aFRR Price Evolution and Unequal Effects From Introducing the PICASSO Platform

The PICASSO framework, for sharing aFRR balancing energy, aims to improve socioeconomic welfare in European power grids through cooperation. However, questions remain about whether the welfare increases are evenly split between participants. aFRR market developments are driven by multiple factors. This paper, attempts to isolate PICASSO’s effect, by considering the historical aFRR energy prices and comparing them to electricity prices. At the same time, quantitative analyses of the local market rules are performed in the German-Austrian balancing cooperation, the Czech Republic, and West Denmark from 2021 to December 2024. The results show that PICASSO has likely reduced German-Austrian aFRR costs, while the aFRR costs in the Czech Republic are reduced due to new market-based regulations. The Danish costs are up, compared to previous regulated prices following deregulation and market harmonization with Germany. Finally, price volatility has risen across all three regions, increasing the potential profits for market participants.