Natural gas balancing, storage, and flexibility in Europe: assessing the recent literature

The liberalization process of European gas markets has shown how pivotal is the role of both balancing mechanisms and flexibility instruments. Before the liberalization, in fact, these activities were perceived as being very technical. A growing body of literature, instead, has demonstrated how decentralized and market-oriented forms of managing both issues is crucial for achieving well-functioning and liquid wholesale markets. The aim of our paper is precisely to show how the evolution of theoretical models, coupled with findings from empirical investigations, has provided scientific justifications for the introduction of market-oriented rules by regulators and policy makers. At present, to achieve a fully integrated European market, the Energy Union policy framework has to attain one last final target: the harmonization and integration of balancing and flexibility mechanisms among markets, particularly with the expected increase in intermittent generation.