Becoming a Balancing Service Provider (BSP) in electricity trading in Spain

Balancing service providers (BSPs) are market participants, including owners of generation or demand facilities, among others, who provide energy, balancing capacity, or both to their connexion Transmission System Operator. In Spain, this operator is Red Eléctrica Española or REE).

Balancing service providers compensate for unforeseen fluctuations in the electricity grid at REE’s request by rapidly increasing or decreasing their energy production. They receive compensation for their services from the Transmission System Operator (TSO) in Spain, REE.

This compensation can take the form of capacity, signifying its availability during market closures (balancing capacity), or payment for energy, when REE activates it in the balancing market (balancing energy).

As for the Spanish mainland electricity system, balancing services encompass the following:

  • Secondary regulation
  • Tertiary regulation
  • Activation of balancing energy from substitution reserves (RR)

Currently, the energy allocation from the secondary and tertiary regulation balancing markets is restricted to the national level. However, in line with the provisions outlined in Regulation (EU) 2017/2195, a gradual implementation at the European level is anticipated.

Given the differing technical and operational qualifications required to qualify as a provider of these services (BSP), this article focuses on the regulatory prerequisites for each, namely secondary regulation, tertiary regulation, and the activation of balancing energy from replacement reserves (RR):

  • Secondary Regulation: A voluntary service to uphold the balance between generation and demand. It automatically corrects deviations from the planned exchange programme in the “Spain” Control Block area and adjusts for variations in the system frequency.
  • Tertiary Regulation: This service involves activating power reserves to maintain equilibrium between system frequency and generation demand.
  • Activation of Replacement Reserve Balancing Energy (RR): This balancing service activates active power reserves to address deviations between generation and consumption identified after the intraday market closure. Additionally, it aims to restore or maintain the level of frequency recovery energies through manual and automatic activation (secondary and tertiary regulation energies) necessary to address any additional imbalances in the system.

Requirements to obtain authorisation as a Balancing Service Provider (BSP) from REE

All market agents with generation, demand, or storage programming units, regardless of their nationality, can be Balancing Service Providers (BSP) in the Spanish market, provided they meet the established technical requirements. As system operators, REE will verify compliance with these conditions. If all criteria are met, the applicant entity will receive prior authorization to become a BSP in the Spanish peninsular electricity system.

As a result, these entities can provide balancing services to the system through one or several programming units, subject to compliance with the corresponding requirements:

  • Operators of production facilities
  • Operators of demand facilities
  • Storage facility operators
  • Third-party representatives of the owners and contractually designated market agents.

The requirements that these parties must meet to obtain the prior authorisation granted by REE are established in the applicable regulations and are as follows:

General Technical Requirements

The requirements for secondary regulation, tertiary regulation, or the provision of replacement reserves are as follows:

  • Programming units applying for BSP status shall consist of one or more physical units, each of which may, in turn, consist of one installation or a set of installations
  • Minimum supply capacity of 1 MW
  • Compliance with the information exchange requirements with REE
  • In the case of integrating renewable, cogeneration, and waste facilities, these must have successfully passed production control tests
  • The physical units that constitute the programming unit must pass specific tests to participate in the corresponding balancing service or have been integrated into a programming unit already providing the service, provided that the conditions for non-repetition of tests are met.

Specific Requirements

The applicable regulations establish specific requirements for qualifying as a BSP for secondary, tertiary, or RR-type regulation services.

In broad terms, these requirements imply that the programming unit complies with the structural and real-time information exchange requirements established in the applicable regulations.

If you need additional information regarding balancing service providers in Spain,

Please note that this article is not intended to provide legal advice.

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