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
Published version

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.

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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