  Considering that the existing setup of the European electricity markets
promotes the spatial coordination of neighbouring power systems only on the
day-ahead market stage, regional system operators have to rely mainly on their
internal balancing resources in order to guarantee system security. However, as
power systems are forced to operate closer to their technical limits, where
flexible generation becomes scarce, the conventional market paradigm may not be
able to respond effectively on the wide range of uncertainty. The operational
flexibility of the power system depends both on the technical parameters of its
components, i.e., generators and transmission infrastructure, as well as on the
operational practices that make optimal use of the available assets. This work
focuses on alternative market designs that enable sharing of cross-border
balancing resources between adjacent power systems through High Voltage Direct
Current (HVDC) interconnections which provide increased controllability. In
this context, we formulate a stochastic market-clearing algorithm that attains
full spatio-temporal integration of reserve capacity, day-ahead and balancing
markets. Against this benchmark we compare two deterministic market designs
with varying degrees of coordination between the reserve capacity and energy
services, both followed by a real-time mechanism. Our study reveals the
inefficiency of deterministic approaches as the shares of wind power increase.
Nevertheless, enforcing a tighter coordination between the reserves and energy
trading floors may improve considerably the expected system cost compared to a
sequential market design. Aiming to provide some insights for improvement of
the sequential market-clearing, we analyse the effect of explicit transmission
allocation between energy and reserves for different HVDC capacities and
identify the market dynamics that dictate the optimal ratio.
