The electricity grid includes multiple network areas managed by different operators, with transmission system operators (TSOs) handling high-voltage areas and distribution system operators managing midto low-voltage areas. These areas are interconnected and synchronized, creating classical...

This paper investigates the incentives market participants have in the German electricity balancing mechanism. Strategic over- and undersupply positions are the result of existing stochastic arbitrage opportunities between the spot market and the balancing mechanism. This strategic behavior can...