Balancing Market Watch #3

In Europe, balancing markets have been essential for securing and activating flexibility needed to ensure operational security in case of frequency deviations. Their design has been subject to multiple national evolutions and European integration efforts. For (prospective) balancing service providers, these represent a major source of revenue making understanding of their outcomes as well as (national) designs and conditions underpinning them crucial for success. The Balancing Market Watch offers regular, consolidated insights into balancing market dynamics. By monitoring and analysing these developments, we provide stakeholders – including TSOs, BRPs, and BSPs – with the tools to better understand seasonal outcomes and market conditions.

What’s in the Balancing Market Watch?

You will find the latest news, trends, and analysis of multiple market outcomes, including:

Main results from PICASSO and MARI platforms for the exchange of aFRR and mFRR balancing energy, including the status of TSO accessions.
Price and volume evolutions for Frequency Containment Reserves (FCR) as well as for automatic and manual Frequency Restoration Reserves (aFRR and mFRR). For FRR, we analyse both balancing capacity and balancing energy market results.
The distribution between procured vs. activated volumes.
Balancing costs per product.

For the time being, we will be covering two regions, Central-Western Europe (incl. AT, BE, DE, FR, NL) and the Nordics (incl. SE and NO price zones, DK1, DK2, FI).

Key takeaways for Winter 2025

The continued integration of the European balancing platforms is increasingly visible in the data.
In PICASSO, the late-2025 accessions kept broadening cross-border aFRR competition, with Terna’s November 2025 reconnection clearly adding to significant exchanged volumes and reinforcing the trend toward more liquidity.
In MARI, liquidity also continued to grow, including through TenneT NL’s and ESO’s accessions, but cross-border mFRR exchanges remained largely concentrated in the Iberian peninsula and the Baltics. At the same time, the general balancing landscape kept evolving, with TERRE phased out on January 1st 2026.
Italy is an interesting example of how balancing outcomes shifted alongside market design changes. Terna first joined PICASSO in July 2023, suspended participation in March 2024 after extreme early price episodes, introduced TIDE from January 2025 with quarter-hourly imbalance settlement and a broader redesign of the balancing framework, and then rejoined PICASSO in November 2025 under the revised framework. The first PICASSO phase remains a clear imbalance price outlier, while the post-rejoin period appears much more contained, with a weaker pass-through from extreme 4-second aFRR CBMPs into final imbalance prices. Dynamic elastic aFRR demand, the broader TIDE reform and other underlying system factors appear to be part of that change.
Across products, balancing capacity markets remained comparatively stable, while balancing energy continued to produce the most extreme outcomes. In FCR, synchronous-area price convergence broadly held, but Finland remained the clear low-price outlier in the Nordics, while the Netherlands again stood out on the high side in CWE. In aFRR, capacity procurement stayed relatively stable in CWE but varied more in the Nordics, while energy activation price spikes habitually pop up in both regions. In mFRR, capacity costs were relatively stable, but energy prices continued to be driven by tail events, with very high activation prices showing up in both CWE and the Nordics.