Hierarchical Balancing in Zonal Markets

Balancing is becoming increasingly coordinated in Europe with the rollout of cross-zonal platforms for the activation of reserve. The European balancing platforms that are being put in place employ zonal network models. The misrepresentation of network constraints in these balancing platforms may cause congestion, which would be challenging to address very close to real time. We propose a hierarchical implementation of nodal balancing which respects the zonal design of European balancing platforms. We illustrate our approach on the classic six-node Chao-Peck example, and discuss the compatibility of our proposal with the institutional requirements of European balancing markets.