Analysis of the mFRR market in East Denmark

Denmark | November 2020 - December 2020

To ensure security of supply in the electricity system, Energinet buys various types of reserves for the market areas DK1 and DK2 (areas covering West and East Denmark, respectively). The most important purchases are for stabilisation of frequency, for frequency recovery, and for equalising balance (tertiary reserves – manual reserves, mFFR).

This project concerns the purchase of mFFR reserves in DK2. Prior to 2021, most of the need for reservation of mFFR was bought on five-year contracts with few, specially chosen plants. It is the intention of Energinet that mFFR in DK2 shall be bought on significantly shorter contracts, and from January 1st, 2021, the reserves are therefore bought in a new way.

Ea Energy Analyses has carried out an analysis of the price formation for the year 2021 for three scenarios:

  • Purchase by the current method for purchasing mFFR, the full amount of 600MW on daily auctions
  • Purchase by a new method without reservation on Storebælt, 40% bought on daily auctions and 60% on monthly auctions
  • Purchase by a new method with reservation on Storebælt of about 10% of the joint volume, the remaining volume is divided into 40% on daily auctions and 60% on monthly auctions.

The project was carried out for Energinet in November and December 2020.