European Union Electricity Market Glossary
Activation Optimisation Function (AOF)
‘Activation optimisation function’ (AOF) means the function of operating the algorithm applied to optimise the activation of balancing energy bids (Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing, Article 2(39)).
Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing
Activation optimisation function
1. All TSOs shall establish an activation optimisation function in accordance with Article 29 and this Article for the optimisation of the activation of balancing energy bids from different common merit order lists. This function shall take into account at least:
(a) activation processes and technical constrains from different balancing energy products;
(b) operational security;
(c) all balancing energy bids included in the compatible common merit order lists;
(d) the possibility to net the counteracting activation requests from TSOs;
(e) submitted activation requests of all TSOs;
(f) available cross-zonal capacity.
2. Common merit order lists shall consist of balancing energy bids from standard products. All TSOs shall establish the necessary common merit order lists for the standard products. Upward and downward balancing energy bids shall be separated in different common merit order lists.
3. Each activation optimisation function shall use at least one common merit order list for upward balancing energy bids and one common merit order list for downward balancing energy bids.
4. TSOs shall ensure that the balancing energy bids submitted to the common merit order lists are expressed in euros and make reference to the market time unit.
5. Depending on the requirement for standard products for balancing energy, TSOs may create more common merit order lists.
6. Each TSO shall submit its activation requests for balancing energy bids to the activation optimisation function.
7. The activation optimisation function shall select balancing energy bids and request the activation of selected balancing energy bids from the connecting TSOs where the balancing service provider, associated with the selected balancing energy bid, is connected.
8. The activation optimisation function shall submit the confirmation of the activated balancing energy bids to the TSO requesting the activation of the balancing energy bids. The activated balancing service providers shall be responsible for delivering the requested volume until the end of the delivery period.
9. All TSOs that operate the frequency restoration process and the reserve replacement process to balance their LFC area shall strive to use all balancing energy bids from relevant common merit order lists to balance the system in the most efficient way, taking into account operational security.
10. TSOs that do not use the reserve replacement process to balance their LFC area shall strive to use all balancing energy bids from relevant common merit order lists for frequency restoration reserves to balance the system in the most efficient way, taking into account operational security.
11. Except in the normal state, TSOs may decide to balance the system using only the balancing energy bids from balancing service providers in its own control area if such decision helps alleviate the severity of the current system state. The TSO shall publish a justification for such decision without undue delay.
Rules on the activation optimisation function are stipulated in Article 31 of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing - see box.
The activation optimisation function is central to the process of the activation of balancing energy.
In order to enable the cross-border exchange of balancing energy, the activation of balancing energy has to be coordinated by a common function.
This function, known as the activation optimisation function, determines the most efficient activation of the incoming balancing request while respecting some capacity and operational restrictions.
The activation optimisation function is responsible for using the algorithm which is commonly developed by the Transmission System Operators (TSOs).
The activation itself is done by the controlling units of the respective TSOs. This activation is automatically done for Frequency Restoration Reserve (FRR) automatic or manually done for both FRR manual and Replacement Reserve (RR).
In order to implement this activation process robust communication procedures are required between the common function and the controlling units/operators.
The steps involved in the activation of balancing energy are as follows:
1. the requesting TSOs send their requirements to the Activation Optimisation Function;
2. after the balancing energy gate closure time, the activation optimisation function calculates the most efficient activation taking the following into account:
(a) common merit order list (CMOL) containing all balancing energy bids,
(b) available cross zonal capacity either available after Intraday or reserved previously,
(c) network stability constraints,
(d) balancing requirements of the TSOs,
(e) imbalance netting potential;
3. activation optimisation function sends the individual activation amounts (as a correction signal) to each responsible TSO (connecting TSO);
4. the connecting TSO activates the successful balancing energy bids (via a phone call or automatically by activation system such as a MOL-Server or local controller);
5. balancing energy is exchanged through commercial schedules or virtual tie-lines;
6. balancing energy is settled between the providers and the TSOs involved.
According to Article 29(6) of the said Regulation (EU) 2017/2195 of 23 November 2017 the request for activation of a balancing energy bid from the activation optimisation function shall oblige the requesting TSO and connecting TSO to accept the firm exchange of balancing energy.
Each connecting TSO shall ensure the activation of the balancing energy bid selected by the activation optimisation function.
The balancing energy shall be settled between the connecting TSO and the balancing service provider (BSP).
Moreover, the said Regulation 2017/2195 in Article 29(7) and (9) stipulates that the activation of balancing energy bids is to be based on a TSO-TSO model with a common merit order list.
Each connecting TSO shall submit, prior to the TSO energy bid submission gate closure time, all balancing energy bids received from balancing service providers to the activation optimisation function.
The connecting TSOs shall not modify or withhold balancing energy bids, except for:
(b) balancing energy bids that are manifestly erroneous and include an unfeasible delivery volume;
(c) balancing energy bids that are not forwarded to the European platforms.
Pursuant to Article 29(14) of the said Commission Regulation (EU) 2017/2195 of 23 November 2017 each TSO may declare the balancing energy bids submitted to the activation optimisation function unavailable for the activation by other TSOs because they are restricted due to internal congestion or due to operational security constraints within the connecting TSO scheduling area.