Your newly energized BESS is running smoothly and earning impressive revenues under your local EU TSO’s rules - everything’s integrated, accredited, and optimized. So you look to scale and start planning an expansion into a neighboring TSO market. On paper, it should be straightforward - the balancing products are the same, thanks to EU harmonization.
But as you dig into the process, the reality sets in: different telemetry specs, different APIs, different reporting rules. Even the onboarding steps don’t quite match. What looked like a natural next step now requires months of discovery, engineering work and systems adjustments. These mismatches might not break your strategy - but they slow it down, introduce risk, and erode margins.
No wonder VPP operators struggle to scale profitably across regions - even when the market opportunity is real.
Fast-changing markets require a nimble approach to running a VPP, where even a brief delay can translate into significant missed revenues (a lesson learned in Part 1 of our VPP agility series). This is why, in Part 2, we explored the concept of an “optimization marketplace” to stay one step ahead and capture new flexibility opportunities. Yet, no matter how advanced your optimization is, it can fall short if a TSO’s rules lock you out of the most lucrative balancing services.
Failing to address certain regulatory pitfalls - especially in risk-averse environments - can undermine your operations, expose you to compliance headaches, or force you to sacrifice valuable revenue streams. Today, we’ll uncover how TSOs across Europe are gradually converging on common frameworks, offering potentially higher profits for VPP operators who can keep up.
Traditionally, electricity flowed one way: from grid-connected large thermal power plants through high-voltage grids and down to low-voltage connected consumers. Transmission System Operators (TSOs) set strict rules for these few massive generators to maintain system stability and managed and instructed them individually from grid control rooms.
But now, small-scale Distributed Energy Resources (DERs) like solar panels and batteries are multiplying fast, often feeding energy back into the grid from low-voltage connection points. Managing many thousands of DERs is much more challenging. Old rules built for gas or coal units don’t always fit thousands of distributed and often more dynamic assets. Digital solutions are essential for the grid controller to effectively monitor and dispatch this huge new fleet.
While TSOs are rightfully cautious - they must ensure 24/7 security of supply and have an impressive track record - this caution can inadvertently slow the adoption of new solutions to deliver the full potential of DERs, solutions such as Virtual Power Plants (VPPs).
Nevertheless, more DERs mean greater flexibility, which helps to economically balance the variability of renewables. If integrated properly, VPPs can provide frequency response, congestion management, and resilience during disruptions. The challenge is that each country’s TSO may still have its own rules, and meeting them can be costly or time-consuming. If alignment lags, innovative projects risk hitting compliance roadblocks, missing out on revenue, and delaying the benefits that flexible resources can bring.
Driving forces for standardization
Europe’s push toward more renewables is a key driver for TSO evolution. As wind and solar grow, the grid needs ever more flexible balancing resources that can ramp up or down quickly. DERs, when aggregated in VPPs, are ideal candidates. Yet harnessing them effectively requires consistent market rules. EU initiatives like the Clean Energy Package and Electricity Balancing Guideline (EB-GL) aim to harmonize balancing products (e.g., FCR, aFRR, mFRR) across borders. By streamlining accreditation and participation, these rules lower entry barriers for DERs and VPPs and enable cross-market optimization on platforms like MARI and PICASSO, ultimately improving grid flexibility and reducing balancing costs.
A unified approach enables VPP operators to expand more quickly and at lower cost. TSOs and regulators increasingly see this as a win-win: they gain reliable balancing reserves and reduce overall system costs, while DER owners and aggregators gain broader market access and bigger revenues and profits.
Key Standardization Initiatives in Europe
UK (National Grid ESO) - Wider Access & VLPs
In 2019, the UK’s National Grid ESO lowered the minimum threshold for Balancing Mechanism participation from 100 MW to 1 MW. They introduced Virtual Lead Parties (VLPs), allowing aggregators without a supply license to combine multiple small volumes, including behind-the-meter assets, in order to offer balancing services. Replacing expensive dedicated lease lines with cheap-to-integrate web APIs for communication and aligning with the TERRE platform opened many doors for DERs and smaller assets to participate in balancing markets, leading to a more flexible and resilient grid with lower balancing costs.
BeFlexible Project
Funded by the European Commission, BeFlexible runs pilot projects in Italy, Sweden, Spain, and France, testing how prosumers can boost overall system flexibility. The project focuses on regulations, flexible service development, and interoperable digital platforms, aiming to integrate more DERs for a more adaptable grid.
Equigy
A non-profit venture by several TSOs (TenneT NL/DE, Terna, APG, Swissgrid), Equigy provides a standardized interface for DER owners and aggregators - covering not just AS market participation (bidding), but also activation signals, reporting, and settlement. By unifying these processes and data formats, Equigy makes it easier and cheaper to participate across multiple TSO areas. It’s a foundational step toward seamless, scalable VPP integration across Europe.
MARI and PICASSO
Developed under the EB-GL, MARI (Manually Activated Reserves Initiative) and PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation - for aFRR) are pan-European platforms for dispatching balancing energy to minimise total cost for the MARI/PICASSO area. They require standardized product definitions for mFRR and aFRR to enable bid aggregation and optimized activation. This standardization lowers the complexity for VPPs wanting to provide balancing services in multiple TSO regions.
TSOs’ risk aversion
While standardization is accelerating TSOs remain cautious, and for good reason. Historically, they managed stability around a handful of large, gigawatt-scale power plants that could comply rapidly with a small number of dispatch signals. That legacy often endures in today’s grid codes and the muscle memory of grid engineers, who still demand rigorous accreditation, connectivity, and performance reporting standards for assets to qualify to provide balancing services. Engineers have delivered uninterrupted power around the clock for decades; their mindset of “getting it right 100% of the time” is impressive and necessary. Yet this insistence on proven reliability can slow the onboarding of distributed energy resources (DERs) and raise the cost of market entry.
The good news is that many TSOs understand the value of bringing DERs into their balancing mix. Easier, cheaper participation by many thousands of smaller assets can significantly increase the total megawatts available for balancing, reducing overall system costs and boosting resilience, even when each asset may not always deliver 100% to schedule.
The question is whether TSOs’ risk averse approach is a speed bump in the race to energy decentralization. Most observers expect grid operators to rapidly adapt to delivering system stability from DERs as they become integral rather than optional. Over time, that balance of prudence and progress should shift in favor of flexible participation. But it requires challenging changes in mindsets, regulatory frameworks, codes, and accreditation rules.
TSO rules still differ with regional quirks
Even though TSOs are converging around common principles, many local quirks persist. For instance, Hungary has a rule that keeps subsidized solar PV from being aggregated with other asset classes because of the potential for gaming solar subsidies. A single aggregator might have to split out its solar portfolio from other assets, creating extra work and complexity. Meanwhile, the Nordics have different balancing timelines and product definitions, partly because they were temporarily exempted from the new European balancing platforms. And Germany has so many special rules, again often due to the way renewable subsidies were defined, that only a small pool of accredited members are able to provide ancillary services and new entrants are rare. A VPP operating across borders must handle these variations despite the overarching push for uniformity.
These nuances might be a relic of historical practices, renewable subsidy regimes, regulatory experiments, or country-specific politics. They can persist for years even after new EU-level mandates. As a result, while a standardized foundation is taking shape, each TSO still has its peculiarities that a VPP needs to address. Agility is essential: the same aggregator that confidently handles a 1 MW minimum bid in Germany may stumble if a TSO across the border insists on symmetrical offers or different telemetry.
Selected TSO Market Access Conditions
The Ten-Year Plan
ENTSO-E’s Ten Year Network Development Plan (TYNDP) maps Europe’s future grid needs, traditionally focusing on large-scale infrastructure. However, more attention is now paid to how DERs and VPPs support flexibility, especially as renewables keep rising. In upcoming TYNDP editions, we expect a more robust analysis of how new TSO rules might boost DER integration. This forward-thinking approach and pilot projects that test TSO-DSO coordination will likely accelerate rule changes that help VPPs participate more fully across national borders.
Still, local differences remain a significant operational hurdle. Even though MARI and PICASSO unify the core balancing products, assets must still interface with the IT systems of their home TSO - for bidding, receiving activation signals, reporting, and settlement. A lot of the differences between TSO platforms are rooted in technical legacies: distinct APIs, data formats, and logic built independently over time. Other than the sheer complexity of standardizing systems across countries, there’s no fundamental reason for this fragmentation to persist.
This creates friction for VPPs and EMS/SCADA manufacturers active in multiple TSO regions. The lack of a standard interface increases integration costs and slows expansion, even where market rules have been harmonized. Initiatives like Equigy and the others mentioned above aim to reduce this friction by standardizing some aspects of the interactions between TSOs and flexible assets, but they still leave plenty of challenges for VPP operators expanding to new markets.
Your Bottom Line
You could miss out on new revenue streams if you’re too slow to adapt to standardized TSO processes. However, adopting a one-size-fits-all approach won’t work if local quirks lock you out. Balancing the two is key: implement solutions that align with EU-level platforms like MARI or PICASSO while fine-tuning each TSO’s specific requirements. For instance, your VPP software might need to accommodate 1 MW minimum bid sizes in one market and 5 MW in another. You may also need to separate certain asset classes to comply with local restrictions.
The good news is that all market participants face the same challenges which opens up the potential for specialist digitalization solution providers to abstract away this complexity by providing digital plumbing that works across multiple markets, leaving aggregators free to concentrate on higher value activities such as expanding and optimizing their DER asset portfolios.
Playing it smart means embracing standardization where possible and being agile to adapt where rules diverge. You need technology solutions that seamlessly integrate multiple forecast providers and optimizers, monitor and dispatch many assets and standardize market participation across multiple TSO areas, and which then adapt quickly as rules and market conditions change.
The reward is more rapid scaling, lower risk, higher revenues and fewer costly speed bumps on your roadmap.
In Part 4, we’ll explore how today’s VPP vendors are positioned, what “full-scale aggregation” really looks like in practice, and where many offerings still fall short. Building on that, we’ll outline our own approach - how we’ve expanded our platform, structured our roadmap, and designed for long-term agility.
