In August 2023 the three Baltic national regulatory authorities (NRAs) published a communication to market participants on the functioning of the electricity market and the expected behaviour of market participants regarding offering of generating capacity or other assets on the balancing and day-ahead market. The purpose of the communication was to ensure that market participants do not withhold available generating capacity or other assets from the day-ahead market with the intention to capitalise on providing their generating capacity to the balancing energy market while decreasing liquidity on the day-ahead market. Although not legally binding, that was the opinion of the Baltic NRAs under the given market circumstances.
Electricity markets have evolved since, introduction of balancing energy and balancing capacity market in the Baltic area being the highlight of the changes. An update on how the Baltic NRAs see the functioning of the electricity market and the behaviour of market participants appears to be necessary and appropriate to dissipate concerns of market participants on how the NRAs might interpret the behaviour of market participants by offering their generating capacity or other assets in different sequential markets.
Given the new circumstances related to the introduction of balancing energy and balancing capacity markets (aFRR, mFRR, FCR), it is not necessarily expected that all market participants provide generating capacity or other assets in all market segments sequentially, beginning with the day-ahead market. The sequence of the gate closure times alters the logic of placing bids in different markets. A market participant can decide what capacities it will offer to the sequential market of interest, while acting in ways that do not constitute breach of REMIT (such as capacity withholding, market manipulation or other). Thus, market participants are not constrained from placing offers on the balancing capacity market prior to the day-ahead market. Considering the situation following the synchronization process with Continental Europe, where it is crucial to ensure a sufficient level of capacity for balancing the power system in the Baltic region, market participants that have assets prequalified for balancing services are expected to provide capacity in all market segments sequentially.
For a more detailed explanation on the expected behaviour of market participants with the introduction of balancing markets the NRAs encourage market participants to consult Balancing Market Best Practice Guidance Document by the Baltic electricity transmission system operators (available here: https://www.litgrid.eu/uploads/files/dir766/dir38/dir1/5_0.php in the website of TSO Litgrid AB: https://www.litgrid.eu/index.php/elektros-rinka/remit-rinkos-stebesena/33141). The NRAs also encourage market participants to consult the updated edition of the ACER Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (published on December 18, 2024, available here: https://www.acer.europa.eu/remit/about-remit/remit-guidance).
The Council urges market participants, following synchronization with Continental Europe and the full operation of the Baltic balancing services market, to act responsibly, not to abuse their position, and not to manipulate the market by placing orders that are not justified by opportunity costs.
