Procurement of ancillary services

Commissioned by BMWi

Ingmar Schlecht, Lion Hirth

With EF.Ruhr, EWL and BBH

2021

EU law requires market-based procurement of non-frequency ancillary services unless its economic efficiency can be ruled out. For the economics ministry, Neon assessed market-based procurement of services such as inertia, black start capability, and voltage support, teaming up with EF.Ruhr, EWL, and BBH as work package leader. Using a welfare-economic framework covering transaction costs, incentives, and system security, the study identifies the services for which markets are efficient and develops a three-pillar procurement concept for reactive power, giving grid operators freedom to combine regulated and competitive sourcing. This report was originally published in German.