Public consultation on the study on pay-as-bid vs. pay-as-cleared remuneration for mFRR & aFRR capacity

Topic

Elia launches a public consultation on its study regarding pay-as-bid or pay-as-cleared remuneration for mFRR and aFRR capacity.

This study includes:

  • a theoretical analysis of the advantages and disadvantages of both remuneration mechanisms;
  • an overview of the remuneration mechanisms implemented in other European countries for aFRR and mFRR capacity (and possible foreseen changes in product designs of other TSOs) as well as the link with methodologies for an allocation process of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves;
  • an assessment of how the change from a pay-as-bid to pay-as-cleared remuneration could be introduced in the designs of the Belgian aFRR and mFRR capacity products.

Elia publishes and distributes this study report for consultation in order to collect stakeholders’ views on the study in general and to receive feedback on some specific questions on priorities and implementation approach. The stakeholders’ feedback will facilitate the finalization of the study.

Elia will publish the final report of the study at the latest by December 23, 2020.

Context

As in 2020 the last steps of the Elia balancing roadmap including short-term procurement for mFRR (February 2020) and aFRR (September 2020) are implemented, the time has come to consider the next possible changes to the FRR capacity markets.

In this framework, as requested previously by the stakeholders, Elia investigated the possibilities and effects of moving from a pay-as-bid to a pay-as-cleared remuneration mechanism for aFRR and/or mFRR capacity. The general expectation is that pay-as-cleared remuneration in a well-functioning market leads to increased efficiency and lower procurement costs. The study presents under which circumstances this would be the case from a theoretical perspective and evaluates to which extent the necessary preconditions are (or will be) met based on concrete analyses of the (future) design and the current market situation of aFRR and mFRR capacity products in Belgium.

Period

Elia invites the stakeholders to provide comments and suggestions on the consulted document via the online form below during the consultation period from Tuesday September 1st, 2020 to Thursday October 1st, 2020.

A workshop on this study is planned on the 15th of September to present its main conclusions and engage in an open discussion with the stakeholders.

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