aFRR balancing capacity prices in ALPACA: Minima converge, German daily market drives peaks

This year, attention in the area of prices for providing balancing services has focused on automatically activated frequency restoration reserve (aFRR) capacity. Cross-border cooperation under ALPACA plays a significant role in its development, linking price formation in Czechia and Germany more closely than before. During night-time hours, differences are minimal and prices nearly overlap. However, price peaks tend to be higher in Germany, particularly in the upward direction.

The most visible effect is in the upward direction. The German balancing capacity market operates on daily contracts and trades in six four-hour blocks. Czechia has also had four-hour blocks since 3 September 2025, but part of the balancing capacity is still procured on an annual basis, with around one-third of capacity contracted annually and two-thirds daily from the beginning of 2025.

Following the interconnection, the daily price is highly sensitive to cross-border price signals. During the observed period, the minimum accepted prices (night-time blocks) in both countries practically overlap. Peaks, however, remain higher in Germany. In tight hours, prices spike more sharply, with the difference from the Czech curve reaching several tens of €/MW/h for aFRR+. This effect is related to block-based daily trading, market size and immediate demand for capacity. The Czech annual component also naturally dampens part of the volatility.