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Impact assessment on European electricity balancing market : final report to the European Commission. Brighton : Mott MacDonald, March 2013, 135 p.http://ec.europa.eu/energy/gas_electricity/studies/doc/electricity/20130610_eu_balancing_master.pdfExecutive summary (© Mott MacDonald) :Energy Policy in Europe is driving the power sector towards a new paradigm on how the European Power System of the future will be structured and operated. This is largely as a result of EU Member States increasing deployment of intermittent renewable energy sources to deliver the targets formulated in the European Renewables Directive of 2009, but also changes in the pattern, profile and predictability of electrical demand. As the installed capacity of intermittent and unpredictable generation capacity increases, so are increased the volumes of imbalances which system operators have to deal with and as a result the amount of control power that is required to be held grows. This may lead to a situation where costs and technical challenges present a serious obstacle to the implementation of the EU’s sustainability policies, whilst rendering obsolete the methodologies deployed so far for System Control and Security in a synchronously interconnected system.This study, commissioned by the European Commission in support of ACER’s Impact Assessment for the development of Electricity Balancing Framework Guidelines (FG), attempts to answer a set of questions generated around the issue of how best to develop the so far disjointed, highly concentrated and diverse national balancing markets, into one robust integrated scheme accessible by all market participants which seamlessly is joined to the other timeframes of the Internal Energy Market (IEM). The aim of the study is to assess the pros and cons of different arrangements for handling cross-border exchanges of balancing services, and seeks to quantify estimates of the various proposed models. The study utilises both empirical information gained from European Transmission System Operators (TSOs) in the implementation of some bilateral and regional (in some cases pilot) schemes of operating cross-border balancing arrangements, as well as the result of a quantitative analysis built around four separate models of simulating operations with cross-border Balancing Markets where exchanges of balancing energy and sharing of reserve capacities can realise substantial economic benefits. The simulation results obtained provide evidence of the increase in social welfare and facilitation of integration of intermittent generation, as a result of cross-border integration of balancing markets...