The transition towards an energy system with high shares of variable renewable energy (VRE) sources has significant implications for the electricity system's demand and supply of balancing services, i.e. all the services to level out frequency deviations in the electricity system. First, the intermittent character and limited predictability of these renewables lead to additional challenges to balance the grid Furthermore, the transition towards a renewable energy system implies the phase-out of the conventional generation units, which are the traditional suppliers of balancing services. As a consequence, there is a growing need for VRE generators to actively participate in balancing services.

To promote VRE participation in the balancing market, VRE operators need tools to quantify the value of providing balancing services. Therefore, this study aims to create a model that calculates the revenue for VRE when participating in both energy and balancing markets and examine whether it is financially attractive for VRE operators to participate in balancing markets.

The results of this study demonstrated that the participation in balancing capacity markets has a positive effect on a plant's revenue under the assumptions and price scenarios of this study. In the conducted case study, participation in the balancing markets increased the revenue by 18% compared to participation in the day-ahead energy market only.