The energy sector is developing rapidly. The process of European market integration began some years ago. Its purpose is to create a single European market that enables market parties to trade gas and electricity across national borders easily and efficiently.
There are many different actors in the electricity system and its markets. Each actor has his or her specific role. Those roles and responsibilities are stipulated by law and regulation. In principle, each role can be fulfilled by a separate player. In practice however, companies often perform several roles simultaneously. The figure below shows the most important categories of actors, their roles and relationships among them.
The roles in the electricity system either fall into the physical, administrative or in the market domain. In the physical domain are all roles that deal directly with production, transport, consumption and security of the electricity system. The administrative domain includes actors who manage the relationships between customers and the market or grid operators. For example, they monitor actual consumption and production and arrange the invoicing for their customers. The market domain lists the different market platforms needed for all these transactions.
Electricity producers & consumers (connected party)
Electricity producers generate electricity from different resources, e.g. wind, solar, hydro but in the NL to a significant extent also from natural gas and coal. They can be big, (e.g. operating a multi Megawatt power plant) or very small, (e.g. a household with solar panels on the roof). Depending on their size, they need to contact different actors when they want to be connected to the electricity grid and join the market.
Large producers or consumers need to request the grid operator (TenneT) to be physically connected to the high voltage grid and become a Balance Responsible Party (BRP) themselves or contract a BRP. Once they have established physical and market connection, they are ready to offer their production capacity on the different markets through a BRP, balance or congestion service provider (BSP & CSP).
If small producers want to join the market, they need to inform their local DSO about their new production capacity. The DSO will then inform their supplier and adjust the billing information of the customer. Alternatively, small producers or consumers can also make an independent contract with an aggregator. The aggregator bundles flexible assets and offers them for balancing or congestion purposes on the market in return for remuneration.
Transmission System Operators (TSO) & Distribution System Operators (DSO)
TSOs operate the high voltage electricity grid. This entails core system services such as continuously monitoring and managing the balance between electricity supply and demand in the grid. To ensure that is possible, TSOs are also responsible for planning, maintaining and expanding the high voltage grid (above 110kV) in line with current and future needs. To allow for a smoothly functioning electricity market, TSOs also collaborate amongst each other to facilitate a single European electricity market and allow for the most efficient allocation of resources.
DSOs operate the regional distribution grid, which distributes the electricity from the high voltage grid to the end consumers. Just like the TSO they are responsible for the planning, construction, maintenance and operation of the distribution grids. They are also obliged to connect new producers and consumers to the grid. In another role, DSOs measure the consumption of small consumers and report it to their suppliers and the national TSO. Lastly, they are also responsible for registration, management and exchange of data to be used by market parties.
While the maintaining the overall system balance is the responsibility of TSOs, both TSOs and DSOs are responsible for avoiding congestion in the grid.
Balance Responsible Parties (BRP)
A Balance Responsible Party (BRP) is financially responsible for balancing off-take and feed-in through the allocation points in his/her portfolio for each imbalance settlement period (ISP). One ISP is 15 min. BRPs are required to transmit forecasts of their customers (production and consumption) per ISP to TenneT. This is called an e-programma or commercial trade schedule.
TenneT determines the imbalance of the BRP by comparing the e-programma with the measured infeed and/or offtake and charges or rewards the BRP by the imbalance volume and the imbalance price. The BRP may also act as a trader on the market platforms, buying and later selling services to different customers.
To be active as a BRP, each BRP needs to apply and complete a prequalification process at TenneT first. More information about how to become a BRP can be found here
Electricity suppliers conclude delivery contracts with consumers and invoice them for all costs related to their electricity bill. To supply their consumers, they purchase power on the wholesale market (forward futures, day-ahead and intraday). Some are also a BRP and thus financially responsible for the consumption and production of their customers. Other suppliers, chose to connect to an external BRP instead. In either case they forecast their customers expected consumption and production and report it on behalf of their customers the respective BRP.
Balance Service Providers (BSP)
A Balancing Service Provider (BSP) offers balancing energy and/or balancing capacity to TenneT. TenneT procures balancing capacity and activates balancing energy from BSPs to balance out any unforeseen imbalances in the electricity grid. To offer their capacity on the market, each BSP needs to prequalify at TenneT. If you want to read more about how to prequalify as a BSP, check this link.
Congestion Service Provider (CSP)
A congestion service provider (CSP) is a market participant who offers congestion management services to the TSO or DSOs. After prequalification the CSP may, on behalf of its portfolio/connected parties make redispatch bids. In contrast to the balancing services, congestion management services are location-bound so they can feed-in or take off power in grid areas that are under high pressure.
The role of Congestion Service Provider (CSP) is not formally implemented yet, work is ongoing to make it a regular market role in the near future.
An aggregator is a company that bundles flexibility from multiple small consumers and producers in a portfolio and offers the combined capacity on the wholesale, balancing or congestion market. An aggregator can offer this flexibility to the different roles (BRP or BSP) or prequalify as one those roles himself. In the future, it will be possible that aggregators may also become congestion service providers (CSP), who offer their pooled capacity to alleviate local grid congestion issues.