This paper develops a stylized model of cross-border balancing. We distinguish three degrees of cooperation: autarky, reserves exchange and reserves sharing. The model shows that TSO cooperation reduces costs. The gains of cooperation increase with cost asymmetry and decrease with correlation of...

As a key component of the balancing market, balance settlement links the physical layer of electricity balance with financial fund equilibrium. Imbalance funds pertain to costs that emerge from the balancing settlement process and, lacking a clearly defined responsible entity, require...