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ENTSO-E response to ACER public consultation on the draft Framework Guidelines on Electricity Balancing
The specific characteristics of balancing and the relative immaturity of existing balancing projects need to be kept in mind when developing the network code.
ENTSO-E's paper highlights three fundamental concerns with the draft FG:
- The net benefits of many of the proposals outlined in the draft FG have yet to be proven. In particular, harmonisation is a trade-off between integrating markets and preserving the flexibility of balancing products, processes and incentives to address current and future needs as well as keeping the secure operation of the system. There is a risk that seeking to push for extensive harmonization before analysis has been undertaken to assess that trade-off, could lead to the inefficient developments of European balancing markets.
- ENTSO-E also has concerns about the feasibility of some of the proposals in the FG and firmly believes that a much more in depth assessment of the implications, operational risks and unintended consequences is needed before they could credibly be implemented.
- It is unclear how the proposals in the FG could be applied to European markets where central-dispatch of generation units is applied.
As such ENTSO-E recommends that:
- The FG sets out a pragmatic incremental approach which delivers efficiency and security of supply benefits by developing a pan-European balancing market on a step-by-step basis.
- The transition from one step to another is justified and underpinned by a systematic cost benefit analysis and a full consideration of risks and interdependencies and is informed by practical experience gained through regional projects (which have the potential to deliver significant benefits).
- While having in mind the overall aim of a common internal balancing market, ACER makes sure that the proposals in the FG are compatible with fundamental electricity market design choices like self-dispatch and central-dispatch.
ENTSO-E would be pleased to work with ACER to further explain and develop the important points raised in this response.
ENTSO-E is due to receive an invitation to develop a network code on the subject in circa October 2012. In the meantime ENTSO-E will continue to discuss issues with regulators and stakeholders through organized workshops and has formed a balancing network code drafting team to produce the draft text.
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