Balancing service

The TSO uses balancing services to maintain frequency, which are sold to the TSO by balancing service providers. Trading in balancing services takes place on the respective product-specific markets MARI and PICASSO. The TSO procures the balancing service readiness service from the Baltic Balancing Capacity Market (BBCM – Baltic Balancing Capacity Market).

Demand response is the use of the flexibility of the power system to balance the electricity network and solve voltage and overload problems. Although the term ‘demand response’ refers only to increasing and decreasing demand, demand response also means increasing and decreasing production. In terms of demand response, the system can be balanced by two-way balancing, i.e. balancing up and down. Balancing up means increasing production or reducing consumption and balancing down means reducing production or increasing consumption.

The concept of flexibility in the area of demand response encompasses the ability to adjust electricity consumption and production according to the needs of the system. For example, major industrial consumers can reduce their energy use during peak load or shift it to cheaper hours when there is more generating capacity. Similarly, home consumers, using smart devices and automatic control systems, can adjust their electricity consumption as needed, for example by turning on electricity consumption when wind or solar energy production is high.

Demand response is provided and mediated by balancing service providers (BSP - Balancing Service Provider), who also include aggregators. Aggregators provide flexibility by combining the energy use and production flexibility of different consumers or producers into one larger portfolio. Through this, they can provide balancing services to the system operator.

View the rules for ensuring the balance of the electricity system here

Balancing service provider

A balancing service provider (BSP) is an electricity market participant that provides balancing service in the form of increasing or decreasing production or consumption. A balancing service provider that aggregates and mediates the resources of different consumers and producers to provide balancing service is called an aggregator.

A balancing service provider ust meet the following conditions:
• The BSP must itself be a balance provider, or the BSP must have a balance provider (the BSP must have and open supply contract to balance its own imbalance if necessary).
• The BSP must enter into a balancing agreement with Elering.
• The BSP must enter into a data warehouse usage agreement with Elering to use the data warehouse (Estfeed Datahub) (only a BSP who is an aggregator must enter into a data warehouse usage agreement).
• The BSP must go through a pre-qualification process and interface with the Balance Management Software (BMS).

Financing of frequency reserves

Since synchronisation, Estonia and the other Baltic States have started using fast reserves, which are automatically activated within a few seconds or minutes, in addition to slower reserves. Previously, we used fast reserves from Russia, but after synchronisation, we switched to a similar procurement system for reserves used by other European countries. 

Elering and other system operators purchase such reserves from reserve markets created for this purpose, where power plant, battery bank and demand response service providers place bids. Reserves mean that electricity consumers benefit from a stable and safely operating power system. At the same time, new opportunities arise for companies to sell electricity. The frequency reserve market thus adds certainty to investors considering the construction of new controllable power plants.

System operators do not earn any income from using the reserves themselves, which means that they only charge as much money for the reserves as they spend to acquire them.

Frequency reserves, or balancing service products

Balancing service is a service used to balance the power system, which is used by the transmission system operator (TSO) to ensure a continuous balance between production and consumption as well as system stability. Balancing service is offered to the system operator in the form of various products. Balancing products can be distinguished by their response speed:

• Frequency containment reserve (FCR), which is automatically activated within a few seconds to 30 seconds;
• Automatic frequency restoration reserve (aFRR), which responds within 30 seconds to 12.5 minutes;
• Manual frequency restoration reserve (mFRR), which is activated manually and responds from 12.5 minutes.