Harmonization issues for cross-border balancing markets: Regulatory and economic analysis

As the implementation of cross-border balancing markets has a lot of benefits for the participating countries and is one of the European targets, this paper focuses on harmonization issues for such balancing markets. Essential regulatory parameters for cross-border balancing markets - on national and international level - have been worked out. It is argued if these parameters need to be harmonized to create a well-functioning cross-border balancing market. Recommendations and barriers for the implementation of such a market are given for each parameter. Pricing mechanisms and the resulting cost allocation algorithms have been analyzed and economic implications as well as risks of cross-border balancing markets have been pointed out.