​​​The EB Regulation sets out certain obligations for TSOs, ENTSO-E, DSOs, regulatory authorities and the Agency regarding the development and approval of terms and conditions or methodologies. Articles 4 and 5 describe the process of adoption of these terms and conditions or methodologies submitted by the TSOs, which are divided into three categories: the ones subject to all regulatory authorities' approval, in accordance with Article 5(2), the ones subject to the approval of the regulatory authorities of a concerned region, in accordance with Article 5(3), and the ones subject to the approval of each regulatory authority of each Member State on a case by case basis, in accordance with Article 5(4).

A proposal by TSOs should typically be consulted upon in accordance with Article 10 and according to Article 5(5) submitted to the concerned regulatory authorities and to the Agency and should contain a timescale for implementation and the expected impact on the objectives of the EB Regulation as referred to in Article 3. The implementation timescale shall not be longer than twelve months after the approval by the relevant regulatory authorities, except where all relevant regulatory authorities agree to extend the implementation timescale or where different timescales are stipulated in the EB Regulation. The concerned regulatory authorities should take decisions concerning the proposed terms and conditions or methodologies within six months after receipt of the proposal. Where the regulatory authorities were not able to reach unanimous agreement on the approval of the proposal, they can request an amendment, which gives the TSOs extra two months for amending the proposal and another two months for the regulatory authorities to approve the amended proposal. If, in either case, the regulatory authorities were not able to reach unanimous agreement or upon their joint request, the Agency shall adopt a decision within six months from the referral.

After the adoption of the terms and conditions or methodologies TSOs responsible for developing the respective proposals or regulatory authorities responsible for their adoption, may request amendments of these terms and conditions or methodologies, in accordance with Article 6(3). In that case the proposals for amendment to the terms and conditions or methodologies shall be submitted to consultation and follow the approval procedure as described above.​​​
 

EU-wide TSO-TSO settlement rules for the intended exchanges of energy

What is it about?

All TSOs participating in the European balancing platforms have to implement the common settlement rules for the exchange of energy. These rules define the methodology to determine the settlement amounts of all intended exchanges of balancing energy resulting from the replacement reserves process, the frequency restoration process with manual and automatic activation and the imbalance netting process.

They also define how the settlement amounts and balancing congestion incomes are distributed among the TSOs.

Legal basis: Article 50(1) of the EB Regulation

Responsibility: all TSOs

Current status: The common settlement rules were approved by ACER in July 2020.

Implementation: Each TSO shall apply the relevant provisions of the common settlement rules once they participate in the European balancing platform for the exchange of balancing energy or the operation of the imbalance netting process. The TSOs participating in the replacement reserve platform shall implement and apply these common settlement rules by 1st July 2022.

Read more on the latest approved common TSO-TSO settlement rules for the intended exchanges of energy.

Documentation on the approval process of the settlement rules.

TSO-TSO settlement rules for the intended exchange of energy within a synchronous area

What is it about?

These rules determine the high-level design principles of the common settlement rules, settlement amounts and prices for all intended exchanges of balancing energy resulting from the frequency containment process and ramping period.

Legal basis: Article 50(3) of the EB Regulation

Responsibility: all TSOs intentionally exchanging energy within a synchronous area

Current status: The common settlement rules of the continental Europe and Nordic synchronous areas were approved by relevant regulatory authorities in June 2020. 

Implementation: The approved rules are implemented.

Read more on the latest approved TSO-TSO settlement rules for the intended exchange of energy within a synchronous area.

Documentation on the approval process of these rules.

TSO-TSO settlement rules for the intended exchange of energy for all asynchronously connected TSOs

What is it about?

These rules determine the high-level design principles of the common settlement rules, the settlement amounts and prices for all intended balancing energy’s exchanges of asynchronously connected TSOs resulting from the frequency containment process for active power output and ramping restrictions.

Legal basis: Article 50(4) of the EB Regulation

Responsibility: all asynchronously connected TSOs intentionally exchanging energy between synchronous area

Current status: The common settlement rules were approved by relevant regulatory authorities in June 2020. 

Implementation: The approved rules are implemented.

Read more on the latest approved TSO-TSO settlement rules for the intended exchange of energy for all asynchronously connected TSOs.

Documentation on the approval process of these rules.

TSO-TSO settlement rules for the unintended exchange of energy for each synchronous area

What is it about?

These rules determine the high-level design principles of the common settlement rules, the settlement amounts and prices of all balancing energy’s unintended exchanges within a synchronous area.

Legal basis: Article 51(1) of the EB Regulation

Responsibility: all TSOs of a synchronous area

Current status: The common settlement rules applicable to all unintended energy exchanges have been approved:

• in April 2020 within the Baltic and Nordic synchronous areas

• in June 2020 within the Continental Europe synchronous area

Implementation: The rules are implemented.

Read more on the latest approved TSO-TSO settlement rules for the unintended exchange of energy for each synchronous area.

Documentation on the approval process of these rules.

TSO-TSO settlement rules for the unintended exchange of energy for all asynchronously connected TSOs

What is it about?

These rules determine the high-level design principles of the common settlement rules, the settlement amounts and prices of all balancing energy’s unintended exchanges of asynchronously connected TSOs.

Legal basis: Article 51(2) of the EB Regulation

Responsibility: all asynchronously connected TSOs

Current status: The common settlement rules applicable have been approved by relevant regulatory authorities in January 2020.  

Implementation: The rules are implemented.

Read more on the latest approved TSO-TSO settlement rules for the unintended exchange of energy for all asynchronously connected TSOs.

Documentation on the approval process of these rules.

Harmonisation of the main features of imbalance settlement

What is it about?

Each Transmission System Operator (TSOs) calculates the overall imbalance for every responsible party in its imbalance area, and defines its price according to the national rules. However, all TSOs are required to harmonise the main features of the imbalance settlement through the application of this methodology. These include:

• calculation of the imbalance (including its position, the allocated volume and the imbalance adjustment)

• main components for calculating the imbalance price

• use of single and dual imbalance pricing

Following the adoption of this methodology, all TSOs are required to amend their national terms and conditions for balance responsible parties.

Legal basis: Article 52(2) of the EB Regulation

Responsibility: all TSOs

Current status: The methodology was approved by ACER in July 2020.

Implementation: All TSOs should implement the methodology by January 2022.

Read more on the latest approved methodology for further specifying and harmonising the imbalance settlement.

Documentation on the approval process of this methodology.

Application of an allocation process of cross-zonal capacity

What is it about?

Two or more TSOs exchanging balancing capacity need to ensure the overall availability of the cross-zonal capacity for the exchange of balancing capacity. This can be done through the allocation of cross-zonal capacity for the exchange of balancing capacity or for sharing of reserves.

There are three different processes for allocating cross-zonal capacity:

• co-optimised allocation process (Article 40)

• market-based allocation process (Article 41)

• allocation process based on economic efficiency analysis (Article 42).

If TSOs opt for applying one of these processes, they need to further specify the relevant bidding zone borders, the timeframe and the duration of the application of the respective methodology.

Legal basis: Article 38(1) of the EB Regulation

Responsibility: two or more TSOs are allowed to apply the methodology for cross-zonal capacity allocation process for the exchange of balancing capacity or sharing of reserves.

Current status: The proposal for the application of the methodology  from frequency restoration reserves with automatic activation submitted by the TSOs of Denmark, Finland and Sweden was approved by ACER in August 2020.

Implementation: This methodology will be implemented once the capacity calculation methodology for the Nordic capacity calculation region is applied according to the Capacity Allocation and Congestion Management Regulation.

Read more on the latest approved proposals for the application of a methodology for a cross-zonal capacity allocation process for the exchange of balancing capacity or sharing of reserves.

Documentation on the approval process of these proposals.

Harmonisation of the methodology for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves

What is it about?

This methodology provides a harmonised approach for the processes of allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves, which can be applied by any group of TSOs.

The methodology will foster the optimisation of the allocation process and may also involve the market-based allocation process and the allocation process based on economic efficiency (Article 40, 41 and 42).

The methodology will replace the regional methodologies for allocating cross-zonal capacities to the balancing timeframe.

Legal basis: Article 38(3) of the EB Regulation

Responsibility: all TSOs

Current status: The harmonised cross-zonal capacity methodology was approved by ACER in July 2023.

Implementation: The harmonised market-based process should be ready for application by July 2025. The implementation deadline of the co-optimised allocation process is defined in the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).

Read more on the latest approved methodology for a co-optimised allocation process.

Documentation on the approval process of this methodology:

• TSO proposal for the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves (16 December 2022);
• TSO proposal for the Regional Coordination Centres' (RCCs') tasks of regional sizing of reserve capacity (17 March 2023); 
• TSO proposal for the RCCs' tasks of facilitating the procurement of electricity balancing capacity (17 March 2023)
• ACER Decision No 11-2023 on the TSOs’ proposal for the harmonised cross-zonal capacity allocation methodology (19 July 2023);
• ACER Decision No 12-2023 on the Regional Coordination Centre Regional Sizing of Reserve Capacity Methodology (19 July 2023); and
• ACER Decision No 13-2023 on the Regional Coordination Centre Regional Procurement of Balancing Capacity Methodology (19 July 2023).

Methodology for a co-optimised allocation process of cross-zonal capacity

What is it about?

The co-optimised allocation process is based on a comparison of actual market values of cross-zonal capacity for the exchange of energy and of balancing capacity or sharing of reserves. Its methodology describes the associated rules for allocating cross-zonal capacity across timeframes.

The market values is based on the bids of market participants, submitted for day-ahead energy and balancing capacity markets.

The cross-zonal capacity will be allocated across the balancing and day-ahead timeframe to maximise the combined overall welfare gains.

Legal basis: Article 40(1) of the EB Regulation

Responsibility: all TSOs

Current status: The methodology for a co-optimised allocation process was approved by ACER in June 2020.

Implementation: The implementation is on-going.

All TSOs are currently conducting an impact assessment for the implementation of the co-optimised allocation process and will provide the relevant requirements for the singe day-ahead coupling algorithm to Nominated Electricity Market Operators (NEMOs).

NEMOs need to consider this implementation when submitting amendments of the single day-ahead coupling algorithm methodology (Article 37 of the Capacity Allocation and Congestion Management Regulation).

Read more on the latest approved methodology for a co-optimised allocation process.

Documentation on the approval process of this methodology.

Methodology for a market-based allocation process of cross-zonal capacity

What is it about?

The market-based allocation process is based on a comparison of market values of cross-zonal capacity for the day-ahead and  balancing timeframe. Its methodology establishes the rules for allocating cross-zonal capacity for the exchange of balancing capacity or sharing of reserves.

While one of the two market values is based on the bids of market participants, the second one is based on a forecast. The cross-zonal capacity is then allocated across the balancing and energy timeframe with the aim of maximising the expected combined overall welfare gains.

Legal basis: Article 41(1) of the EB Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Methodologies for a market-based allocation process were approved for the Baltic, Core, GRIT, Italy North and Nordic capacity calculation regions.

Implementation: Different regions have different implementation timelines. Some regions have already implemented the methodology, whereas some other are expected to do so by 2025.

Read more on the latest approved methodologies for a market-based allocation process of the respective capacity calculation region.

Documentation on the approval processes of the methodologies for a market-based allocation process of each capacity calculation region.

Methodology for an allocation process of cross-zonal capacity based on economic efficiency analysis

What is it about?

The allocation process is based on a comparison of forecasted market values of cross-zonal capacity for the exchange of energy,  balancing capacity or sharing of reserves. Its methodology describes the rules for allocating cross-zonal capacity across timeframes.

The cross-zonal capacity will be allocated across the balancing and energy timeframe to maximise the expected combined overall welfare gains.

Legal basis: Article 42(1) of the EB Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Methodologies were submitted for the Core, Greece-Italy (GRIT) and Italy North capacity calculation regions.  Core and Italy North were withdrawn during the approval process, while GRIT was approved.

Implementation: No implementation is foreseen.

Read more on the latest approved methodologies for a market-based allocation process of the respective capacity calculation region.

Documentation on the approval processes of the methodologies for a market-based allocation process of each capacity calculation region.

Rules and processes for the exchange and procurement of balancing capacity

What is it about?

Transmission System Operators (TSOs) procure the balancing capacity needed at national level. However, to lower the procurement costs, TSOs may opt for exchanging balancing capacity with other TSO(s).

In this case, TSOs  need to develop the rules and processes for the common procurement of balancing capacity, including the specification of the standard product(s) for balancing capacity (Article 25(2)) they intend to exchange, taking into account the available cross-zonal capacity (Article 38(1)) and the operational limits.

Legal basis: Article 33(1) and Article 34(1) of the Electricity Balancing Regulation

Responsibility: two or more TSOs exchanging or mutually willing to exchange balancing capacity

Current status: So far two groups of TSOs have developed rules and processes for the exchange and procurement of balancing capacity:

• The Frequency Containment Reserves (FCR Cooperation), together with the exemption for transferring the balancing capacity obligations, were approved by the regulatory authorities of Austria, Belgium, France, Germany, Denmark and The Netherlands in December 2018

• The Frequency Restoration Reserves with automatic activation (Nordic aFRR market), together with the exemption for transferring the balancing capacity obligations submitted by the TSOs of Denmark, Finland and Sweden, was approved by ACER in August 2020.

Implementation: The FCR Cooperation is operational and expanding. The common rules and processes for the Nordic aFRR market will be implemented once the capacity calculation methodology for the Nordic capacity calculation region is applied according to the CACM Regulation.

Read more on the latest approved rules and processes for the exchange and procurement of balancing capacity.

Documentation on the approval process of these methodologies.

Standard products for balancing capacity

What is it about?

Each TSO may develop specific products for its national procurement of balancing capacity. However, when two or more TSOs exchange balancing capacity, they are required to use standard balancing capacity products from a list developed by all TSOs.

This list defines the characteristics of the standard products for each type of reserve:

• Replacement reserves

• Frequency restoration reserves with manual activation

• Frequency restoration reserves with automatic activation, including the validity period and the minimum duration between the end of deactivation period and the following activation.

Legal basis: Article 25(2) of the EB Regulation

Responsibility: all TSOs

Current status: The list of standard products for balancing capacity was approved by ACER in June 2020.

Implementation: Each TSO intending to use standard balancing capacity products should implement this methodology by December 2021.

Read more on the latest approved list of standard products for balancing capacity.

Documentation on the approval process of this methodology.

Implementation frameworks for balancing platforms

The Electricity Balancing (EB) Regulation governs the establishment of three different balancing platforms by requiring Transmission System Operators (TSOs) to propose implementation frameworks.

Those frameworks include:

• governance structure

• processes for operating the platform

• timeline for its development.

Find out more on the implementation of the European balancing platforms on ENTSO-E's website.  

Activation purposes of balancing energy bids 

What is it about?

Transmission System Operators (TSOs) receive standard product balancing energy bids from service providers, which they forward to the European platforms for exchanging balancing energy.

These balancing energy bids shape the common merit order list (ranking of available bids) for each platform and can be activated by the respective platform to satisfy TSOs’ balancing energy demand. Each TSO can activate any of these bids for satisfying system constraints.

Legal basis: Article 29(3) of the EB Regulation

Responsibility: all TSOs

Current status: The methodology was approved by ACER in June 2020.

Implementation: Each TSO should implement this classification methodology, once they join the respective European platform.

Read more on the latest approved methodology for classifying the activation purposes of balancing energy bids.

Documentation on the approval process of this methodology.

Pricing of balancing energy and cross-zonal capacity

What is it about?

TSOs receive standard product balancing energy bids from service providers, which they forward to the European platforms for exchanging balancing energy. Each platform activates the most cost-efficient balancing energy bids to satisfy TSOs’ balancing energy demand. The balancing energy price is set according to the marginal pricing principle. These balancing energy prices represent also a reference for pricing the cross-zonal capacity used in the balancing energy’s exchange by each platform. 

Legal basis: Article 30(1) of the EB Regulation

Responsibility: all TSOs

Current status: The methodology was approved by ACER in January 2020.

Implementation: Each TSO should implement this methodology once they join the respective European platform for the exchange of balancing energy. The European platform for the exchange of balancing energy form replacement reserves applied a different pricing methodology (as it became operation before the ACER Decision 01/2020). However, the TSOs using this platform should implement this methodology by 1st July 2022.

Read more on the latest approved methodology for pricing balancing energy.

Documentation on the approval process of this methodology.

Cross-zonal capacity calculation methodology

What is it about?

The capacity calculation methodology describes how TSOs calculate the available cross-zonal capacity for the exchange of balancing energy or for operating the imbalance netting process within the balancing timeframe. The methodology complies with network security standards.

The process consists of the following steps:

• TSOs define capacity calculation inputs – i.e. common grid models

• The inputs are used by regional coordination centres to calculate the available amount of cross-zonal capacities either by using a flow-based or coordinated Net Transmission Capacity (NTC) approach, depending on the respective region.

Legal basis: Article 37(3) of the EB Regulation

Responsibility: all TSOs in each capacity calculation region

Current status: Proposals for this methodology need to be submitted from the TSOs of each capacity calculation region by December 2022.

Implementation: No implementation timeline available yet.

The development of the EB Regulation started in 2011 when the Agency started developing the Framework Guidelines on Electricity Balancing. These Framework Guidelines were adopted on 18 September 2012.   

Among other elements, the Framework Guidelines included provisions for the forthcoming development of the Network Code on Electricity Balancing. The Framework Guidelines were essentially aiming for the integration of national electricity balancing markets through the cross-border exchanges of balancing services.

The core element of the Framework Guidelines were the models for cross-border exchanges of balancing energy that should first emerge in different geographical areas and gradually, i.e. within 6 years be integrated into one European platform where all TSOs would have access to different types of balancing energy while taking into account the transmission capacities available between different areas. To enable the creation of such a market, several requirements need to be implemented such as a common set of rights (in particular in terms of access to the balancing markets and in terms of remuneration) and obligations (in particular in terms of balancing responsibility) for all types of market participants (generation and demand). The Framework Guidelines also asked for more efficient procurement and use of balancing reserves.

The Framework Guidelines on Electricity Balancing also required the standardisation and harmonisation of some key balancing elements such as balancing products, balancing energy pricing and imbalance pricing, which are considered as prerequisites before the markets can be fully integrated. The roles and responsibilities of TSOs, Balancing Service Providers and Balance Responsible Parties also need to be harmonised to a large degree to achieve a level playing field for competition in different Member States.

Based on these Framework Guidelines, ENTSO-E was tasked to develop the Network Code on Electricity Balancing. Subsequently, the draft network code was submitted to the Agency for opinion based on which ENTSO-E revised the network code and resubmitted it to the Agency. Finally, the Agency adopted a recommendation to the European Commission to adopt the Network Code on Electricity Balancing subject to specific amendments proposed by the Agency. Following this recommendation, the European Commission further revised the network code, which was then finally adopted as a Commission guideline in November 2017 and entered into force in December 2017.

The detailed dates and documents of the above actions are presented below:

Action 1: 18 September 2012: The Agency adopts the Framework Guidelines on Electricity Balancing

Action 2: 23 December 2013: ENTSO-E submits the Network Code on Electricity Balancing to the Agency

Action 3: 21 March 2014: The Agency adopts the Opinion on the Network Code on Electricity Balancing

Action 4: 16 September 2014: ENTSO-E submits the revised Network Code on Electricity Balancing to the Agency     

Action 5: 20 July 2015: The Agency adopts the Recommendation on the Network Code on Electricity Balancing

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​​​​​Development and amendments to CACM Regulation

​

The CAC​​​M Regulation has been developed in close cooperation with the Agency, ENTSO-E and stakeholders, in order to adopt effective, balanced and proportionate rules in a transparent and participative manner. In accordance with Article 18(3) of Regulation (EC) No 714/2009, the Commission will consult the Agency, ENTSO-E and other relevant stakeholders, before proposing any amendment to this regulation.

Development of terms and conditions or methodologies

Every proposal for the terms and conditions on methodologies, having a direct effect on stakeholders, should be submitted to public consultation before its submission for regulatory approval, in accordance with Article 12 of the CACM Regulation. The entities responsible for performing the consultation should duly consider the views of stakeholders resulting from the consultation, prior to its submission for regulatory approval. In all cases, a clear and robust justification for including or not the views resulting from the consultation should be developed and published in a timely manner before or simultaneously with the publication of the respective proposal.​
 

Implementation of CACM Regulation

Pursuant to Article 11 of the CACM Regulation, the Agency, in close cooperation with ENTSO-E, has established the Market European Stakeholder Committee (MESC), in order to organise stakeholder involvement regarding single day-ahead and intraday coupling and other aspects of the implementation of the CACM Regulation and holds regular meetings with stakeholders to identify problems and propose improvements notably related to the operation and development of the issues described in the CACM Regulation.

Details on the activities of MESC​
 

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