year without transmission constraints and €135 million per year with transmission constraints. The cost decrease of sharing is estimated to be €500 million per year. The model also shows that voluntary cross-border cooperation could be hard to achieve, as TSOs do not necessarily have correct incentives.


Reference:
Baldursson, Fridrik M., Ewa Lazarczyk, Marten Ovaere and Stef Proost (2018), "Cross-Border Exchange and Sharing of Generation Reserve Capacity". Energy Journal 39(4), 57–84.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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