May 8, 2020

Project TERRE – The Trans-European Replacement Reserve Exchange

Under European Union electricity regulations, there is a requirement for the Transmission System Operators (TSOs) of Member States to collaborate in order to procure ancillary and balancing services in cross-border markets, enabling power providers to have access to a wider range of opportunities to sell, and to encourage greater cooperation between power markets across the EU. This results from updates to the Electricity Balancing Guideline which came into force in December 2017, which made provision for cross-border ancillary service products to be procured from the end of 2019. This initiative will be rolled out over the coming years through a series of new products being procured on a cross-border basis by several TSOs. The first of these is a ‘tertiary’ product to provide reserve power, the Trans European Replacement Reserve Exchange (TERRE).

TERRE is being taken forward by 8 member TSOs on a voluntary basis (participation in TERRE is not a mandatory requirement), with a further 6 TSOs acting as observers, with a view to joining the scheme at a later date. There are two principle drivers behind the development of TERRE, ideological and economic. Firstly, a European initiative to bring Member States’ electricity systems closer together and make them more integrated, to further deepen the single market in electricity across the EU. This, in turn, should lead to lower costs for consumers as barriers to cross-border trade in a wider range of electricity products, as only the most economically efficient electricity is being activated at any given time across the EU.

Map of Europe showing participating regions

In terms of practicalities, the participating TSOs have developed the LIBRA platform, which will be used to reconcile bids and offers into the TERRE market, and to activate resources which are selected as being most economical. The LIBRA platform may be expanded for use in future projects. TERRE requires electricity to be provided according to a defined delivery profile, and is procured in 48 half-hourly blocks each day. To participate, an electricity provider must submit its bid to LIBRA via the relevant national TSO, which will then forward all bids from within its TSO region, whereby LIBRA will then reconcile bids and offers, including interconnection costs where applicable.

Electricity providers in the Czech Republic are already able to bid for the TERRE product, being the first TSO region to go-live in early 2020. The go-live date is currently delayed in France and Great Britain, with all remaining participant TSOs aiming to go live in 2020, aside from Poland which is planning to launch the service in 2021/22.

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