f97.beERIK SCHMIDT’S WORKSHOP
← All terms

Glossary · Energy industry & energy transition

Balancing Energy

Balancing energy balancing energy balancing energy work electricity market frequency maintenance Balancing group balancing power

Balancing Energy refers to electrical energy that a transmission system operator actually activates in order to offset short-term deviations between feed-in and withdrawal in the power system. The European guideline on electricity balancing (Regulation (EU) 2017/2195, EB GL for short) defines it as energy used by transmission system operators for system balancing and provided by a balancing service provider. The German term that matches most precisely is "Regelarbeit". It only arises when a plant or controllable load is actually instructed or automatically activated to feed energy into the system or withdraw energy from it.

Balancing Energy is measured as a quantity of energy, usually in megawatt-hours. An activation of 100 megawatts over 15 minutes corresponds to 25 megawatt-hours. This simple calculation helps because power and energy are often confused in the power system. Power is the instantaneous capability or instantaneous use, in megawatts. Balancing Energy is the quantity actually delivered or absorbed over a given period.

Balancing Energy is therefore not the reserve held available, but its use. The capability to provide a certain amount of power on demand is called Balancing Capacity or, in German, usually Regelleistung. Under the EB GL, a provider of Balancing Capacity undertakes to hold reserve for the contract period and to submit corresponding Balancing Energy bids for it. It can be paid for holding the reserve even if its plant is never called. Balancing Energy, by contrast, arises only upon activation. This distinction is more than a question of wording. It determines procurement, price formation, settlement and incentives in the balancing market.

Physical function in the power system

In an interconnected system, almost exactly as much electricity must be generated as is consumed at every moment. Network losses and exchange flows with neighbouring control areas are included. If generation and consumption diverge, the grid frequency changes. If power is lacking, the frequency falls below the nominal value of 50 hertz. In the case of a surplus, it rises. The frequency is therefore a shared physical signal across the Continental European synchronous area.

Balancing reserve is deployed in stages:

  • Frequency Containment Reserve (FCR, formerly primary control power) responds automatically and very quickly to frequency deviations. It is activated across the entire synchronous area on the solidarity principle, regardless of where the imbalance arose. In Germany, FCR capacity and FCR energy are procured together. FCR energy is not run as a separate balancing energy market. The TSOs publish only a calculated value for it (k times delta f), because the FCR actually delivered is not measured.

  • Automatic Frequency Restoration Reserve (aFRR, formerly secondary control power) is activated automatically for the control area in which the deviation arose (polluter-pays principle). Its standard products are designed for full activation within 5 minutes.

  • Manual Frequency Restoration Reserve (mFRR, formerly minute reserve) is called specifically by the transmission system operator. According to TransnetBW, activation takes place within 12.5 minutes and lasts at least 15 minutes. mFRR supplements or replaces aFRR in the case of long or particularly large imbalances.

When Germany speaks of Regelarbeit with its own energy prices and its own market, it therefore mainly means aFRR and mFRR. The EB GL governs the settlement of Balancing Energy at least for frequency restoration and replacement reserves. The settled quantity may be based on the requested activation or on measured values.

Positive Balancing Energy means that the system needs additional feed-in or less consumption. A power plant ramps up, a battery discharges or an industrial site reduces its load. Negative Balancing Energy means that there is too much energy in the system. Generation is then reduced, a battery charges, a controllable load increases its consumption or another suitable unit absorbs energy. The direction therefore says nothing about whether a plant has a good or bad effect. It merely describes which correction the overall system currently needs.

Distinction from balancing capacity, balancing energy as a loose term and imbalance energy

Balancing Energy is often loosely translated as "Regelenergie". In everyday usage, however, Regelenergie can mean both the reserve held available and the energy actually activated. For a clean analysis, a distinction should be made: Regelleistung is the capacity held available in megawatts, Regelarbeit the activated quantity of energy in megawatt-hours. Balancing Capacity corresponds to Regelleistung, Balancing Energy to Regelarbeit. The German procurement platform of the TSOs accordingly distinguishes between markets for capacity and for energy.

Imbalance energy (Ausgleichsenergie) is a related but different term. In the German electricity market it refers mainly to the deviation of a balancing group from its notified schedule and the financial valuation of that deviation. A balancing group may have too little energy if customers consume more or plants feed in less than planned. It may also have too much energy in its portfolio. Such deviations are settled at the imbalance price, in Germany the uniform cross-control-area imbalance settlement price (reBAP).

The two quantities are closely linked but not identical. Balancing Energy is the physical correction that the transmission system operator triggers in the grid. Imbalance energy is the accounting and financial allocation of deviations to the balance responsible parties. The costs of the activated Regelarbeit flow back to the balancing groups via imbalance energy and thus ultimately to consumers. How much Regelarbeit is needed in total depends on the net deviation of the control areas. The netting of opposing deviations, cross-border cooperation and grid constraints also play a role.

It follows that high imbalance energy costs for a market participant do not mean that exactly this quantity was activated as Regelarbeit. Conversely, Regelarbeit may become necessary even though no single balancing group deviates strongly. This happens, for example, when many small errors go in the same direction and do not offset one another.

How Balancing Energy arises

A large part of balancing is already organised through markets before real time. Generators, suppliers, traders and direct marketers buy and sell energy on the forward market, the day-ahead market and the intraday market. Schedules arise for each quarter-hour and are consolidated in balancing groups. The EB GL makes this clear: market participants are to balance themselves as close to real time as possible. Only the imbalances remaining after the end of intraday trading are balanced by the transmission system operators via the balancing market. In addition, each balance responsible party is to be balanced in real time or to contribute to balancing the system.

In real time, physical reality departs from these schedules. Consumption forecasts are not exact, wind and solar generation change with the weather, power plants fail, industrial processes run differently from planned, and network losses also fluctuate. Added to this are forecasting and communication errors or delayed schedule adjustments. The transmission system operators regulate the remaining difference.

Regelarbeit is delivered by prequalified providers. These include conventional power plants, hydropower plants, battery storage, pooled smaller plants, flexible industrial processes, controllable consumers and, increasingly, renewable plants. The EB GL explicitly requires that demand flexibility, renewable generators and storage operators can also become balancing service providers. A provider must demonstrate that it meets the required response time and that its output is measurable, available, controllable and billable.

The market determines which plant is called. Since November 2020, Germany has had a separate Regelarbeit market for aFRR and mFRR alongside the Regelleistung market. There, providers offer quantities at an energy price. Anyone who has received an award on the Regelleistung market must submit Regelarbeit bids. Other prequalified providers may bid in addition. The bids are ranked by energy price in a merit order list for each product and direction. In the case of positive demand, the cheapest bids are activated first. In the case of negative demand, the order is descending, so the bids with the highest energy price are used first.

Via the European platforms PICASSO for aFRR and MARI for mFRR, the participating grid operators rank their bids jointly. They optimise the activations taking into account the available cross-border transmission capacity. In Germany, mFRR activation runs via the TSOs' Merit Order List Server (MOLS), which is connected to MARI. If the platform fails, activations are handled nationally. Even before activation, imbalance netting offsets opposing imbalances of neighbouring control areas. The Regelarbeit actually activated is therefore also a result of market organisation and not merely a direct expression of physical scarcity.

Price formation and settlement

Regelarbeit has its own prices. They can differ significantly from the capacity price of Regelleistung, the day-ahead price and the intraday price. Regelarbeit is activated at very short notice, must be reliably available and depends strongly on timing, technical suitability and location in the control area. Energy prices therefore reflect not only fuel costs but also opportunity costs, start-up conditions, storage levels, minimum run times and the direction of activation. For the European platforms, the EB GL in principle provides for marginal pricing: the most expensive activated bid sets the price for all (pay-as-cleared).

Settlement takes place on two levels. First, between grid operator and provider: under the EB GL, the direction of payment depends on the direction of the Regelarbeit and on the sign of the price. In the case of positive Regelarbeit and a positive price, the grid operator pays the provider. In the case of a negative price, the provider pays. In the case of negative Regelarbeit, this is reversed. Second, balancing group deviations are settled via imbalance prices. Under the EB GL, these prices are meant to reflect the value of energy in real time. This is intended to create incentives to forecast balancing groups carefully and to readjust in intraday trading.

This construction must combine two goals. Grid operation needs reliable corrective energy in real time, and the market needs prices without perverse incentives. If imbalance energy is too cheap, market participants may knowingly accept deviations. If it is at times very expensive, this promotes balancing discipline but also means risks for participants with portfolios that are hard to forecast.

Why the term matters for the power system

Balancing Energy shows how much real corrective work the power system needs at short notice. The term links three levels: physical frequency control, the market processes before real time and the financial allocation of deviations. Only with this link can one clarify whether a problem arises from technical limits, forecasting errors, market rules, lack of flexibility or poor balancing group management.

With more weather-dependent generation, the term becomes more important, but it did not arise because of wind and solar energy. A system dominated by fossil or nuclear generation also needs Regelarbeit, because power plants fail and loads fluctuate. Weather-dependent feed-in does, however, change the nature of the uncertainty. Forecast quality, short-term weather changes and the coupling with intraday trading become more important. At the same time, forecasts are improving, larger market areas offset more, and flexible plants often react faster than conventional power plants.

For flexibility, Regelarbeit is a practical field of application. Batteries, pumped storage, electrolysers, industrial loads, heat storage and pooled consumers can provide it if they can be controlled quickly and reliably. Their value then arises not only from price differences between cheap and expensive hours but also from system services in which speed, precision and availability are paid for.

Typical misunderstandings

  • Balancing Energy is not additional electricity consumption. Positive Regelarbeit means more feed-in or less consumption, negative Regelarbeit less generation or more consumption. The quantity describes corrections relative to a schedule, not total electricity consumption.

  • Balancing Energy is not the same as storage. Storage is only one of many possible sources. What matters is the ability to change feed-in or withdrawal quickly, measurably and in compliance with the rules. A gas-fired power plant, an aluminium smelter or an aggregator of small plants can do this too.

  • High Regelarbeit prices do not automatically indicate a lack of generation capacity. Prices can also rise when few bids are available at short notice, when plants are committed in other markets, when grid constraints limit the selection or when bidding rules allow strategic behaviour. Whether there is actually scarcity in the sense of security of supply can only be assessed by looking at firm capacity, the grid situation, power plant availability, imports and reserve mechanisms.

  • Renewable feed-in does not automatically create a need for balancing. What matters is the deviation between forecast, schedule and actual feed-in, not the type of generation. A well-forecast wind farm causes less need for correction than a large power plant that fails unexpectedly.

  • Balancing Energy is not redispatch. Redispatch resolves grid congestion by shifting generation geographically. Regelarbeit offsets power imbalances. Both can involve the same plants but solve different problems. The EB GL therefore requires that bids activated for internal congestion management do not set the marginal price of Regelarbeit.

What Balancing Energy makes visible and what it does not

Time series of activated Regelarbeit show in which quarter-hours how much correction was needed in which direction and what it cost. The German transmission system operators publish such data separately by control area and direction. Together with weather data, forecast errors, power plant outages and intraday prices, causes can be narrowed down in this way.

Taken on its own, however, the indicator is of limited informative value. Many deviations are already corrected in intraday trading or offset one another through imbalance netting. A falling quantity can mean better planning, but also a shift to other processes. A rising quantity can point to larger forecast errors, but also to changed products, rules or measurement methods. Regelarbeit also says little about the reserve capacity required. The reserve is sized according to possible large power jumps, in Germany using a dynamic method. Energy costs, by contrast, depend on the activated quantity and the price. And finally, Regelarbeit costs are only one part of system costs alongside grid expansion, redispatch, network losses and other items.

Significance for electrification and new flexible loads

Heat pumps, electric vehicles, electrolysers and data centres change load profiles. For Regelarbeit, what matters here is less the annual quantity of electricity than the question of how well these loads can be controlled and forecast. Electric cars charging in an uncoordinated way can increase the need for balancing. The same vehicles can, however, provide flexibility if their charging processes are measurable, controllable and integrated into the market. Individual household appliances are usually too small for the balancing market, but pooled they can participate. This requires suitable metering concepts, communication channels and consumer protection rules. Industrial processes can move large amounts of power but are not suitable for every product. Whether such capabilities are used depends on minimum bid sizes, product time slices and settlement rules. Products that are too coarse favour conventional plants, products that are too fine-grained increase transaction costs.

A precise use of the term

Balancing Energy should be used for the Regelarbeit actually activated. The term does not fit reserve capacity held available, arbitrary imbalance costs or short-term electricity trading as a whole. Anyone analysing it always looks at two levels: the physical correction in the grid and the rules under which this correction is procured, activated and settled. Alongside the quantity in megawatt-hours, direction, timing, product, price, control area and available flexibility also count.

Sources

Related glossary entries

Edited by eCMS on 11.11.2026 14:59

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.