Real-Time Balancing Mechanism in the Electricity Market

Introduction

The load increase/reduction instructions issued by the Türkiye Elektrik İletim Anonim Şirketi (‘TEİAŞ’) and market participants’ obligations concerning real-time balancing typically become a point of interest following power outages, malfunctions, and/or administrative investigations. Indeed, in mid-August, various media outlets reported that the Energy Market Regulatory Authority (‘EMRA’) had requested information from 66 electricity generation companies concerning the reasons for non-compliance with load reduction and/or load increase instructions issued between 2020 and 2024.

In light of this new development in the electricity market, the legal framework of the real-time balancing mechanism in the electricity market will be examined in this article.

General Overview of the Balancing Mechanism

Owing to the characteristics of electricity and the grid, production and consumption of electricity must always remain in constant balance. If this balance cannot be maintained, outages and malfunctions may occur. For this reason, there are regulatory instruments designed to ensure this balance. The nature of these mechanisms differs as real time approaches. Indeed, pursuant to Article 5 of the Electricity Market Balancing and Settlement Regulation (‘BSR’), published in the Official Gazette dated 14 April 2009 and numbered 27200, the balancing mechanism comprises the following: (i) the forward electricity market; (ii) the day-ahead market, which complements bilateral agreements; (iii) the intraday market; and (iv) real-time balancing.

The stages preceding real-time balancing permit market participants to balance their own production and consumption. Real-time balancing, which is the subject of this article, comprises activities carried out by TEİAȘ to maintain the balance between supply and demand of active electricity energy in real time.

Real Time Balancing Mechanism

The activities to be carried out within the scope of real-time balancing are defined in the Electricity Grid Regulation (‘Grid Regulation’), published in the Official Gazette dated 28 May 2014 and numbered 29013 (Repeated).

The fundamentals of real-time balancing are regulated pursuant to Article 112 of the Grid Regulation. According to the second paragraph of this provision, real-time balancing activities are carried out through: (i) primary frequency control service and secondary frequency control service; (ii) load increase and load reduction operations within the scope of the balancing power market; and (iii) emergency measures.[1] Whilst not listed in Article 112 of the Grid Regulation, the newly introduced limited frequency sensitivity mode service may also be considered within the scope of real-time balancing. Participation in some of these activities is optional, whilst in others it is mandatory.

Primary Frequency Control and Secondary Frequency Control

Primary frequency control and secondary frequency control are ancillary services defined in the Grid Regulation.[2] It should be noted that primary and secondary control services are not mandatory services. Whilst the provision of these services was mandatory for certain plants, this was changed with the Electricity Market Ancillary Services Regulation (‘Ancillary Services Regulation’) published in the Official Gazette dated 26 November 2017 and numbered 30252.

The Ancillary Services Regulation provides that primary and secondary frequency control services will be provided by legal entities that have executed the standard market participation agreements prepared by TEİAŞ.[3] If market participants enter into such an ancillary service agreement, they become obliged to provide the service in accordance with the provisions of that agreement.[4]

Primary frequency control is the process of bringing the system frequency to a new balance point by automatically increasing or decreasing the active output power of the ancillary service unit in response to a drop or rise in system frequency.[5] Secondary frequency control refers to the activity of bringing the system frequency to its required value by increasing or decreasing the active power output through signals automatically sent by the National Load Dispatch Center (‘NLDC’).[6] Primary and secondary frequency control are complementary activities. In summary, when there is a mismatch between production and consumption in the electricity grid, the deviation in grid frequency is balanced by primary frequency control, whilst secondary frequency control seeks to restore the system frequency to its nominal value (50 Hz).

The legal entities that are to be engaged for the primary and secondary frequency control services are selected through the procurement processes defined in Articles 13 and 21 of the Ancillary Services Regulation. Such legal entities provide the service by keeping available the frequency control reserve they are obliged to maintain during the relevant period and by delivering primary/secondary frequency control responses consistent with the provisions of the Grid Regulation. The legal entities providing the service in this manner are paid a capacity fee determined in accordance with the provisions of the Ancillary Services Regulation.

Pursuant to Article 13 for primary frequency control and Article 21 for secondary frequency control of the Ancillary Services Regulation, if it is determined that the legal entities undertaking to provide these services fail to do so, no capacity fee shall be paid, and the non-performance penalties established in Article 30 for primary frequency control and Article 31 for secondary frequency control shall be applied.

Limited Frequency Sensitivity Mode

With an amendment made to the Ancillary Services Regulation on 17 December 2024, the limited frequency sensitivity mode has been introduced into the legislation as a new ancillary service. Pursuant to Article 8/8 of the Ancillary Services Regulation, electricity generation facilities that obtained an electricity generation licence after 1 January 2025 are required to undergo a limited frequency sensitivity mode test. Those who are obliged to participate in the limited frequency sensitivity mode service must enter into an ancillary service agreement with TEİAŞ in this regard. According to Article 31/A of the Ancillary Services Regulation, the principles of this service will be established in the ancillary service agreement to be prepared by TEİAŞ. Pursuant to Provisional Article 9, TEİAȘ will prepare this ancillary service agreement and submit it to the Energy Market Regulatory Authority (EPDK) by 1 December 2025.

Load Increase and Load Reduction Instructions within the Scope of the Balancing Power Market

The balancing power market is a wholesale electricity market operated by TEİAŞ. The purpose of the activities in this market is to balance electricity supply and demand in real time.[7] Market participants that satisfy the conditions to qualify as a balancing unit and have at least one settlement-based supply/draw unit are required to participate in the balancing power market.[8] Consequently, legal entities holding licensed electricity generation facilities are obliged to participate in the balancing power market.[9]

Following the completion of the day-ahead market, the bidding process of market participants within the scope of the balancing power market commences. In these bids, market participants must offer all of the capacities of the relevant balancing units that can technically be realised.[10] In other words, electricity generation facilities must offer all their available capacity, excluding that allocated to the day-ahead market, bilateral agreements, primary frequency control, and secondary frequency control, as load increase capacity in the balancing power market.

Market participants are obliged to comply with the instructions given to them by the NLDC within the scope of real-time balancing. If the instruction cannot be fulfilled owing to technical issues, they are obliged to inform the NLDC and/or the Regional Load Dispatch Center (‘RLDC’).[11] If the instructions are not carried out, the fees to be calculated pursuant to the relevant articles of the BSR will be charged to the market participant who fails to comply with the instruction.[12] If market participants fail to fulfil the instructions sent to them without a valid and acceptable reason, TEİAŞ will issue a written warning requiring the violations to be rectified. If the violations persist, TEIAȘ prepares a report and notifies EMRA. If a violation is determined in the review conducted by EMRA, the sanctions established in Article 16 of the Electricity Market Law No. 6446 (‘Law’) shall apply.

Emergency Precautions

Emergency measures are methods applied when the frequency of the electricity grid reaches levels that may create critical or unstable operating conditions,[13] or when excessive voltage drops occur outside the voltage limits specified in the Grid Regulation. According to the Grid Regulation, these methods comprise the following: issuing emergency notifications to electricity producers; providing instant demand control service within the scope of the Ancillary Services Regulation; automatically cutting demand through low-frequency relays; and implementing outages/curtailments by TEİAŞ.[14]

The parties subject to emergency measures are defined as TEİAȘ, distribution companies, eligible consumers, legal entities holding generation licences, and owners of unlicensed generation facilities connected at the transmission level.[15] The emergency instructions to be sent by NLDC or RLDC are not required to comply with the offers submitted in the balancing power market.[16] This is because emergency instructions are issued not as part of a commercial activity, but to ensure system security. Users who receive emergency instructions are required to comply with them. If they are unable to do so, they must promptly notify the NLDC and/or RLDC of their situation.

Another emergency measure is instant demand control. The addressees of this measure are consumption facilities that provide instant demand control service pursuant to the Ancillary Services Regulation. When this service is required, TEIAS may cut the electricity consumption of these facilities through instant demand control relays.[17] If the system frequency continues to fall, TEIAS may mandatorily cut electricity demand through low-frequency relays.[18] Ultimately, in order to prevent system collapse, compulsory curtailments, whether planned or unplanned, may be applied.

Conclusion

The real-time balancing mechanism in the electricity market is of critical importance for ensuring system security and maintaining the supply-demand balance. The investigation initiated by EMRA concerning the 2020-2024 period has drawn attention to the legal consequences of non-compliance with these obligations. Indeed, failure to comply with the instructions issued by TEİAŞ within the framework of real-time balancing activities may lead to both technical and legal consequences. It is of vital importance for market participants to fulfil these obligations in order to safeguard electricity supply security, ensure the efficient functioning of the market, and mitigate the risk of being subject to sanctions

This article was authored by Erdem & Erdem Senior Associate Rüştü Mert Kaşka

[1] Although Article 112 of the Grid Regulation also refers to the standby reserve service, this service was removed from the scope of the Grid Regulation and the BSR by the amendment published in the Official Gazette dated 26.11.2017 and numbered 30252.

[2] Grid Regulation Article 104.

[3] Ancillary Services Regulation art. 16/1 and art. 24/1.

[4] In art. 7/2 of the Ancillary Services Regulation, it is articulated that the obligation to provide ancillary services could be regulated in a different regulatory instrument. However, as for primary frequency control and secondary frequency control, no such regulation exists.

[5] Ancillary Services Regulation art. 4/1-mm.

[6] Ancillary Services Regulation art. 4/1-üü.

[7] BRS art. 4/1-ş.

[8] BRS art. 19/1.

[9] Electricity storage facilities with certain characteristics may also qualify as balancing units, provided that a request is made by the market participant in whose name they are registered and such request is approved by TEİAŞ. (BSR art. 22/2-a)

[10] BSR art. 67/1-c

[11] BSR art. 71/A.

[12] BSR art. 102/A and BSR 105/a.

[13] Described under Grid Regulation art. 63/1.

[14] Grid Regulation art. 63.

[15] For considerations regarding unlicensed (license-exempt) generation facilities see: Rüştü Mert Kaşka, Important Amendments Concerning Unlicensed Electricity Generation Plants (https://www.erdem-erdem.av.tr/en/insights/important-amendments-concerning-unlicensed-electricity-generation-plants, Access Date: 04.09.2025)

[16] BSR art. 75, Grid Regulation art. 65.

[17] Grid Regulation art. 66.

[18] Grid Regulation art. 67.