Balancing Market Integration - Model-Based Analysis of Potential Cross-Border Reserve Exchange Between Norway and Germany

Abstract

Integrating balancing markets across borders bears a cost-reducing potential but requires the availability of transmission capacity for the eventual activation of committed reserves. Using scarce transmission capacity for this purpose hence incurs opportunity cost. In this paper, the utilization of the yet to be built interconnector N ordlink for exchange on the spot electricity and reserve market between Norway and Germany is investigated. An optimized utilization underlines the importance of the spot market but also results in partial reserve exchange from Norway to Germany in 77 % of the hours and yields a cost reduction of 45 Ma compared to pure spot exchange.