Balancing markets across South-East Europe are emerging as a critical component of the region’s electricity system, as increasing renewable penetration and tightening supply-demand conditions drive demand for flexibility.
During calendar week 13, the interplay between variable renewable output, fluctuating demand, and constrained interconnections highlighted the growing importance of balancing mechanisms. System operators across the region are increasingly relying on ancillary services to maintain stability, particularly during periods of rapid changes in generation or consumption.
Balancing services encompass a range of products, including frequency containment reserves (FCR), automatic frequency restoration reserves (aFRR), and manual frequency restoration reserves (mFRR). These services are designed to ensure that supply and demand remain in equilibrium on a real-time basis, preventing deviations that could compromise system stability.
In SEE markets, the development of balancing markets has historically lagged behind Western Europe. However, recent trends suggest that this gap is narrowing. As renewable capacity increases—particularly solar and wind—the need for rapid-response flexibility has become more pronounced.
Revenue potential in balancing markets is also increasing. Current estimates suggest that assets providing balancing services can generate between €25,000 and €60,000 per MW per year, depending on market conditions and participation levels. While these revenues are still lower than in some Western European markets, they represent a significant and growing component of the overall revenue stack for flexible assets.
The expansion of balancing markets is being driven by both technical and regulatory factors. On the technical side, the variability of renewable generation is creating more frequent and larger imbalances, requiring additional resources to restore system equilibrium. On the regulatory side, efforts to align SEE markets with European network codes are facilitating the development of more sophisticated balancing mechanisms.
From a market perspective, the growth of balancing services is changing the way assets are operated. Instead of focusing solely on energy markets, operators are increasingly optimising across multiple revenue streams, including energy, intraday, and ancillary services.
Battery storage systems are particularly well-suited to this environment, given their ability to respond rapidly to system signals. As a result, they are expected to play an increasingly important role in balancing markets.
However, challenges remain. Market design varies significantly across SEE countries, and cross-border participation in balancing markets is still limited. In addition, the lack of long-term visibility on balancing revenues introduces uncertainty for investors.
Despite these challenges, the trajectory is clear. Balancing markets are becoming an integral part of the SEE electricity system, providing both operational stability and new revenue opportunities.
