The BBCM: Long-term Value for the Baltic Energy System

The BBCM platform provides ongoing, long-term value for the Baltic power system by ensuring efficient and reliable balancing capacity procurement. The platform went live on February 4th, 2025, executing its first balancing capacity auctions and deliveries ahead of the synchronization weekend. It performed effectively throughout the transition, ensuring secure procurement of balancing reserves to maintain grid stability.

The BBCM represents a significant advancement in how the Baltic states manage their energy markets. The Baltics replaces the previous local capacity provision mechanisms by introducing daily balancing procurement. This fundamental execution improves market flexibility, cost efficiency, and competition while expanding revenue opportunities for flexibility providers.

The Technical Foundation of the BBCM Platform

Moving away from the BRELL ring required new reserve procurement and dimensioning approaches. N-SIDE develops two sophisticated algorithms that not only enable this transition but also optimize the entire balancing process, reduce costs, and increase system reliability across all three Baltic states:

1. The Dimensioning Algorithm - A dynamic approach, adjusting reserve requirements daily by combining:

• Probabilistic calculations: Model potential imbalance scenarios using statistical analysis of historical data.

• Deterministic calculations: Ensure coverage of critical reference incidents for the network.

2. The Power Matching Algorithm - A market clearing solution delivering:

• Co-optimized procurement: Simultaneously optimizes FCR, aFRR, and mFRR for maximum efficiency.

• Complex bid support: Enables the market to operate with diverse constraints  (block bids, linked bids, exclusive bids).

• Marginal pricing: Creates transparent price signals reflecting the true value of flexibility.

• Cross-border optimization: Maximizes reserve sharing between countries while respecting transmission limits.

Addressing Baltic Energy Challenges

The Baltic region faces unique challenges that make the BBCM platform particularly valuable:

• Managing low and decreasing grid inertia: 

The Baltic power system faces declining grid inertia due to two key factors. First, the Baltic TSOs rely heavily on electricity imports via only two HVDC subsea interconnections (Estonia-Finland and Lithuania-Sweden), which supply around 40% of their total consumption. Second, the region has plans to increase intermittent wind generation capacity rapidly. Both factors contribute to lower system inertia, which makes the grid more vulnerable to frequency disturbances. This increases the importance of frequency response and other ancillary services to maintain grid stability.

• Resource adequacy and reserve shortages:

The Baltic region benefits from HVDC interconnections with the Nordic power system, but these create specific reserve challenges. When operating at maximum import capacity, there can be insufficient local reserve capacity to cover potential outages of these critical interconnections. This vulnerability was a key driver for establishing cross-border reserve sharing through the BBCM platform, enabling the Baltic countries to collectively address reserve requirements more efficiently than through national solutions alone.

• Geopolitical energy security: 

The EU Member States around the Baltic Sea have identified cross-border energy cooperation as a key strategic priority to strengthen regional security, wind energy capacity, and market efficiency. The BBCM platform helps manage the complexity of the Capacity Mechanism markets, which derives from integrating these various constraints, interconnection capacities, and market coupling.

A Milestone Achieved, More to Come

The BBCM will play a significant role in overseeing the energy transition in the Baltic states, facilitating the effective acquisition of ancillary reserves critical for maintaining system stability. The N-SIDE Energy team will continue to enhance the algorithm to support optimal reserve procurement and dimensioning as the Baltic states strengthen their integration with the European power system.

This project highlights the strength of collaboration between technology providers and TSOs. The Baltic states set a precedent for other regions seeking greater integration within the European energy network by moving away from historical dependencies and adopting a modern, interconnected approach.