On the Impact of Voluntary Bids in Balancing Reserve Markets

In the context of the market consultation on the introduction of voluntary bids in German balancing reserve markets (BRM), this paper provides an overview over the game-theoretical and practical implications of voluntary bids as well as of alternative designs. Key design elements are analyzed in order to end up with a market design proposal that guarantees the desirable properties, such as market efficiency and the integration of renewable energy sources, and avoids malfunctioning of the market. Daring a look on neighboring markets, this paper sets the status quo in the BRM design discussion and fosters the integration of European BRM.