Replacement Reserve (RR)
According to Article 3(2)(8) of the Network Code on System Operation replacement reserve (RR) means the active power reserves available to restore or support the required level of frequency restoration reserve (FRR) to be prepared for additional system imbalances, including generation reserves.
|
|
1 February 2023 ENTSO-E consultation - Nordic TSOs' methodology for sharing and exchange limits of FRR/RR (amended) This consultation concerns the amended methodology of all Nordic TSOs for sharing and exchange limits of FRR/RR between synchronous areas in accordance with Article 176(1), 177(1), 178(1) and 179(1) of the Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission system operation (SO Regulation). The main trigger for this amendment is the implementation of markets that allow for exchanging FRR energy and capacity between synchronous areas. This development is expected to increase the exchange of FRR and accordingly change the operation on the HVDC interconnectors significantly. This amendment makes sure that the allocation constraints for exchange by day-ahead and intraday markets also apply to the balancing market. Furthermore, the amendment ensures secure operation on the HVDC interconnectors and confirms the responsibilities of the TSOs on FRR capacity.
17 June 2020 Annex II Evaluation of responses to the public consultation
|
This category includes operating reserves with activation time from 15 minutes (in Continental Europe) up to hours. Commission Staff Working Document of 23 November 2017 accompanying the Commission Regulation establishing a guideline on electricity balancing explaines replacement reserves are reserves from reserve providers (generators, storage, demand response) used by Transmission System Operator (TSO) to restore the required level of frequency containment reserve (FCR) and FRR due to their earlier usage. Contrary to FCR and FRR, not all TSOs in the EU maintain RR.
For replacement reserves the European integration model for a future EU-wide balancing market is based on:
- the TSO-TSO model or,
|
Links:
TERRE (Trans European Replacement Reserves Exchange)
|
- the TSO-BSP model (when a TSO does not use the RR process as part of its Load-Frequency-Control structure).
The average price for the replacement reserve has a vital and commercially sensitive interconnectedness with the imbalance price.
The Network Code on the Electricity Balancing (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - NC EB) envisions that:
1. the imbalance price for shortage must not be less than:
(a) the weighted average price for activated positive balancing energy for FRR and RR; or
(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy for FRRs or RRs;
2. the imbalance price for surplus must not be greater than:
(a) the weighted average price for activated negative balancing energy for FRRs and RRs; or
(b) in the event that no activation of balancing energy in either direction has occurred during the imbalance settlement period, the value of the avoided activation of balancing energy for FRRs of RRs;
3. imbalance settlement price, in the event that both positive and negative balancing energy for FRRs or RRs have been activated during the same imbalance settlement period, is to be determined for shortage and surplus based on at least one of the above principles.
According to Article 48 of the said Commission Regulation (EU) 2017/2195 of 23 November 2017 each connecting TSO may calculate and settle the activated volume of balancing energy for the reserve restoration process with balancing service providers (BSPs).
The price, be it positive, zero or negative, of the activated volume of balancing energy for the reserve restoration process is to be defined for each direction in accordance with the following table:
Table
Payment for balancing energy
| Balancing energy price positive | Balancing energy price negative | |
| Positive balancing energy | Payment from TSO to BSP | Payment from BSP to TSO |
| Negative balancing energy | Payment from BSP to TSO | Payment from TSO to BSP |
Provisions regulating replacement reserves are stipulated in Articles 160 - 162 of the Network Code on System Operation (see box below).
Network Code on System Operation
Title 7
Replacement Reserves
Article 160
RR dimensioning
1. All TSOs of an LFC block shall have the right to implement a reserve replacement process.
2. To comply with the FRCE target parameters referred to in Article 128, all TSOs of a LFC block with a RRP, performing a combined dimensioning process of FRR and RR to fulfil the requirements of Article 157(2), shall define RR dimensioning rules in the LFC block operational agreement.
3. The RR dimensioning rules shall comprise at least the following requirements:
(a) for the Nordic and CE synchronous areas there shall be sufficient positive reserve capacity on RR to restore the required amount of positive FRR. For the GB and IE/NI synchronous areas there shall be sufficient positive reserve capacity on RR to restore the required amount of positive FCR and positive FRR;
(b) for the Nordic and CE synchronous areas, there shall be sufficient negative reserve capacity on RR to restore the required amount of negative FRR. For the GB and IE/NI synchronous areas, there shall be sufficient negative reserve capacity on RR to restore the required amount of negative FCR and negative FRR;
(c) there shall be sufficient reserve capacity on RR, where this is taken into account to dimension the reserve capacity on FRR in order to respect the FRCE quality target for the period of time concerned; and
(d) compliance with the operational security within a LFC block to determine the reserve capacity on RR.
4. All TSOs of an LFC block may reduce the positive reserve capacity on RR of the LFC block, resulting from the RR dimensioning process, by developing a RR sharing agreement for that positive reserve capacity on RR with other LFC blocks in accordance with the provisions of Title 8 of Part IV. The control capability receiving TSO shall limit the reduction of its positive reserve capacity on RR in order to:
(a) guarantee that it can still meet its FRCE target parameters set out in Article 128;
(b) ensure that operational security is not endangered; and
(c) ensure that the reduction of the positive reserve capacity on RR does not exceed the remaining positive reserve capacity on RR of the LFC block.
5. All TSOs of a LFC block may reduce the negative reserve capacity on RR of the LFC block, resulting from the RR dimensioning process, by developing a RR sharing agreement for that negative reserve capacity on RR with other LFC blocks in accordance with the provisions of Title 8 of Part IV. The control capability receiving TSO shall limit the reduction of its negative reserve capacity on RR in order to:
(a) guarantee that it can still meet its FRCE target parameters set out in Article 128;
(b) ensure that operational security is not endangered; and
(c) ensure that the reduction of the negative reserve capacity on RR does not exceed the remaining negative reserve capacity on RR of the LFC block.
6. Where a LFC block is operated by more than one TSO and if the process is necessary for the LFC block, all TSOs of that LFC block shall specify in the LFC block operational agreement the allocation of responsibilities between the TSOs of different LFC areas for the implementation of the dimensioning rules set out in paragraph 3.
7. A TSO shall have sufficient reserve capacity on RR in accordance with the RR dimensioning rules at any time. The TSOs of a LFC block shall specify in the LFC block operational agreement an escalation procedure for cases of severe risk of insufficient reserve capacity on RR in the LFC block.
Article 161
RR minimum technical requirements
1. RR providing units and RR providing groups shall comply with the following minimum technical requirements:
(a) connection to only one reserve connecting TSO;
(b) RR activation according to the setpoint received from the reserve instructing TSO;
(c) the reserve instructing TSO shall be the reserve connecting TSO or a TSO that shall be designated by the reserve connecting TSO in the RR exchange agreement pursuant to Article 165(3) or 171(4);
(d) activation of complete reserve capacity on RR within the activation time defined by the instructing TSO;
(e) de-activation of RR according to the setpoint received from the reserve instructing TSO;
(f) a RR provider shall ensure that the RR activation of the RR providing units within a reserve providing group can be monitored. For that purpose, the RR provider shall be capable of supplying to the reserve connecting TSO and the reserve instructing TSO real-time measurements of the connection point or another point of interaction agreed with the reserve connecting TSO concerning:
(i) the time-stamped scheduled active power output, for each RR providing unit and group and for each power generating module or demand unit of a RR providing group with a maximum active power output larger than or equal to 1,5 MW;
(ii) the time-stamped instantaneous active power, for each RR providing unit and group, and for each power generating module or demand unit of a RR providing group with a maximum active power output larger than or equal to 1,5 MW;
(g) fulfilment of the RR availability requirements.
2. All TSOs of a LFC block shall specify RR availability requirements and requirements on the control quality of RR providing units and RR providing groups in the LFC block operational agreement.
3. The reserve connecting TSO shall adopt the technical requirements for the connection of RR providing units and RR providing groups to ensure the safe and secure delivery of RR in the prequalification process description.
4. Each RR provider shall:
(a) ensure that its RR providing units and RR providing groups fulfil the RR technical minimum requirements and the RR availability requirements referred to in paragraphs 1 to 3; and
(b) inform its reserve instructing TSO about a reduction of the actual availability or a forced outage of its RR providing unit or its RR providing group or a part of its RR providing group as soon as possible.
5. Each reserve instructing TSO shall ensure compliance with the RR technical requirements, the RR availability requirements and the connection requirements referred to in this Article with regard to its RR providing units and RR providing groups.
Article 162
RR prequalification process
1. Each TSO of a LFC block which has implemented a RRP shall develop a RR prequalification process within 12 months after entry into force of this Regulation and shall clarify and make publicly available the details thereof.
2. A potential RR provider shall demonstrate to the reserve connecting TSO or the TSO designated by the reserve connecting TSO in the RR exchange agreement that it complies with the RR technical minimum requirements, the RR availability requirements and the connection requirements referred to in Article 161 by completing successfully the prequalification process of potential RR providing units or RR providing groups, described in paragraphs 3 to 6.
3. A potential RR provider shall submit a formal application to the relevant reserve connecting TSO or the designated TSO together with the required information of potential RR providing units or RR providing groups. Within 8 weeks from receipt of the application, the reserve connecting TSO or the designated TSO shall confirm whether the application is complete. Where the reserve connecting TSO or the designated TSO considers that the application is incomplete, the potential RR provider shall submit the additional required information within 4 weeks from the receipt of the request for additional information. Where the potential RR provider does not supply the requested information within that deadline, the application shall be deemed withdrawn.
4. Within 3 months from confirmation of the completeness of the application, the reserve connecting TSO or the designated TSO shall evaluate the information provided and decide whether the potential RR providing units or RR providing groups meet the criteria for a RR prequalification. The reserve connecting TSO or the designated TSO shall notify its decision to the potential RR provider.
5. The qualification of RR providing units or RR providing groups shall be reassessed:
(a) at least once every 5 years; and
(b) where the technical or availability requirements or the equipment have changed.
6. To ensure operational security, the reserve connecting TSO shall have the right to reject the provision of RR by RR providing groups, based on technical arguments such as the geographical distribution of the power generating modules or demand units establishing a RR providing group.
European platform for the exchange of balancing energy from replacement reserves
Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing in Article 19 envisages the procedure for establishing the European platform for the exchange of balancing energy from replacement reserves (RR platform). The goal is the integration of balancing markets and for this purpose it is necessary to develop platforms for balancing energy exchange from replacement reserves, frequency restoration reserves with manual and automatic activation and imbalance netting.
Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing
Article 19
European platform for the exchange of balancing energy from replacement reserves
1. By six months after entry into force of this Regulation, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall develop a proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves.
2. The European platform for the exchange of balancing energy from replacement reserves, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the activation optimisation function and the TSO-TSO settlement function. That European platform shall apply a multilateral TSO-TSO model with common merit order lists to exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14).
3. The proposal in paragraph 1 shall include at least:
(a) the high level design of the European platform;
(b) the roadmap and timelines for the implementation of the European platform;
(c) the definition of the functions required to operate the European platform;
(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;
(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure:
(i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform;
(ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as, supports the objectives of this Regulation;
(iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;
(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;
(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;
(h) the balancing energy gate closure time for all standard products for replacement reserves in accordance with Article 24;
(i) the definition of standard products for balancing energy from replacement reserves in accordance with Article 25;
(j) the TSO energy bid submission gate closure time in accordance with Article 29( 13);
(k) the common merit order lists to be organised by the common activation optimisation function pursuant to Article 31;
(l) the description of the algorithm for the operation of the activation optimisation function for the balancing energy bids from all standard products for replacement reserves in accordance with Article 58.
4. By six months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).
5. By one year after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 and that have at least one interconnected neighbouring TSO performing the replacement reserves process shall implement and make operational the European platform for the exchange of balancing energy from replacement reserves. They shall use the European platform to:
(a) submit all balancing energy bids from all standard products for replacement reserves;
(b) exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14);
(c) strive to fulfil all their needs for balancing energy from replacement reserves.
The founding rules for the RR Platform have been set out in:
- The proposal of all Transmission System Operators performing the reserve replacement for the implementation framework for the exchange of balancing energy from Replacement Reserves in accordance with Article 19 of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, ENTSO-E, 21 February 2018,
- Explanatory Document to the proposal of all Transmission System Operators performing the reserve replacement for the implementation framework for the exchange of balancing energy from Replacement Reserves in accordance with Article 19 of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, ENTSO-E, 21 February 2018.
The above proposal was developed by the participating TSOs, i.e.: National Grid, Swissgrid, ESO, REE, REN, MAVIR, TERNA, Transelectrica, RTE, PSE and CEPS. The objective of the RR Platform is to support the exchange of RR between Transmission System Operators performing the reserve replacement process (RR TSOs) that have at least one neighbouring RR TSO or interconnected TSO. The RR Platform implementation framework applies solely to the exchange of balancing energy from replacement reserves. European platforms for imbalance netting, manual and automatic frequency restoration reserves processes are out of the scope. The RR Platform will gather all the RR offers from the TSOs’ local balancing markets and provide, an optimised allocation of RR in order to meet the TSOs’ balancing energy needs.
The RR Platform is intended to perform the following functions:
(a) AOF (activation optimization function),
(b) data management:
i. CMOL (common merit order list);
ii. available cross-zonal capacity.
(c) TSO-TSO settlement.
The TSO-TSO process is the following:
- the TSOs receive offers from the BSPs in their national market balance areas and systems,
- the offers which are coherent with the RR standard product are anonymized and forwarded to the RR-Platform,
- TSOs applying a central dispatching model will convert integrated scheduling bids received from the BSPs into standard RR standard products and then submit the RR standard product to the RR Platform,
- TSOs also communicate their balancing energy needs to the platform, as well as the available cross-zonal capacities remaining after the intraday market,
- the RR Platform executes the AOF (activation optimisation function) that optimises the clearing of the TSOs’ balancing energy needs against the BSPs’ offers,
- the RR Platform communicates back to the TSOs the accepted offers, the satisfied needs and the prices (based upon this allocation of RR standard product, the platform calculates the commercial flows between the bidding zones, the resulting cross zonal schedules and updated cross-zonal capacities are sent to the TSOs and possibly also to the European verification platforms operated by ENTSO-E),
- data that must be published are sent to the central transparency platform operated by ENTSO-E according to the Transparency Regulation 543/2013 and Article 12 of the Commission Regulation (EU) 2017/2195 of 23 November 2017,
- finally, the information required to settle expenditure and revenue between TSOs, i.e. the financial value of the energy flows across bidding zones, is sent to TSO-TSO settlement function responsible for the financial accounting between TSOs (Explanatory Document to the proposal of all Transmission System Operators performing the reserve replacement for the implementation framework for the exchange of balancing energy from Replacement Reserves in accordance with Article 19 of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, ENTSO-E, 21 February 2018, p. 5, 6).
Permitted RR standard product bid formats for balancing energy offers
The following RR standard product energy bids formats will be permitted in the RR Platform:
(a) Divisible offers with a minimum quantity greater or equal to one: A divisible offer is a balancing energy offer that consists of a single quantity and a single price. Its delivery period can be 15, 30, 45 or 60 minutes. The algorithm can accept a part of it in terms of quantity; however, the same quantity must be accepted for the whole submitted delivery period. The BSPs can also define a minimum quantity. If the offer is accepted then always a volume greater or equal to this minimum quantity will be accepted.
(b) Indivisible offers: An indivisible offer is a balancing energy offer that consists of a single quantity and a single price. Its delivery period can be 15, 30, 45 or 60 minutes. The difference between a divisible and an indivisible offer is that the algorithm can accept either the whole quantity of the indivisible offer or nothing.
(c) Exclusive offers either in time or in volume: Exclusive offers are balancing energy offers that satisfy the following condition: only one (or none) of the exclusive offers can be activated; hence, the activation of a sub-offer belonging to an exclusive offer excludes the activation of the other sub-offers belonging to the same exclusive offer. The exclusive offers can either be divisible or indivisible offers. The number of sub-offers of each exclusive offer (that may be compounded of indivisible and divisible offers) will be limited by a maximum number that will be defined during the implementation phase, based on the computation time requirements.
(d) Multi-part offers in volume: A multi-part offer is a balancing energy offer that has variable prices for variable volumes and a single delivery period. The price can either decrease or increase as the volume increases.
(e) Linking offers either in time or in volume: Linking offers are balancing energy offers that satisfy the following condition: a sub-offer of a linking offer is (not) activated if and only if another sub-offer of the same linking offer is (not) activated. For the linking offers in volume, always the same ration of two linking offers will be activated.
Some TSOs may not allow their BSPs to offer all RR standard product energy bids formats at the first stage of the operation of the RR Platform, as their local IT systems may not be ready to process all types of offers. However, to ensure fair competition and non-discriminatory conditions, all BSPs will be allowed to offer all RR standard product energy bids formats at a later stage.
RR Standard Products
The product exchanged in RR Platform is the standard product for balancing energy from RR. It is a 15 minutes scheduled block product that can be activated for a fixed quarter hour or a multiple of a fixed quarter hour. The full activation time (FAT) of the RR standard product is 30 minutes. The ramping period can be from 0 to 30 minutes.
Gate closure time for RR standard product energy bids
The gate closure time (GCT) for the submission of an RR standard product balancing energy bid to the connecting TSO by BSPs is between 60 and 55 minutes before the period which is concerned by the activation of the RR standard product to satisfy the TSO balancing energy need.
Organisation of the common merit order lists
Common merit order lists are organised by the activation optimisation function in the following manner:
(1) Each BSP in self-dispatch system shall submit the RR standard product energy bids to the connecting TSO.
(2) Each BSP in central-dispatch system shall submit integrated scheduling process bids to the connecting TSO who shall convert integrated scheduling process bids received from BSPs into RR standard product energy bids.
(3) The format possibilities of the RR standard product energy bids are:
(a) Divisible or indivisible;
(b) Exclusive in volume or time and/or Multi-part in volume and price; (c) Linked in volume or time.
(4) The connecting TSO shall submit the coherent bids to the common merit order list function.
(5) The common merit order list function shall compromise of two merit order lists that shall contain all involved RR standard product energy bids and all the RR balancing energy needs submitted by the TSOs:
(a) First merit order list shall include upward bids and downward RR balancing energy needs sorted in ascending order of price;
(b) Second merit order list shall include downward bids and upward RR balancing energy needs sorted in descending order of price.
Cap and floors prices
What is noteworthy, the TSOs suggest to not apply cap and floor prices to the balancing energy offers submitted to RR Platform. Only technical price limit will be applied (IT limits).
Terms and conditions for BSPs of RR standard product
The terms and conditions for BSPs of RR standard product are as follows:
- to become a BSP it is necessary to perform a prequalification;
- the BSPs for RR must be able to provide a RR standard product (accepted shape or shape which can be converted to RR standard product and exchange necessary information with the TSO;
- the BSPs will be settled for the requested volume of energy;
- the BSPs will receive the cross-zonal marginal price (if a Connecting TSO converts bids submitted to the RR Platform from integrated scheduling process bids or from specific products, settlement with BSPs can be adapted in order to ensure such TSO financial neutrality);
- the BSP will identify the location of the product in non-portfolio bidding systems;
- in case of under or over delivery of balancing energy, the BSP will have financial consequences directly or through the Balance Responsible Parties (BRP);
- the terms and conditions for BRPs are out of the scope of the RR Platform implementation.
Terre
The TERRE (Trans European Replacement Reserves Exchange) is the implementation project of the RR Platform.
Regulatory chronicle