Power systems are evolving in response to the growing integration of variable renewable resources. Considering this, balancing reserves are becoming more important for maintaining the continuous balance between total production and demand in the power system. However, the allocation of these reserves comes at a cost, given their inherent link to the energy traded in the day-ahead electricity market. This study examines the implications of different reserve allocation strategies using a modeling framework that incorporates dispatchable hydropower and intermittent wind power alongside demand to evaluate the costs of securing sufficient reserves in a highly renewable energy system. The analysis indicates that aligning reserve allocation more closely with the conditions expected at the time of operation results in improved outcomes, leading to better utilization of stored water in hydropower reservoirs and lower operational costs. Therefore, considering the increasing integration of variable renewable energy sources, the findings highlight the need to investigate more effective approaches for reserve allocation that are better aligned with anticipated system conditions.