EN Official Journal of the European Union L 312/6

COMMISSION REGULATION (EU) 2017/2195

of 23 November 2017

establishing a guideline on electricity balancing

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (1) and in particular Articles 18(3)(b), 18(3)(d) and 18(5) thereof,

Whereas:

(1) A fully functioning and interconnected internal energy market is crucial for maintaining security of energy supply, increasing competitiveness and ensuring that all consumers can purchase energy at affordable prices.

(2) A well-functioning internal market in electricity should provide producers with appropriate incentives for investing in new power generation, including in electricity from renewable energy sources, paying special attention to the most isolated Member States and regions in the Union's energy market. A well-functioning market should also provide consumers with adequate measures to promote more efficient use of energy, which presupposes a secure supply of energy.

(3) Regulation (EC) No 714/2009 sets out non-discriminatory rules on conditions for access to the network for cross-border exchanges in electricity and, in particular, rules on capacity allocation for interconnections and transmission systems affecting cross-border electricity flows. In order to move towards a genuinely integrated electricity market and to ensure operational security, efficient balancing rules should be developed in order to provide incentives for market participants to contribute to solving the system scarcities for which they are responsible. In particular, it is necessary to set up rules related to the technical and operational aspects of system balancing and to energy trading. Such rules should include system-related power reserve rules.

(4) Commission Regulation (EU) 2017/1485 (2) sets out harmonised rules on system operation applicable to transmission system operators (‘TSOs’), regional security coordinators, distribution system operators (‘DSOs’) and significant grid users. It identifies different critical system states (normal state, alert state, emergency state, blackout state and restoration state). It also sets out requirements and principles to maintain operational security throughout the Union and aims to promote the coordination of requirements and principles for Union-wide load-frequency-control and reserves.

(5) This Regulation establishes an EU-wide set of technical, operational and market rules to govern the functioning of electricity balancing markets. It sets out rules for the procurement of balancing capacity, the activation of balancing energy and the financial settlement of balance responsible parties. It also requires the development of harmonised methodologies for the allocation of cross-zonal transmission capacity for balancing purposes. Such rules will increase the liquidity of short-term markets by allowing for more cross-border trade and for a more efficient use of the existing grid for the purposes of balancing energy. As balancing energy bids will compete on EU-wide balancing platforms, it will also have positive effects on competition.

(6) This Regulation pursues the objective of ensuring the optimal management and coordinated operation of the European electricity transmission system, while supporting the achievement of the Union's targets for penetration of renewable generation, as well as providing benefits for customers. TSOs, working with DSOs where relevant, should be responsible for organising European balancing markets and should strive for their integration, keeping the system in balance in the most efficient manner. To do so, TSOs should work in close cooperation with one another and with DSOs, coordinating their activities as much as possible to deliver an efficient electricity system, across all regions and voltage levels, without prejudice to competition law.

(7) TSOs should be able to delegate all or part of any tasks under this Regulation to a third party. The delegating TSO should remain responsible for ensuring compliance with the obligations in this Regulation. Likewise Member States should be able to assign tasks and obligations under this Regulation to a third party. Such assignment should be limited to tasks and obligations executed at national level (such as imbalance settlement). The limitations to the assignment should not lead to unnecessary changes to the existing national arrangements. However TSOs should remain responsible for the tasks entrusted to them pursuant to Directive 2009/72/EC of the European Parliament and of the Council (3) for the development of European-wide methodologies, as well as the implementation and operation of the European-wide balancing platforms. Where, in a Member State, the expertise and experience of operating imbalance settlement lies with a third party, the TSO of the Member State may request the other TSOs and ENTSO-E to enable such third party to assist in the development of the proposal. However, the responsibility for developing the proposal remains with the TSO of the Member State in conjunction with all other TSOs and such responsibility cannot be transferred to a third party.

(8) The rules defining the role of balancing service providers and the role of balance responsible parties ensure a fair, transparent and non-discriminatory approach. Moreover, the rules concerning the terms and conditions related to balancing set out the principles and roles by which the balancing activities governed by this Regulation will take place, and ensure adequate competition based on a level-playing field between market participants, including demand-response aggregators and assets located at the distribution level.

(9) Each balancing service provider intending to provide balancing energy or balancing capacity should successfully pass a qualification process defined by the TSOs in close cooperation with DSOs where necessary.

(10) The integration of balancing energy markets should be facilitated with the establishment of common European platforms for operating the imbalance netting process and enabling the exchange of balancing energy from frequency restoration reserves and replacement reserves. Cooperation between TSOs should be strictly limited to what is necessary for the efficient and secure design, implementation and operation of those European platforms.

(11) The platforms for the exchange of balancing energy from frequency restoration reserves and replacement reserves should apply a model with merit order lists in order to ensure cost-efficient activation of bids. Only where a cost benefit analysis performed by all TSOs shows that the model for the platform for the exchange of balancing energy from frequency restoration reserves with automatic activation should be modified, it should be possible for TSOs to implement and make operational the platform based on another model.

(12) The integration of balancing energy markets should facilitate the efficient functioning of the intraday market in order to provide the possibility for market participants to balance themselves as close as possible to real time. Only the imbalances remaining after the end of the intraday market should be balanced by TSOs with the balancing market. The harmonisation of the imbalance settlement period to 15 minutes in Europe should support intraday trading and foster the development of a number of trading products with same delivery windows.

(13) In order to allow an exchange of balancing services, the creation of common merit order lists and adequate liquidity in the balancing market, it is necessary to regulate the standardisation of balancing products. This Regulation lists the minimum set of standard characteristics and additional characteristics defining standard products.

(14) The pricing method for standard products for balancing energy should create positive incentives for market participants in keeping and/or helping to restore the system balance of their imbalance price area, reduce system imbalances and costs for society. Such pricing approach should strive for an economically efficient use of demand response and other balancing resources subject to operational security limits. The pricing method used in the procurement of balancing capacity should strive for an economically efficient use of demand response and other balancing resources subject to operational security limits.

(15) In order to enable TSOs to procure and use balancing capacity in an efficient, economic and market-based manner, there is a need to foster market integration. In this regard, this Regulation establishes three methodologies through which TSOs may allocate cross-zonal capacity for the exchange of balancing capacity and sharing of reserves, when supported on the basis of a cost-benefit analysis: the co-optimisation process, the market-based allocation process and the allocation based on an economic efficiency analysis. The co-optimisationallocation process should be performed on a day-ahead basis whereas the market-based allocation process could be performed where the contracting is done not more than one week in advance of the provision of the balancing capacity and the allocation based on an economic efficiency analysis where the contracting is done more than one week in advance of the provision of the balancing capacity on the conditions that the volumes allocated are limited and that an assessment is done every year.

(16) Once a methodology for the allocation process of cross-zonal capacity is approved by the relevant regulatory authorities, early application of the methodology by two or more TSOs could take place to gain experience and allow for a smooth application by more TSOs in the future. The application of such a methodology, where existing, should nevertheless be harmonised by all TSOs in order to foster market integration.

(17) The general objective of imbalance settlement is to ensure that balance responsible parties support the system's balance in an efficient way and to incentivise market participants in keeping and/or helping to restore the system balance. This Regulation defines rules on imbalance settlement, ensuring that it is made in a non-discriminatory, fair, objective and transparent basis. To make balancing markets and the overall energy system fit for the integration of increasing shares of variable renewables, imbalance prices should reflect the real-time value of energy.

(18) A process for provisionally derogating TSOs from the application of certain rules should be set out in this Regulation to take into account circumstances where exceptionally, for example, compliance with those rules could lead to risks concerning operational security or lead to premature replacement of smart grid infrastructure.

(19) In accordance with Article 8 of Regulation (EC) No 713/2009 of the European Parliament and of the Council (4), the Agency for the Cooperation of Energy Regulators (‘the Agency’) should take a decision where the relevant regulatory authorities are not able to reach an agreement on common terms and conditions or methodologies.

(20) This Regulation has been developed in close cooperation with the Agency, the ENTSO for Electricity (‘ENTSO-E’) and stakeholders, in order to adopt effective, balanced and proportionate rules in a transparent and participative manner. In accordance with Article 18(3) of Regulation (EC) No 714/2009, the Commission will consult the Agency, ENTSO-E and other relevant stakeholders before proposing any amendment to this Regulation.

(21) The measures provided for in this Regulation are in accordance with the opinion of the Committee referred to in Article 23(1) of Regulation (EC) No 714/2009,

HAS ADOPTED THIS REGULATION:

TITLE I

GENERAL PROVISIONS

Article 1

Subject matter and scope

1. This Regulation lays down a detailed guideline on electricity balancing including the establishment of common principles for the procurement and the settlement of frequency containment reserves, frequency restoration reserves and replacement reserves and a common methodology for the activation of frequency restoration reserves and replacement reserves.

2. This Regulation shall apply to transmission system operators (‘TSOs’), distribution system operators (‘DSOs’) including closed distribution systems, regulatory authorities, the Agency for the Cooperation of Energy Regulators (‘the Agency’), the European Network of Transmission System Operators for Electricity (‘ENTSO-E’), third parties to whom responsibilities have been delegated or assigned and other market participants.

3. This Regulation shall apply to all transmission systems and interconnections in the Union except the transmission systems on islands that are not connected with other transmission systems via interconnections.

4. Where more than one TSO exists in a Member State, this Regulation shall apply to all TSOs in a Member State. Where a TSO does not have a function relevant to one or more obligations under this Regulation, Member States may provide that the responsibility to comply with those obligations is assigned to one or more specific TSOs.

5. Where a load-frequency control (‘LFC’) area consists of two or more TSOs, all TSOs of that LFC area may decide, subject to the approval by the relevant regulatory authorities, to exercise one or more obligations under this Regulation in a coordinated manner for all scheduling areas of the LFC area.

6. The European platforms for the exchange of standard products for balancing energy may be opened to TSOs operating in Switzerland on the condition that its national law implements the main provisions of Union electricity market legislation and that there is an intergovernmental agreement on electricity cooperation between the Union and Switzerland, or if the exclusion of Switzerland may lead to unscheduled physical power flows via Switzerland endangering the system security of the region.

7. Subject to the conditions of paragraph 6, the participation of Switzerland in the European platforms for the exchange of standard products for balancing energy shall be decided by the Commission based on an opinion given by the Agency and all TSOs in accordance with the procedures set out in paragraph 3 of Article 4. The rights and responsibilities of Swiss TSOs shall be consistent with the rights and responsibilities of TSOs operating in the Union, allowing for a smooth functioning of balancing market at Union level and a level-playing field for all stakeholders.

8. This Regulation shall apply to all system states defined in Article 18 of Regulation (EU) 2017/1485.

Article 2

Definitions

For the purposes of this Regulation, the definitions in Article 2 of Directive 2009/72/EC, Article 2 of Regulation (EC) No 714/2009, Article 2 of Commission Regulation (EU) No 543/2013 (5), Article 2 of Commission Regulation (EU) 2015/1222 (6), Article 2 of Commission Regulation (EU) 2016/631 (7), Article 2 of Commission Regulation (EU) 2016/1388 (8), Article 2 of Commission Regulation (EU) 2016/1447 (9), Article 2 of Commission Regulation (EU) 2016/1719 (10), Article 3 of Commission Regulation (EU) 2017/1485, and Article 3 of Commission Regulation (EU) 2017/2196 (11) shall apply.

The following definitions shall also apply:

(1) ‘balancing’ means all actions and processes, on all timelines, through which TSOs ensure, in a continuous way, the maintenance of system frequency within a predefined stability range as set out in Article 127 of Regulation (EU) 2017/1485, and compliance with the amount of reserves needed with respect to the required quality, as set out in Part IV Title V, Title VI and Title VII of Regulation (EU) 2017/1485;

(2) ‘balancing market’ means the entirety of institutional, commercial and operational arrangements that establish market-based management of balancing;

(3) ‘balancing services’ means balancing energy or balancing capacity, or both;

(4) ‘balancing energy’ means energy used by TSOs to perform balancing and provided by a balancing service provider;

(5) ‘balancing capacity’ means a volume of reserve capacity that a balancing service provider has agreed to hold and in respect to which the balancing service provider has agreed to submit bids for a corresponding volume of balancing energy to the TSO for the duration of the contract;

(6) ‘balancing service provider’ means a market participant with reserve-providing units or reserve-providing groups able to provide balancing services to TSOs;

(7) ‘balance responsible party’ means a market participant or its chosen representative responsible for its imbalances;

(8) ‘imbalance’ means an energy volume calculated for a balance responsible party and representing the difference between the allocated volume attributed to that balance responsible party and the final position of that balance responsible party, including any imbalance adjustment applied to that balance responsible party, within a given imbalance settlement period;

(9) ‘imbalance settlement’ means a financial settlement mechanism for charging or paying balance responsible parties for their imbalances;

(10) ‘imbalance settlement period’ means the time unit for which balance responsible parties' imbalance is calculated;

(11) ‘imbalance area’ means the area in which an imbalance is calculated;

(12) ‘imbalance price’ means the price, be it positive, zero or negative, in each imbalance settlement period for an imbalance in each direction;

(13) ‘imbalance price area’ means the area for the calculation of an imbalance price;

(14) ‘imbalance adjustment’ means an energy volume representing the balancing energy from a balancing service provider and applied by the connecting TSO for an imbalance settlement period to the concerned balance responsible parties, used for the calculation of the imbalance of these balance responsible parties;

(15) ‘allocated volume’ means an energy volume physically injected or withdrawn from the system and attributed to a balance responsible party, for the calculation of the imbalance of that balance responsible party;

(16) ‘position’ means the declared energy volume of a balance responsible party used for the calculation of its imbalance;

(17) ‘self-dispatching model’ means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power generating facilities and demand facilities are determined by the scheduling agents of those facilities;

(18) ‘central dispatching model’ means a scheduling and dispatching model where the generation schedules and consumption schedules as well as dispatching of power generating facilities and demand facilities, in reference to dispatchable facilities, are determined by a TSO within the integrated scheduling process;

(19) ‘integrated scheduling process’ means an iterative process that uses at least integrated scheduling process bids that contain commercial data, complex technical data of individual power generating facilities or demand facilities and explicitly includes the start-up characteristics, the latest control area adequacy analysis and the operational security limits as an input to the process;

(20) ‘integrated scheduling process gate closure time’ means the point in time when the submission or the update of integrated scheduling process bids is no longer permitted for the given iterations of the integrated scheduling process;

(21) ‘TSO-TSO model’ means a model for the exchange of balancing services where the balancing service provider provides balancing services to its connecting TSO, which then provides these balancing services to the requesting TSO;

(22) ‘connecting TSO’ means the TSO that operates the scheduling area in which balancing service providers and balance responsible parties shall be compliant with the terms and conditions related to balancing;

(23) ‘exchange of balancing services’ means either or both exchange of balancing energy and exchange of balancing capacity;

(24) ‘exchange of balancing energy’ means the activation of balancing energy bids for the delivery of balancing energy to a TSO in a different scheduling area than the one in which the activated balancing service provider is connected;

(25) ‘exchange of balancing capacity’ means the provision of balancing capacity to a TSO in a different scheduling area than the one in which the procured balancing service provider is connected;

(26) ‘transfer of balancing capacity’ means a transfer of balancing capacity from the initially contracted balancing service provider to another balancing service provider;

(27) ‘balancing energy gate closure time’ means the point in time when submission or update of a balancing energy bid for a standard product on a common merit order list is no longer permitted;

(28) ‘standard product’ means a harmonised balancing product defined by all TSOs for the exchange of balancing services;

(29) ‘preparation period’ means the period between the request by the connecting TSO in case of TSO-TSO model or by the contracting TSO in case of TSO-BSP model and the start of the ramping period;

(30) ‘full activation time’ means the period between the activation request by the connecting TSO in case of TSO-TSO model or by the contracting TSO in case of TSO-BSP model and the corresponding full delivery of the concerned product;

(31) ‘deactivation period’ means the period for ramping from full delivery to a set point, or from full withdrawal back to a set point;

(32) ‘delivery period’ means the period of delivery during which the balancing service provider delivers the full requested change of power in-feed to, or the full requested change of withdrawals from the system;

(33) ‘validity period’ means the period when the balancing energy bid offered by the balancing service provider can be activated, where all the characteristics of the product are respected. The validity period is defined by a start time and an end time;

(34) ‘mode of activation’ means the mode of activation of balancing energy bids, manual or automatic, depending on whether balancing energy is triggered manually by an operator or automatically in a closed-loop manner;

(35) ‘divisibility’ means the possibility for a TSO to use only part of the balancing energy bids or balancing capacity bids offered by the balancing service provider, either in terms of power activation or time duration;

(36) ‘specific product’ means a product different from a standard product;

(37) ‘common merit order list’ means a list of balancing energy bids sorted in order of their bid prices, used for the activation of those bids;

(38) ‘TSO energy bid submission gate closure time’ means the latest point in time when a connecting TSO can forward the balancing energy bids received from a balancing service provider to the activation optimisation function;

(39) ‘activation optimisation function’ means the function of operating the algorithm applied to optimise the activation of balancing energy bids;

(40) ‘imbalance netting process function’ means the role to operate the algorithm applied for operating the imbalance netting process;

(41) ‘TSO-TSO settlement function’ means the function of performing the settlement of cooperation processes between the TSOs;

(42) ‘capacity procurement optimisation function’ means the function of operating the algorithm applied for the optimisation of the procurement of balancing capacity for TSOs exchanging balancing capacity.

(43) ‘TSO-BSP model’ means a model for the exchange of balancing services where the balancing service provider provides balancing services directly to the contracting TSO, which then provides these balancing services to the requesting TSO;

(44) ‘contracting TSO’ means the TSO that has contractual arrangements for balancing services with a balancing service provider in another scheduling area;

(45) ‘requesting TSO’ means the TSO that requests the delivery of balancing energy.

Article 3

Objectives and regulatory aspects

1. This Regulation aims at:

(a) fostering effective competition, non-discrimination and transparency in balancing markets;

(b) enhancing efficiency of balancing as well as efficiency of European and national balancing markets;

(c) integrating balancing markets and promoting the possibilities for exchanges of balancing services while contributing to operational security;

(d) contributing to the efficient long-term operation and development of the electricity transmission system and electricity sector in the Union while facilitating the efficient and consistent functioning of day-ahead, intraday and balancing markets;

(e) ensuring that the procurement of balancing services is fair, objective, transparent and market-based, avoids undue barriers to entry for new entrants, fosters the liquidity of balancing markets while preventing undue distortions within the internal market in electricity;

(f) facilitating the participation of demand response including aggregation facilities and energy storage while ensuring they compete with other balancing services at a level playing field and, where necessary, act independently when serving a single demand facility;

(g) facilitating the participation of renewable energy sources and support the achievement of the European Union target for the penetration of renewable generation.

2. When applying this Regulation, Member States, relevant regulatory authorities, and system operators shall:

(a) apply the principles of proportionality and non-discrimination;

(b) ensure transparency;

(c) apply the principle of optimisation between the highest overall efficiency and lowest total costs for all parties involved;

(d) ensure that TSOs make use of market-based mechanisms, as far as possible, in order to ensure network security and stability;

(e) ensure that the development of the forward, day-ahead and intraday markets is not compromised;

(f) respect the responsibility assigned to the relevant TSO in order to ensure system security, including as required by national legislation;

(g) consult with relevant DSOs and take account of potential impacts on their system;

(h) take into consideration agreed European standards and technical specifications.

Article 4

Terms and conditions or methodologies of TSOs

1. TSOs shall develop the terms and conditions or methodologies required by this Regulation and submit them for approval to the relevant regulatory authorities in accordance with Article 37 of Directive 2009/72/EC within the respective deadlines set out in this Regulation.

2. Where a proposal for terms and conditions or methodologies pursuant to this Regulation needs to be developed and agreed by more than one TSO, the participating TSOs shall closely cooperate. TSOs, with the assistance of ENTSO-E, shall regularly inform the relevant regulatory authorities and the Agency about the progress of developing these terms and conditions or methodologies.

3. Where no consensus is reached among TSOs deciding on proposals for terms and conditions or methodologies in accordance with Article 5(2), they shall decide by qualified majority. A qualified majority for proposals in accordance with Article 5(2) shall require a majority of:

(a) TSOs representing at least 55 % of the Member States; and

(b) TSOs representing Member States comprising at least 65 % of the population of the Union.

A blocking minority for decisions in accordance with Article 5(2) must include TSOs representing at least four Member States, failing of which the qualified majority shall be deemed attained.

4. Where the regions concerned are composed of more than five Member States and no consensus is reached among TSOs deciding on proposals for terms and conditions or methodologies in accordance with Article 5(3), they shall decide by qualified majority. A qualified majority for proposals in accordance with Article 5(3) shall require a majority of:

(a) TSOs representing at least 72 % of the Member States concerned; and

(b) TSOs representing Member States comprising at least 65 % of the population of the concerned area.

A blocking minority for decisions in accordance with Article 5(3) must include at least a minimum number of TSOs representing more than 35 % of the population of the participating Member States, plus TSOs representing at least one additional Member State concerned, failing of which the qualified majority shall be deemed attained.

5. TSOs deciding on proposals for terms and conditions or methodologies in accordance with Article 5(3) in relation to regions composed of five Member States or less shall decide based on consensus.

6. For TSO decisions under paragraphs 3 and 4, one vote shall be attributed per Member State. If there is more than one TSO in the territory of a Member State, the Member State shall allocate the voting powers among the TSOs.

7. Where TSOs fail to submit a proposal for terms and conditions or methodologies to the relevant regulatory authorities within the deadlines defined in this Regulation, they shall provide the relevant regulatory authorities and the Agency with the relevant drafts of the terms and conditions or methodologies and explain why an agreement has not been reached. The Agency shall inform the Commission and shall, in cooperation with the relevant regulatory authorities, at the Commission's request, investigate the reasons for the failure and inform the Commission thereof. The Commission shall take the appropriate steps to make possible the adoption of the required terms and conditions or methodologies within four months from the receipt of the Agency's information.

Article 5

Approval of terms and conditions or methodologies of TSOs

1. Each relevant regulatory authority in accordance with Article 37 of Directive 2009/72/EC shall approve the terms and conditions or methodologies developed by TSOs under paragraphs 2, 3 and 4.

2. The proposals for the following terms and conditions or methodologies shall be subject to approval by all regulatory authorities:

(a) the frameworks for the establishment of the European platforms pursuant to Articles 20(1), 21(1) and 22(1);

(b) the modifications of the frameworks for the establishment of the European platforms pursuant to Articles 20(5) and 21(5);

(c) the standard products for balancing capacity pursuant to Article 25(2);

(d) the classification methodology for the activation purposes of balancing energy bids pursuant to Article 29(3);

(e) the assessment on the possible increase of the minimum volume of balancing energy bids that shall be forwarded to the European platforms pursuant to Article 29(11);

(f) the methodologies for pricing balancing energy and cross-zonal capacity used for the exchange of balancing energy or operating the imbalance netting process pursuant to Article 30(1) and (5);

(g) the harmonisation of the methodology for the allocation process of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves pursuant to Article 38(3);

(h) the methodology for a co-optimised allocation process of cross-zonal capacity pursuant to Article 40(1);

(i) the TSO-TSO settlement rules for the intended exchange of energy pursuant to Article 50(1);

(j) the harmonisation of the main features of imbalance settlement pursuant to Article 52(2);

on which a Member State may provide an opinion to the concerned regulatory authority.

3. The proposals for the following terms and conditions or methodologies shall be subject to approval by all regulatory authorities of the concerned region:

(a) the framework, for the geographical area concerning all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485, for the establishment of the European platform for replacement reserves pursuant to Article 19(1);

(b) for the geographical area concerning two or more TSOs exchanging or mutually willing to exchange balancing capacity, the establishment of common and harmonised rules and process for the exchange and procurement of balancing capacity pursuant to Article 33(1);

(c) for the geographical area covering TSOs exchanging balancing capacity, the methodology for calculating the probability of available cross-zonal capacity after intraday cross-zonal gate closure time pursuant to Article 33(6);

(d) the exemption, for the geographical area in which the procurement of balancing capacity has taken place, for not allowing balancing service providers to transfer their obligations to provide balancing capacity pursuant to Article 34(1);

(e) the application of a TSO-BSP model, in a geographical area comprising two or more TSOs, pursuant to Article 35(1);

(f) the cross-zonal capacity calculation methodology for each capacity calculation region pursuant to Article 37(3);

(g) in a geographical area comprising two or more TSOs, the application of the allocation process of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves pursuant to Article 38(1) ;

(h) for each capacity calculation region, the methodology for a market-based allocation process of cross-zonal capacity pursuant to Article 41(1);

(i) for each capacity calculation region, the methodology for an allocation process of cross-zonal capacity based on an economic efficiency analysis and the list of each individual allocation of cross-zonal capacity based on an economic efficiency analysis pursuant to paragraphs 1 and 5 of Article 42;

(j) for the geographical area comprising all TSOs intentionally exchanging energy within a synchronous area, the TSO-TSO settlement rules for the intended exchange of energy pursuant to Article 50(3);

(k) for the geographical area comprising all asynchronously connected TSOs intentionally exchanging energy, the TSO-TSO settlement rules for the intended exchange of energy pursuant to Article 50(4);

(l) for each synchronous area, the TSO-TSO settlement rules for the unintended exchange of energy pursuant to Article 51(1);

(m) for the geographical area comprising all asynchronously connected TSOs, the TSO-TSO settlement rules for the unintended exchange of energy pursuant to Article 51(2);

(n) the exemption, at synchronous area level, to the harmonisation of the imbalance settlement periods pursuant to Article 53(2);

(o) for the geographical area comprising two or more TSOs exchanging balancing capacity, the principles for balancing algorithms pursuant to Article 58(3);

on which a Member State may provide an opinion to the concerned regulatory authority.

4. The proposals for the following terms and conditions or methodologies shall be subject to approval by each regulatory authority of each concerned Member State on a case-by-case basis:

(a) the exemption to publish information on offered prices of balancing energy or balancing capacity bids due to market abuse concerns pursuant to Article 12(4);

(b) where appropriate, the methodology for allocating costs resulting from actions taken by DSOs, pursuant to Article 15(3);

(c) the terms and conditions related to balancing pursuant to Article 18;

(d) the definition and the use of specific products pursuant to Article 26(1);

(e) the limitation on the amount of bids that is forwarded to the European platforms pursuant to Article 29(10);

(f) the exemption to separate procurement of upward and downward balancing capacity pursuant to Article 32(3);

(g) where appropriate, the additional settlement mechanism separate from the imbalance settlement, to settle the procurement costs of balancing capacity, administrative costs and other costs related to balancing with balance responsible parties pursuant to Article 44(3);

(h) the derogations to one or more provisions of this Regulation pursuant to Article 62(2);

(i) the costs relating to the obligations imposed on system operators or assigned third entities in accordance with this Regulation pursuant to Article 8(1);

on which a Member State may provide an opinion to the concerned regulatory authority.

5. The proposal for terms and conditions or methodologies shall include a proposed timescale for their implementation and a description of their expected impact on the objectives of this Regulation. The implementation timescale shall not be longer than 12 months after the approval by the relevant regulatory authorities, except where all relevant regulatory authorities agree to extend the implementation timescale or where different timescales are stipulated in this Regulation. Proposals on terms and conditions or methodologies subject to the approval by several or all regulatory authorities shall be submitted to the Agency at the same time that they are submitted to regulatory authorities. Upon request by the relevant regulatory authorities, the Agency shall issue an opinion within three months on the proposals for terms and conditions or methodologies.

6. Where the approval of the terms and conditions or methodologies requires a decision by more than one regulatory authority, the relevant regulatory authorities shall consult and closely cooperate and coordinate with each other in order to reach an agreement. Where the Agency issues an opinion, the relevant regulatory authorities shall take that opinion into account. Regulatory authorities shall decide on the terms and conditions or methodologies submitted in accordance with paragraphs 2 and 3, within six months following the receipt of the terms and conditions or methodologies by the relevant regulatory authority or, where applicable, by the last relevant regulatory authority concerned.

7. Where the relevant regulatory authorities have not been able to reach agreement within the period referred to in paragraph 6, or upon their joint request, the Agency shall adopt a decision concerning the submitted proposals for terms and conditions or methodologies within six months from the day of referral, in accordance with Article 8(1) of Regulation (EC) No 713/2009.

8. Any party may complain against a relevant system operator or TSO in relation to that system operator's or TSO's obligations or decisions under this Regulation and may refer the complaint to the relevant regulatory authority which, acting as dispute settlement authority, shall issue a decision within two months after receipt of the complaint. That period may be extended by a further two months where additional information is sought by the relevant regulatory authority. That extended period may be further extended with the agreement of the complainant. The relevant regulatory authority's decision shall be binding unless and until overruled on appeal.

Article 6

Amendments to terms and conditions or methodologies of TSOs

1. Where one or several regulatory authorities in accordance with Article 37 of Directive 2009/72/EC require an amendment in order to approve the terms and conditions or methodologies submitted in accordance with paragraphs 2, 3 and 4 of Article 5, the relevant TSOs shall submit a proposal for amended terms and conditions or methodologies for approval within two months following the requirement from the relevant regulatory authorities. The relevant regulatory authorities shall decide on the amended terms and conditions or methodologies within two months following their submission.

2. Where the relevant regulatory authorities have not been able to reach an agreement on terms and conditions or methodologies within the two-month deadline, or upon their joint request, the Agency shall adopt a decision concerning the amended terms and conditions or methodologies within six months, in accordance with Article 8(1) of Regulation (EC) No 713/2009. If the relevant TSOs fail to submit a proposal for amended terms and conditions or methodologies, the procedure provided for in Article 4 shall apply.

3. TSOs responsible for developing a proposal for terms and conditions or methodologies or regulatory authorities responsible for their adoption in accordance with paragraphs 2, 3 and 4 of Article 5 may request amendments of those terms and conditions or methodologies. The proposals for amendments to the terms and conditions or methodologies shall be submitted to consultation in accordance with the procedure set out in Article 10 and approved in accordance with the procedure set out in Article 4 and Article 5.

Article 7

Publication of terms and conditions or methodologies on the internet

TSOs responsible for establishing the terms and conditions or methodologies in accordance with this Regulation shall publish them on the internet following approval by the relevant regulatory authorities or, where no such approval is required, following their establishment, except where such information is considered as confidential in accordance with Article 11.

Article 8

Recovery of costs

1. Costs related to the obligations imposed on system operators or assigned third entities in accordance with this Regulation shall be assessed by the relevant regulatory authorities in accordance with Article 37 of Directive 2009/72/EC.

2. Costs considered as reasonable, efficient, and proportionate by the relevant regulatory authority shall be recovered through network tariffs or other appropriate mechanisms as determined by the relevant regulatory authorities.

3. If requested by the relevant regulatory authorities, system operators or assigned entities shall, within three months of the request, provide the information necessary to facilitate the assessment of the costs incurred.

4. Any costs incurred by market participants in meeting the requirements of this Regulation shall be borne by those market participants.

Article 9

Stakeholder involvement

The Agency, in close cooperation with ENTSO-E, shall organise stakeholder involvement regarding the balancing market and other aspects of the implementation of this Regulation. Such involvement shall include regular meetings with stakeholders to identify problems and propose improvements related to the integration of the balancing market.

Article 10

Public consultation

1. TSOs responsible for submitting proposals for terms and conditions or methodologies or their amendments in accordance with this Regulation shall consult stakeholders, including the relevant authorities of each Member State, on the draft proposals for terms and conditions or methodologies and other implementing measures for a period of not less than one month.

2. The consultation shall last for a period of not less than one month, except for the draft proposals pursuant to points (a), (b), (c), (d), (e), (f), (g), (h) and (j) of Article 5(2) that shall be consulted for a period of not less than two months.

3. At least the proposals pursuant to points (a), (b), (c), (d), (e), (f), (g), (h) and (j) of Article 5(2) shall be subject to public consultation at European level.

4. At least the proposals pursuant to points (a), (b), (c), (d), (e), (f), (g), (h), (i), (n), and (o) of Article 5(3) shall be subject to public consultation at the concerned regional level.

5. At least the proposals pursuant to points (a), (b), (c), (d), (e), (f), (g) and (i) of Article 5(4) shall be subject to public consultation in each concerned Member State.

6. TSOs responsible for the proposal for terms and conditions or methodologies shall duly consider the views of stakeholders resulting from the consultations undertaken in accordance with paragraphs 2 to 5, prior to its submission for regulatory approval. In all cases, a sound justification for including or not including the views resulting from the consultation shall be provided together with the submission and published in a timely manner before or simultaneously with the publication of the proposal for terms and conditions or methodologies.

Article 11

Confidentiality obligations

1. Any confidential information received, exchanged or transmitted pursuant to this Regulation shall be subject to the conditions of professional secrecy laid down in paragraphs 2, 3 and 4.

2. The obligation of professional secrecy shall apply to any person subject to the provisions of this Regulation.

3. Confidential information received by the persons or regulatory authorities referred to in paragraph 2 in the course of their duties may not be divulged to any other person or authority, without prejudice to cases covered by national law, the other provisions of this Regulation or other relevant Union legislation.

4. Without prejudice to cases covered by national law or Union legislation, regulatory authorities, bodies or persons who receive confidential information pursuant to this Regulation may use it only for the purpose of carrying out their duties under this regulation, except where written consent has been provided by the primary owner of the data.

Article 12

Publication of information

1. All entities referred to in Article 1( 2) shall provide TSOs with all the relevant information to fulfil their obligations laid down in paragraphs 3 to 5.

2. All entities referred to in Article 1( 2) shall ensure that information in paragraphs 3 to 5 is published at a time and in a format that does not create an actual or potential competitive advantage or disadvantage to any individual or companies.

3. Each TSO shall publish the following information as soon as it becomes available:

(a) information on the current system balance of its scheduling area or scheduling areas, as soon as possible but no later than 30 minutes after real-time;

(b) information on all balancing energy bids from its scheduling area or scheduling areas, anonymised where necessary, no later than 30 min after the end of the relevant market time unit. The information shall include: (i) type of product; (ii) validity period; (iii) offered volumes; (iv) offered prices; (v) information on whether the bid was declared as unavailable;

(c) information on whether the balancing energy bid was converted from a specific product or from an integrated scheduling process no later than 30 min after the end of the relevant market time unit;

(d) information regarding how balancing energy bids from specific products or from integrated scheduling process have been converted into balancing energy bids from standard products no later than 30 min after the end of the relevant market time unit;

(e) aggregated information on balancing energy bids no later than 30 min after the end of the relevant market time unit, which shall include: (i) total volume of offered balancing energy bids; (ii) total volume of offered balancing energy bids separately per type of reserves; (iii) total volume of offered and activated balancing energy bids separately for standard and specific products; (iv) volume of unavailable bids separately per type of reserves;

(f) information on offered volumes as well as offered prices of procured balancing capacity, anonymised where necessary, no later than one hour after the results of the procurement have been notified to the bidders;

(g) the initial terms and conditions related to balancing referred to in Article 18 at least one month before the application and any amendments to the terms and conditions immediately following approval by the relevant regulatory authority in accordance with Article 37 of Directive 2009/72/EC;

(h) information on the allocation of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves pursuant to Article 38 at the latest 24 hours after the allocation and no later than 6 hours before the use of the allocated cross-zonal capacity: (i) date and time when the decision on allocation was made; (ii) period of the allocation; (iii) volumes allocated; (iv) market values used as a basis for the allocation process in accordance with Article 39;

(i) information on the use of allocated cross-zonal capacity for the exchange of balancing capacity or sharing of reserves pursuant to Article 38 at the latest one week after the use of allocated cross-zonal capacity: (i) volume of allocated and used cross-zonal capacity per market time unit; (ii) volume of released cross-zonal capacity for subsequent timeframes per market time unit; (iii) estimated realised costs and benefits of the allocation process;

(j) approved methodologies referred to in Articles 40, 41 and 42 at least one month before the application;

(k) description of the requirements of any algorithm developed and amendments to it referred to in Article 58, at least one month before the application;

(l) common annual report referred to in Article 59.

4. Subject to approval pursuant to Article 18, a TSO may withhold the publication of information on offered prices and volumes of balancing capacity or balancing energy bids if justified for reasons of market abuse concerns and if not detrimental to the effective functioning of the electricity markets. A TSO shall report such withholdings at least once a year to the relevant regulatory authority in accordance with Article 37 of Directive 2009/72/EC.

5. No later than two years after entry into force of this Regulation, each TSO shall publish the information pursuant to paragraph 3 in a commonly agreed harmonised format at least through the information transparency platform established pursuant to Article 3 of Regulation (EU) No 543/2013. No later than four months after the entry into force of this Regulation, ENTSO-E shall update the manual of procedures as referred to Article 5 of Regulation (EU) No 543/2013 and submit it to the Agency for its opinion, which the Agency shall provide within two months.

Article 13

Delegation and assignment of tasks

1. A TSO may delegate all or part of any tasks with which it is entrusted under this Regulation to one or more third parties in case the third party can carry out the respective function at least as effectively as the delegating TSO. The delegating TSO shall remain responsible for ensuring compliance with the obligations under this Regulation, including ensuring access to information necessary for monitoring by the relevant regulatory authorities in accordance with Article 37 of Directive 2009/72/EC.

2. Prior to the delegation, the third party concerned shall demonstrate to the delegating TSO its ability to meet the tasks to be delegated.

3. In the event that all or part of any tasks specified in this Regulation are delegated to a third party, the delegating TSO shall ensure that suitable confidentiality agreements in accordance with the confidentiality obligations of the delegating TSO have been put in place prior to the delegation. After delegating all or part of any tasks to a third party, the delegating TSO must inform the relevant regulatory authority and publish this decision on the internet.

4. Without prejudice to the tasks entrusted to TSOs pursuant to Directive 2009/72/EC, a Member State, or where applicable a relevant regulatory authority, may assign tasks or obligations entrusted to TSOs under this Regulation to one or more third parties. The concerned Member State, or where applicable the concerned regulatory authority, may only assign TSOs' tasks and obligations which do not require direct cooperation, joint decision-making or entering into contractual relationship with TSOs from other Member States. Prior to the assignment, the third party concerned shall demonstrate to the Member State, or where applicable the relevant regulatory authority, its ability to meet the task to be assigned.

5. In the event that tasks and obligations are assigned to a third party by a Member State, or a regulatory authority, references to TSO in this Regulation shall be understood as referring to the assigned entity. The relevant regulatory authority shall ensure regulatory oversight of the assigned entity in respect of the assigned tasks and obligations.

TITLE II

ELECTRICITY BALANCING MARKET

CHAPTER 1

Functions and responsibilities

Article 14

Role of the TSOs

1. Each TSO shall be responsible for procuring balancing services from balancing service providers in order to ensure operational security.

2. Each TSO shall apply a self-dispatching model for determining generation schedules and consumption schedules. TSOs that apply a central dispatching model at the time of the entry into force of this Regulation shall notify to the relevant regulatory authority in accordance with Article 37 of Directive 2009/72/EC in order to continue to apply a central dispatching model for determining generation schedules and consumption schedules. The relevant regulatory authority shall verify whether the tasks and responsibilities of the TSO are consistent with the definition in Article 2(18).

Article 15

Cooperation with DSOs

1. DSOs, TSOs, balancing service providers and balance responsible parties shall cooperate in order to ensure efficient and effective balancing.

2. Each DSO shall provide, in due time, all necessary information in order to perform the imbalance settlement to the connecting TSO in accordance with the terms and conditions related to balancing pursuant to Article 18.

3. Each TSO may, together with the reserve connecting DSOs within the TSO's control area, jointly elaborate a methodology for allocating costs resulting from actions of DSOs pursuant to paragraphs 4 and 5 of Article 182 of Regulation (EU) 2017/1485. The methodology shall provide for a fair allocation of costs taking into account the responsibilities of the parties involved.

4. DSOs shall report to the connecting TSO any limits defined pursuant to paragraphs 4 and 5 of Article 182 of Regulation (EU) 2017/1485 that could affect the requirements set out in this Regulation.

Article 16

Role of balancing service providers

1. A balancing service provider shall qualify for providing bids for balancing energy or balancing capacity which are activated or procured by the connecting TSO or, in a TSO-BSP model, by the contracting TSO. Successful completion of the prequalification, ensured by the connecting TSO and processed pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485 shall be considered as a prerequisite for the successful completion of the qualification process to become a balancing service provider pursuant to this Regulation.

2. Each balancing service provider shall submit to the connecting TSO its balancing capacity bids that affect one or more balance responsible parties.

3. Each balancing service provider participating in the procurement process for balancing capacity shall submit and have the right to update its balancing capacity bids before the gate closure time of the procurement process.

4. Each balancing service provider with a contract for balancing capacity shall submit to its connecting TSO the balancing energy bids or integrated scheduling process bids corresponding to the volume, products, and other requirements set out in the balancing capacity contract.

5. Any balancing service provider shall have the right to submit to its connecting TSO the balancing energy bids from standard products or specific products or integrated scheduling process bids for which it has passed the prequalification process pursuant to Article 159 and Article 162 of Regulation (EU) 2017/1485.

6. The price of the balancing energy bids or integrated scheduling process bids from standard and specific products pursuant to paragraph 4 shall not be predetermined in a contract for balancing capacity. A TSO may propose an exemption to this rule in the proposal for the terms and conditions related to balancing set-up pursuant to Article 18. Such an exemption shall only apply to specific products pursuant to Article 26(3)(b) and be accompanied with a justification demonstrating higher economic efficiency.

7. There shall be no discrimination between balancing energy bids or integrated scheduling process bids submitted pursuant to paragraph 4 and balancing energy bids or integrated scheduling process bids submitted pursuant to paragraph 5.

8. For each product for balancing energy or balancing capacity, the reserve providing unit, the reserve providing group, the demand facility or the third party and the associated balance responsible parties pursuant to Article 18(4)(d), shall belong to the same scheduling area.

Article 17

Role of balance responsible parties

1. In real time, each balance responsible party shall strive to be balanced or help the power system to be balanced. The detailed requirements concerning this obligation shall be defined in the proposal for terms and conditions related to balancing set up pursuant to Article 18.

2. Each balance responsible party shall be financially responsible for the imbalances to be settled with the connecting TSO.

3. Prior to the intraday cross-zonal gate closure time, each balance responsible party may change the schedules required to calculate its position pursuant to Article 54. TSOs applying a central dispatching model may establish specific conditions and rules for changing the schedules of a balance responsible party in the terms and conditions related to balancing set up pursuant to Article 18.

4. After the intraday cross-zonal gate closure time, each balance responsible party may change the internal commercial schedules required to calculate its position pursuant to Article 54 in accordance with the rules set out in the terms and conditions related to balancing set up pursuant to Article 18.

Article 18

Terms and conditions related to balancing

1. No later than six months after entry into force of this Regulation and for all scheduling areas of a Member State, the TSOs of this Member State shall develop a proposal regarding:

(a) the terms and conditions for balancing service providers;

(b) the terms and conditions for balance responsible parties.

Where a LFC area consists of two or more TSOs, all TSOs of that LFC area may develop a common proposal subject to the approval by the relevant regulatory authorities.

2. The terms and conditions pursuant to paragraph 1 shall also include the rules for suspension and restoration of market activities pursuant to Article 36 of Regulation (EU) 2017/2196 and rules for settlement in case of market suspension pursuant to Article 39 of Regulation (EU) 2017/2196 once approved in accordance with Article 4 of Regulation (EU) 2017/2196.

3. When developing proposals for terms and conditions for balancing service providers and balance responsible parties, each TSO shall:

(a) coordinate with the TSOs and DSOs that may be affected by those terms and conditions;

(b) respect the frameworks for the establishment of European platforms for the exchange of balancing energy and for the imbalance netting process pursuant to Articles 19, 20, 21 and 22;

(c) involve other DSOs and other stakeholders throughout the development of the proposal and take into account their views without prejudice to public consultation pursuant to Article 10.

4. The terms and conditions for balancing service providers shall:

(a) define reasonable and justified requirements for the provisions of balancing services;

(b) allow the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to offer balancing services subject to conditions referred to in paragraph 5 (c);

(c) allow demand facility owners, third parties and owners of power generating facilities from conventional and renewable energy sources as well as owners of energy storage units to become balancing service providers;

(d) require that each balancing energy bid from a balancing service provider is assigned to one or more balance responsible parties to enable the calculation of an imbalance adjustment pursuant to Article 49.

5. The terms and conditions for balancing service providers shall contain:

(a) the rules for the qualification process to become a balancing service provider pursuant to Article 16;

(b) the rules, requirements and timescales for the procurement and transfer of balancing capacity pursuant to Articles 32, 33 and 34;

(c) the rules and conditions for the aggregation of demand facilities, energy storage facilities and power generating facilities in a scheduling area to become a balancing service provider;

(d) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO during the prequalification process and operation of the balancing market;

(e) the rules and conditions for the assignment of each balancing energy bid from a balancing service provider to one or more balance responsible parties pursuant to paragraph 4 (d);

(f) the requirements on data and information to be delivered to the connecting TSO and, where relevant, to the reserve connecting DSO to evaluate the provisions of balancing services pursuant to Article 154(1), Article 154(8), Article 158(1)(e), Article 158(4)(b), Article 161(1)(f) and Article 161(4)(b) of Regulation (EU) 2017/1485;

(g) the definition of a location for each standard product and each specific product taking into account paragraph 5 (c);

(h) the rules for the determination of the volume of balancing energy to be settled with the balancing service provider pursuant to Article 45;

(i) the rules for the settlement of balancing service providers defined pursuant to Chapters 2 and 5 of Title V;

(j) a maximum period for the finalisation of the settlement of balancing energy with a balancing service provider in accordance with Article 45, for any given imbalance settlement period;

(k) the consequences in case of non-compliance with the terms and conditions applicable to balancing service providers.

6. The terms and conditions for balance responsible parties shall contain:

(a) the definition of balance responsibility for each connection in a way that avoids any gaps or overlaps in the balance responsibility of different market participants providing services to that connection;

(b) the requirements for becoming a balance responsible party;

(c) the requirement that all balance responsible parties shall be financially responsible for their imbalances, and that the imbalances shall be settled with the connecting TSO;

(d) the requirements on data and information to be delivered to the connecting TSO to calculate the imbalances;

(e) the rules for balance responsible parties to change their schedules prior to and after the intraday energy gate closure time pursuant to paragraphs 3 and 4 of Article 17;

(f) the rules for the settlement of balance responsible parties defined pursuant to Chapter 4 of Title V;

(g) the delineation of an imbalance area pursuant to Article 54(2) and an imbalance price area;

(h) a maximum period for the finalisation of the settlement of imbalances with balance responsible parties for any given imbalance settlement period pursuant to Article 54;

(i) the consequences in case of non-compliance with the terms and conditions applicable to balance responsible parties;

(j) an obligation for balance responsible parties to submit to the connecting TSO any modifications of the position;

(k) the settlement rules pursuant to Articles 52, 53, 54 and 55;

(l) where existing, the provisions for the exclusion of imbalances from the imbalance settlement when they are associated with the introduction of ramping restrictions for the alleviation of deterministic frequency deviations pursuant to Article 137(4) of Regulation (EU) 2017/1485.

7. Each connecting TSO may include the following elements in the proposal for the terms and conditions for balancing service providers or in the terms and conditions for balance responsible parties:

(a) a requirement for balancing service providers to provide information on unused generation capacity and other balancing resources from balancing service providers, after the day-ahead market gate closure time and after the intraday cross-zonal gate closure time;

(b) where justified, a requirement for balancing service providers to offer the unused generation capacity or other balancing resources through balancing energy bids or integrated scheduling process bids in the balancing markets after day ahead market gate closure time, without prejudice to the possibility of balancing service providers to change their balancing energy bids prior to the balancing energy gate closure time or the integrated scheduling process gate closure time due to trading within intraday market;

(c) where justified, a requirement for balancing service providers to offer the unused generation capacity or other balancing resources through balancing energy bids or integrated scheduling process bids in the balancing markets after intraday cross-zonal gate closure time;

(d) specific requirements with regard to the position of balance responsible parties submitted after the day-ahead market timeframe to ensure that the sum of their internal and external commercial trade schedules equals the sum of the physical generation and consumption schedules, taking into account electrical losses compensation, where relevant;

(e) an exemption to publish information on offered prices of balancing energy or balancing capacity bids due to market abuse concerns pursuant to Article 12(4);

(f) an exemption for specific products defined in Article 26(3)(b) to predetermine the price of the balancing energy bids from a balancing capacity contract pursuant to Article 16(6);

(g) an application for the use of dual pricing for all imbalances based on the conditions established pursuant to Article 52(2)(d)(i) and the methodology for applying dual pricing pursuant to Article 52(2)(d)(ii).

8. TSOs applying a central dispatching model shall also include the following elements in the terms and conditions related to balancing:

(a) the integrated scheduling process gate closure time pursuant to Article 24(5);

(b) the rules for updating the integrated scheduling process bids after each integrated scheduling process gate closure time pursuant to Article 24(6);

(c) the rules for using integrated scheduling process bids prior to the balancing energy gate closure time pursuant to Article 24(7);

(d) the rules for converting integrated scheduling process bids pursuant to Article 27.

9. Each TSO shall monitor the fulfilment by all parties of the requirements set out in the terms and conditions for balancing within its scheduling area or scheduling areas.

CHAPTER 2

European platforms for the exchange of balancing energy

Article 19

European platform for the exchange of balancing energy from replacement reserves

1. By six months after entry into force of this Regulation, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall develop a proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves.

2. The European platform for the exchange of balancing energy from replacement reserves, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the activation optimisation function and the TSO-TSO settlement function. That European platform shall apply a multilateral TSO-TSO model with common merit order lists to exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14).

3. The proposal in paragraph 1 shall include at least:

(a) the high level design of the European platform;

(b) the roadmap and timelines for the implementation of the European platform;

(c) the definition of the functions required to operate the European platform;

(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;

(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure: (i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform; (ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as, supports the objectives of this Regulation; (iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;

(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;

(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;

(h) the balancing energy gate closure time for all standard products for replacement reserves in accordance with Article 24;

(i) the definition of standard products for balancing energy from replacement reserves in accordance with Article 25;

(j) the TSO energy bid submission gate closure time in accordance with Article 29( 13);

(k) the common merit order lists to be organised by the common activation optimisation function pursuant to Article 31;

(l) the description of the algorithm for the operation of the activation optimisation function for the balancing energy bids from all standard products for replacement reserves in accordance with Article 58.

4. By six months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).

5. By one year after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from replacement reserves, all TSOs performing the reserve replacement process pursuant to Part IV of Regulation (EU) 2017/1485 and that have at least one interconnected neighbouring TSO performing the replacement reserves process shall implement and make operational the European platform for the exchange of balancing energy from replacement reserves. They shall use the European platform to:

(a) submit all balancing energy bids from all standard products for replacement reserves;

(b) exchange all balancing energy bids from all standard products for replacement reserves, except for unavailable bids pursuant to Article 29(14);

(c) strive to fulfil all their needs for balancing energy from replacement reserves.

Article 20

European platform for the exchange of balancing energy from frequency restoration reserves with manual activation

1. By one year after entry into force of this Regulation, all TSOs shall develop a proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation.

2. The European platform for the exchange of balancing energy from frequency restoration reserves with manual activation, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the activation optimisation function and the TSO-TSO settlement function. This European platform shall apply a multilateral TSO-TSO model with common merit order lists to exchange all balancing energy bids from all standard products for frequency restoration reserves with manual activation, except for unavailable bids pursuant to Article 29(14).

3. The proposal in paragraph 1 shall include at least:

(a) the high level design of the European platform;

(b) the roadmap and timelines for the implementation of the European platform;

(c) the definition of the functions required to operate the European platform;

(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;

(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure: (i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform; (ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as, supports the objectives of this Regulation; (iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;

(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;

(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;

(h) the balancing energy gate closure time for all standard products for frequency restoration reserves with manual activation in accordance with Article 24;

(i) the definition of standard products for balancing energy from frequency restoration reserves with manual activation in accordance with Article 25;

(j) the TSO energy bid submission gate closure time in accordance with Article 29( 13);

(k) the common merit order lists to be organised by the common activation optimisation function pursuant to Article 31;

(l) the description of the algorithm for the operation of the activation optimisation function for the balancing energy bids from all standard products for frequency restoration reserves with manual activation in accordance with Article 58.

4. By six months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation, all TSOs shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).

5. By eighteen months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation, all TSOs may develop a proposal for modification of the European platform for the exchange of balancing energy from frequency restoration reserves with manual activation pursuant to paragraph 1. Proposed modifications shall be supported by a cost-benefit analysis performed by all TSOs pursuant to Article 61. The proposal shall be notified to the Commission.

6. By thirty months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation, or where all TSOs submit a proposal for modification of the European platform pursuant to paragraph 5, by 12 months after the approval of the proposal for modification of the European platform, all TSOs shall implement and make operational the European platform for the exchange of balancing energy from frequency restoration reserves with manual activation and they shall use the European platform to:

(a) submit all balancing energy bids from all standard products for frequency restoration reserves with manual activation;

(b) exchange all balancing energy bids from all standard products for frequency restoration reserves with manual activation, except for unavailable bids pursuant to Article 29(14);

(c) strive to fulfil all their needs for balancing energy from the frequency restoration reserves with manual activation.

Article 21

European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation

1. By one year after entry into force of this Regulation, all TSOs shall develop a proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation.

2. The European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the activation optimisation function and the TSO-TSO settlement function. This European platform shall apply a multilateral TSO-TSO model with common merit order lists to exchange all balancing energy bids from all standard products for frequency restoration reserves with automatic activation, except for unavailable bids pursuant to Article 29(14).

3. The proposal in paragraph 1 shall include at least:

(a) the high level design of the European platform;

(b) the roadmap and timelines for the implementation of the European platform;

(c) the definition of the functions required to operate the European platform;

(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;

(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure: (i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform; (ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as supports the objectives of this Regulation; (iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;

(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;

(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;

(h) the balancing energy gate closure time for all standard products for frequency restoration reserves with automatic activation in accordance with Article 24;

(i) the definition of standard products for balancing energy from frequency restoration reserves with automatic activation in accordance with Article 25;

(j) the TSO energy bid submission gate closure time in accordance with Article 29( 13);

(k) the common merit order lists to be organised by the common activation optimisation function pursuant to Article 31;

(l) the description of the algorithm for the operation of the activation optimisation function for the balancing energy bids from all standard products for frequency restoration reserves with automatic activation in accordance with Article 58.

4. By six months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation, all TSOs shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).

5. By eighteen months after the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation, all TSOs may develop a proposal for modification of the European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation pursuant to paragraph 1 and of the principles set in paragraph 2. Proposed modifications shall be supported by a cost-benefit analysis performed by the all TSOs pursuant to Article 61. The proposal shall be notified to the Commission.

6. By thirty months from the approval of the proposal for the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation, or where all TSOs submit a proposal for modification of the European platform pursuant to paragraph 5, by 12 months after the approval of the proposal for modification of the European platform, all TSOs performing the automatic frequency restoration process pursuant to Part IV of Regulation (EU) 2017/1485 shall implement and make operational the European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation and they shall use the European platform to:

(a) submit all balancing energy bids from all standard products for frequency restoration reserves with automatic activation;

(b) exchange all balancing energy bids from all standard products for frequency restoration reserves with automatic activation, except for unavailable bids pursuant to Article 29(14);

(c) strive to fulfil all their needs for balancing energy from the frequency restoration reserves with automatic activation.

Article 22

European platform for imbalance netting process

1. By six months after entry into force of this Regulation, all TSOs shall develop a proposal for the implementation framework for a European platform for the imbalance netting process.

2. The European platform for the imbalance netting process, operated by TSOs or by means of an entity the TSOs would create themselves, shall be based on common governance principles and business processes and shall consist of at least the imbalance netting process function and the TSO-TSO settlement function. The European platform shall apply a multilateral TSO-TSO model to perform the imbalance netting process.

3. The proposal in paragraph 1 shall include at least:

(a) the high level design of the European platform;

(b) the roadmap and timelines for the implementation of the European platform;

(c) the definition of functions required to operate the European platform;

(d) the proposed rules concerning the governance and operation of the European platform, based on the principle of non-discrimination and ensuring equitable treatment of all member TSOs and that no TSO benefits from unjustified economic advantages through the participation in the functions of the European platform;

(e) the proposed designation of the entity or entities that will perform the functions defined in the proposal. Where the TSOs propose to designate more than one entity, the proposal shall demonstrate and ensure: (i) a coherent allocation of the functions to the entities operating the European platform. The proposal shall take full account of the need to coordinate the different functions allocated to the entities operating the European platform; (ii) that the proposed setup of the European platform and allocation of functions ensures efficient and effective governance, operation and regulatory oversight of the European platform as well as supports the objectives of this Regulation; (iii) an effective coordination and decision making process to resolve any conflicting positions between entities operating the European platform;

(f) the framework for harmonisation of the terms and conditions related to balancing set up pursuant to Article 18;

(g) the detailed principles for sharing the common costs, including the detailed categorisation of common costs, in accordance with Article 23;

(h) the description of the algorithm for the operation of imbalance netting process function in accordance with Article 58.

4. By six months after the approval of the proposal for the implementation framework for a European platform for the imbalance netting process, all TSOs shall designate the proposed entity or entities entrusted with operating the European platform pursuant to paragraph 3(e).

5. By one year after the approval of the proposal for the implementation framework for a European platform for the imbalance netting process, all TSOs performing the automatic frequency restoration process pursuant to Part IV of Regulation (EU) 2017/1485 shall implement and make operational the European platform for the imbalance netting process. They shall use the European platform to perform the imbalance netting process, at least for the Continental Europe synchronous area.

Article 23

Cost sharing between TSOs in different Member States

1. All TSOs shall provide a yearly report to the relevant regulatory authorities in accordance with Article 37 of Directive 2009/72/EC in which the costs of establishing, amending and operating the European platforms pursuant to Articles 19, 20, 21 and 22 are explained in detail. This report shall be published by the Agency taking due account of sensitive commercial information.

2. The costs referred to in paragraph 1 shall be broken down into:

(a) common costs resulting from coordinated activities of all TSOs participating in the respective platforms;

(b) regional costs resulting from activities of several but not all TSOs participating in the respective platforms;

(c) national costs resulting from activities of the TSOs in that Member State participating in the respective platforms.

3. Common costs referred to in paragraph 2(a) shall be shared among the TSOs in the Member States and third countries participating in the European platforms. To calculate the amount to be paid by the TSOs in each Member State and, if applicable, third country, one eighth of the common cost shall be divided equally between each Member State and third country, five eighths shall be divided between each Member State and third country proportionally to their consumption, and two eighths shall be divided equally between the participating TSOs pursuant to paragraph 2(a). The Member State's share of the costs shall be borne by the TSO or TSOs operating in a territory of that Member State. In case several TSOs are operating in a Member State, the Member State's share of the costs shall be distributed among those TSOs proportionally to the consumption in the TSOs control areas.

4. To take into account changes in the common costs or changes in the participating TSOs, the calculation of common costs shall be regularly adapted.

5. TSOs cooperating in a certain region shall jointly agree on a proposal for the sharing of regional costs in accordance with paragraph 2(b). The proposal shall then be individually approved by the relevant regulatory authorities of each of the Member States and, if applicable, third country in the region. TSOs cooperating in a certain region may alternatively use the cost sharing arrangements set out in paragraph 3.

6. The cost sharing principles shall apply to costs contributing to the establishing, amending and operating the European platforms from the approval of the proposal for the relevant implementation frameworks pursuant to Articles 19(1), 20(1), 21(1) and 22(1). In case the implementation frameworks propose that existing projects shall evolve into a European platform, all TSOs participating in the existing projects may propose that a share of the costs incurred before the approval of the proposal for the implementation frameworks directly related to the development and implementation of this project and assessed as reasonable, efficient and proportionate is considered as part of the common costs pursuant to paragraph 2(a).

Article 24

Balancing energy gate closure time

1. As part of the proposals pursuant to Articles 19, 20 and 21, all TSOs shall harmonise the balancing energy gate closure time for standard products at the Union level, at least for each of the following processes:

(a) replacement reserves;

(b) frequency restoration reserves with manual activation;

(c) frequency restoration reserves with automatic activation.

2. Balancing energy gate closure times shall:

(a) be as close as possible to real time;

(b) not be before the intraday cross-zonal gate closure time;

(c) ensure sufficient time for the necessary balancing processes.

3. After the balancing energy gate closure time, the balancing service providers shall no longer be permitted to submit or update their balancing energy bids.

4. After the balancing energy gate closure time, balancing service providers shall report to the connecting TSO any unavailable volumes of balancing energy bids without undue delay in accordance to 158(4)(b) and 161(4)(b) of Regulation (EU) 2017/1485. If the balancing service provider has a connection point to a DSO, and if required by the DSO, the balancing service provider shall also report any unavailable volumes of balancing energy bids to the DSO without undue delay.

5. By two years after entry into force of this Regulation, each TSO applying a central dispatching model shall define at least one integrated scheduling process gate closure time which shall:

(a) enable balancing service providers to update their integrated scheduling bids as close as possible to real time;

(b) be no longer than eight hours before real-time;

(c) be set before the TSO energy bid submission gate closure time.

6. After each integrated scheduling process gate closure time, the integrated scheduling process bid may only be changed in accordance with the rules defined by the connecting TSO in the terms and conditions for balancing service providers set up pursuant to Article 18. Those rules shall be implemented before the connecting TSO joins any process for the exchange of balancing energy and shall allow balancing service providers to update their integrated scheduling bids to the extent possible until the intraday cross-zonal gate closure time, while ensuring:

(a) the economic efficiency of the integrated scheduling process;

(b) operational security;

(c) consistency of all iterations of the integrated scheduling process;

(d) fair and equal treatment of all balancing service providers in the scheduling area;

(e) no negative effect on the integrated scheduling process.

7. Each TSO applying a central dispatching model shall establish the rules for using the integrated scheduling process bids prior to the balancing energy gate closure time in accordance with Article 18( 8) (c) in order to:

(a) ensure that the TSO meets its reserve capacity requirements in real time;

(b) ensure sufficient resources to solve internal congestions;

(c) ensure the possibility of feasible dispatching of power generating facilities and demand facilities in real time.

Article 25

Requirements for standard products

1. Standard products for balancing energy shall be developed as part of the proposals for the implementation frameworks for the European platforms pursuant to Articles 19, 20 and 21. After the approval of each implementation framework and no later than the time when a TSO uses the respective European platform, the TSO shall use only standard and, where justified, specific balancing energy products in order to maintain the system's balance in accordance with Article 127, Article 157 and Article 160 of Regulation (EU) 2017/1485.

2. By two years after entry into force of this Regulation, all TSOs shall develop a proposal for a list of standard products for balancing capacity for frequency restoration reserves and replacement reserves.

3. At least every two years, all TSOs shall review the list of standard products for balancing energy and balancing capacity. The review of standard products shall take into account:

(a) the objectives set out in Article 3( 1);

(b) if applicable, proposed changes to the list of standard products and the number of common merit order lists pursuant to Article 31( 2);

(c) the performance indicators set out in Article 59( 4).

4. The list of standard products for balancing energy and balancing capacity may set out at least the following characteristics of a standard product bid:

(a) preparation period;

(b) ramping period;

(c) full activation time;

(d) minimum and maximum quantity;

(e) deactivation period;

(f) minimum and maximum duration of delivery period;

(g) validity period;

(h) mode of activation.

5. The list of standard products for balancing energy and balancing capacity shall set out at least the following variable characteristics of a standard product to be determined by the balancing service providers during the prequalification or when submitting the standard product bid:

(a) price of the bid;

(b) divisibility;

(c) location;

(d) minimum duration between the end of deactivation period and the following activation.

6. Standard products for balancing energy and balancing capacity shall:

(a) ensure an efficient standardisation, foster cross-border competition and liquidity, and avoid undue market fragmentation;

(b) facilitate the participation of demand facility owners, third parties and owners of power generating facilities from renewable energy sources as well as owners of energy storage units as balancing service providers.

Article 26

Requirements for specific products

1. Following the approval of the implementation frameworks for the European platforms pursuant to Articles 19, 20 and 21, each TSO may develop a proposal for defining and using specific products for balancing energy and balancing capacity. This proposal shall include at least:

(a) a definition of specific products and of the time period in which they will be used;

(b) a demonstration that standard products are not sufficient to ensure operational security and to maintain the system balance efficiently or a demonstration that some balancing resources cannot participate in the balancing market through standard products;

(c) a description of measures proposed to minimise the use of specific products subject to economic efficiency;

(d) where applicable, the rules for converting the balancing energy bids from specific products into balancing energy bids from standard products;

(e) where applicable, the information on the process for the conversion of balancing energy bids from specific products into balancing energy bids from standard products and the information on which common merit order list the conversion will take place;

(f) a demonstration that the specific products do not create significant inefficiencies and distortions in the balancing market within and outside the scheduling area.

2. Each TSO using specific products shall review at least once every two years the necessity to use specific products in accordance with the criteria laid down in paragraph 1.

3. The specific products shall be implemented in parallel to the implementation of the standard products. Following the use of the specific products, the connecting TSO may alternatively:

(a) convert the balancing energy bids from specific products into balancing energy bids from standard products;

(b) activate the balancing energy bids from specific products locally without exchanging them.

4. The rules for converting balancing energy bids from specific products into balancing energy bids from standard products pursuant to paragraph 1(d) shall:

(a) be fair, transparent and non-discriminatory;

(b) not create barriers for the exchange of balancing services;

(c) ensure the financial neutrality of TSOs.

Article 27

Conversion of bids in a central dispatching model

1. Each TSO applying a central dispatching model shall use the integrated scheduling process bids for the exchange of balancing services or for the sharing of reserves.

2. Each TSO applying a central dispatching model shall use the integrated scheduling process bids available for the real time management of the system to provide balancing services to other TSOs, while respecting operational security constraints.

3. Each TSO applying a central dispatching model shall convert as far as possible the integrated scheduling process bids pursuant to paragraph 2 into standard products taking into account operational security. The rules for converting the integrated scheduling process bids into standard products shall:

(a) be fair, transparent and non-discriminatory;

(b) not create barriers for the exchange of balancing services;

(c) ensure the financial neutrality of TSOs.

Article 28

Fall-back procedures

1. Each TSO shall ensure that fall-back solutions are in place in case the procedures referred to in paragraphs 2 and 3 fail.

2. Where the procurement of balancing services fails, the concerned TSOs shall repeat the procurement process. TSOs shall inform market participants that fall-back procedures will be used as soon as possible.

3. Where the coordinated activation of balancing energy fails, each TSO may deviate from the common merit order list activation and shall inform market participants as soon as possible.

TITLE III

PROCUREMENT OF BALANCING SERVICES

CHAPTER 1

Balancing energy

Article 29

Activation of balancing energy bids from common merit order list

1. In order to maintain the system's balance in accordance with Article 127, Article 157 and Article 160 of Regulation (EU) 2017/1485, each TSO shall use cost-effective balancing energy bids available for delivery in its control area based on common merit order lists or another model as set with the proposal by all TSOs pursuant to paragraph 5 of Article 21.

2. TSOs shall not activate balancing energy bids before the corresponding balancing energy gate closure time, except in the alert state or the emergency state when such activations help alleviate the severity of these system states and except when the bids serve purposes other than balancing pursuant to paragraph 3.

3. By one year after the entry into force of this Regulation, all TSOs shall develop a proposal for a methodology for classifying the activation purposes of balancing energy bids. This methodology shall:

(a) describe all possible purposes for the activation of balancing energy bids;

(b) define classification criteria for each possible activation purpose.

4. For each balancing energy bid activated from the common merit order list, the TSO activating the bid shall define the activation purpose based on the methodology pursuant to paragraph 3. The activation purpose shall be notified and visible to all TSOs through the activation optimisation function.

5. In the event that the activation of balancing energy bids deviates from the results of the activation optimisation function, the TSO shall publish the information about the reasons for the occurrence of such deviation in a timely manner.

6. The request for activation of a balancing energy bid from the activation optimisation function shall oblige the requesting TSO and connecting TSO to accept the firm exchange of balancing energy. Each connecting TSO shall ensure the activation of the balancing energy bid selected by the activation optimisation function. The balancing energy shall be settled pursuant to