On 26 September 2023, ACER initiated a procedure to decide on the Transmission System Operators’ (TSOs) proposal on the alternative bidding zone configurations for the Baltic region. After having received the results of the Locational Marginal Pricing (LMP) analysis carried out by the Baltic TSOs, ACER is now in a position to start this decision-making process.

Why review the bidding zone configurations?

A bidding zone is the largest geographical area within which market participants are able to exchange energy without allocating capacity. Currently, bidding zones in Europe are mostly defined by national borders. However, the existing European electricity target model requires defining bidding zones based on network congestions. Better defined bidding zone configurations, i.e. whose borders are based on long-term, structural congestions, can bring several benefits, including:

• increased opportunities for cross-zonal trade,

• more efficient network investments, and

• cost-efficient integration of new technologies.

To initiate the review process, all involved TSOs need to submit a proposal for:

• the methodology and assumptions that should be used, and

• the alternative configurations of bidding zones that relevant national regulatory authorities (NRAs) should analyse and approve unanimously.

What is the role of ACER?

The bidding zone review process initiated in October 2019; however, the TSOs’ initial proposal lacked alternative bidding zone configurations for a large part of Europe. They were therefore requested by the NRAs to submit an updated version of the proposal, which was then referred to ACER for decision (July 2020).

As a following step, ACER issued two separate decisions:

• In November 2020, ACER approved the bidding zone review methodology and assumptions, and requested TSOs to carry out an LMP analysis.

• In August 2022, following provision of information, ACER decided on the alternative bidding zone configurations to be analysed in the review process for all EU Member States, except for those of the Baltic region. This decision was deferred due to lack of data.

Following the submission of the results of the LMP analysis by the Baltic TSOs, ACER is now able to decide also on the alternative bidding zone configurations for the Baltic region.

What are the next steps?

ACER will adopt this decision by 26 December 2023.

To take an informed decision, ACER will consult with TSOs and NRAs.

Access the public notice.

Today, ACER releases the 2023 report on the security of EU electricity supply.

The report looks into four main areas:

• lessons learnt from the energy crisis;
• implementation status of the EU adequacy framework;
• capacity mechanisms;
• other national measures to address security of supply.

The report provides recommendations on improving Europe’s security of EU electricity supply framework.

What are the report’s key findings?

• Europe’s integrated electricity and gas markets sheltered Member States during the energy crisis from price shocks and enhanced their security of supply.
• The implementation of the adequacy framework is uneven across the EU, potentially leading to unfair cross-border competition.
• Harmonised adequacy assessments are a key tool to assess security of supply risks. It is imperative to bring the European Resource Adequacy Assessment (ERAA) up to standard.
• Total EU costs of capacity mechanisms doubled since 2020 to €5.2 billion in 2022, further increasing by another 40% in 2023.
• Capacity mechanisms largely support fossil-fuels (coal and gas) power plants, potentially undermining the shift to a low-carbon economy.
• Non-domestic EU capacity providers are still unable to compete on an equal footing with domestic resources in capacity mechanism.
• There is scope for improving the design of incentives and penalties in capacity mechanisms to ensure delivery of the service.
• The proliferation of uncoordinated measures to address security of supply, beyond capacity mechanisms,  risk fragmenting the integrated EU electricity market; further streamlining of the European process for approving capacity mechanisms and guidance on the type of measures suitable to cope with exceptional situations is needed.

What are the next steps?

ACER will present the key messages of the security of EU electricity supply report at its webinar on 11 October 2023.

High-level panellists Catharina Sikow-Magny (DG-ENER), Christian Zinglersen (ACER) and Tim Schittekatte (Florence School of Regulation) will discuss the findings of the report and address key questions on the topic.

Register here.

Access the Security of EU electricity supply report.

Dive into ACER's informative infographic.

Explore the monitoring data on security of electricity supply.

On 5th July 2023, ACER has received a proposal by transmission system operators (TSOs) to amend the congestion income distribution methodology for European electricity markets.

What is the congestion income distribution methodology about?

Congestion arises when there is limited capacity to transport electricity between different areas. The congestion income distribution methodology makes sure financial settlements are allocated when congestion occurs in the electricity transmission grid. It determines how the resulting revenues, generated from congestion, are distributed among the TSOs to ensure fairness and efficient operation of the electricity market.

Why change the rules?

The amendment proposal contains two main changes. In particular, it:

• Aims at providing solutions to address unintuitive flows (i.e. when electricity flows from an expensive zone to a cheaper one), in order to guarantee a non-discriminatory treatment of all TSOs (as required by the capacity allocation and congestion management (CACM) Regulation).

• Specifies how congestion incomes generated from the exchange of balancing capacity and the sharing of reserves should be distributed among TSOs.

What are the next steps?

ACER will reach a decision on the proposal by 5th January 2024.

To take an informed decision, ACER will engage in discussions with TSOs and national regulatory authorities (NRAs) as part of its decision-making process.

Access the public notice initiating the procedure.

Electricity grid operators must keep the power system stable or in balance. Decreasing the volume of balancing capacity to ensure operational security and allocating cross-zonal capacity to balancing capacity enables the power system to be balanced more efficiently.

To enable this, ACER approved on 19 July 2023 three proposals of Transmission System Operators (TSOs) and the European Network of Transmission System Operators for Electricity (ENTSO-E) on:

• Harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves;
• Regional Coordination Centres’ (RCCs) task of regional sizing; and
• RCCs’ task of facilitating the procurement of electricity balancing capacity.

How is this relevant for citizens and EU security of electricity supply?

This new ACER Decisions aims at better integrating balancing capacity markets through the use of cross-zonal capacities. The goal is to lower the costs of procuring electricity balancing capacity while ensuring security of supply. This can be achieved by reducing the overall balancing capacity needs and by lowering the procurement cost for acquiring the necessary balancing capacity.

To ensure the informed decisions, ACER gathered input via a:

• Workshop (19 April 2023); and a
• Public consultation (13 April – 15 May 2023).

What are the next steps? 

• ENTSO-E, TSOs and RCC start the implementation of these methodologies.
• The harmonised market-based allocation process should be ready for application in 2 years. 
• The RCC task of facilitating the procurement of electricity balancing capacity should be operational in 2.5 years.
• The RCC task of regional sizing should be operational in 3 years.
• TSOs will submit an amendment proposal of the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves in 1 year to include needed provisions for the governance of the market-based process.
• Based on further assessments, ENTSO-E will submit amendment proposals for the RCC task methodologies before they enter into operation to define required thresholds.

Access the:

• ACER Decision No 11-2023 on the TSOs’ proposal for the harmonised cross-zonal capacity allocation methodology.
• ACER Decision No 12-2023 on the Regional Coordination Centre Regional Sizing of Reserve Capacity Methodology.
• ACER Decision No 13-2023 on the Regional Coordination Centre Regional Procurement of Balancing Capacity Methodology.

EU rules require grid operators to make a 70% minimum amount of capacity on interconnectors available for electricity trading with neighbours by the end of 2025. It is ACER’s job to monitor how Member States are doing on reaching this 70% target, but ACER’s monitoring finds that the target is still far off.

ACER is inviting feedback on its monitoring report and holding a webinar to discuss its conclusions (together with the recently published Emergency Measures report) on 6 September.

Why is reaching the minimum 70% target important?

• Delivering on the agreed minimum 70% target of interconnection capacity is crucial to achieving the ambitious political objectives set for renewable generation.
• Reaching the 70% target will:
  • ensure security of supply;
  • mitigate price volatility; and
  • provide key flexibility to the market.
• Building new lines is difficult and environmentally challenging: The 70% target allows for a more efficient use of existing lines.
• The 70% target will become increasingly difficult and costly to reach. Progress towards the 70% target is unlikely to happen without tough trade-offs.

What is the report about?

ACER’s Report on cross-zonal capacities and the 70% margin available for cross-zonal electricity trade:

• Highlights the need for maximizing cross-zonal trading to reach the EU’s clean energy goals;
• Evaluates progress towards achieving the 70% target by the end of 2025;
• Analyses the main barriers to cross-zonal trading and outlines what Member States and Transmission System Operators (TSOs) can do to lift them; and
• Illustrates the impact on welfare and on price spikes of offering low cross-zonal capacity levels in day-ahead electricity markets.

What are the key findings?

• Interconnection capacity available for cross-zonal trade of electricity remains low across the EU. The minimum 70% target of interconnection capacity is still far off for most Member States.
• Reaching the 70% target is a collective effort: Each Member State’s actions (or inactions) impact other Member States and ultimately consumers.
• Lifting both internal and cross-zonal constraints is necessary to achieving the 70% target. Old barriers persist:
  • Loop flows, i.e., internal trades within country A creating electrical flow through country B, thus creating congestion;
  • Insufficient and costly remedial actions;
  • No mechanism in place for sharing the cost of remedial actions.

What are the next steps?

• ACER’s public consultation (from 21 July to 15 September 2023) invites stakeholders’ views on the findings of the ACER monitoring report.
• ACER’s webinar (6 September 2023) presents and discusses the report’s conclusions (and the recent ACER report on Emergency Measures).
• Based on the findings of the report and stakeholders’ input, ACER will issue a formal opinion, on capacity available for cross-zonal electricity trade, to the European Commission and European Parliament by the end of the year. 

Access the ACER Report on cross-zonal capacities and the 70% margin available for cross-zonal electricity trade.

Access the Report's infographic.

In response to the energy crisis, every EU Member State introduced emergency measures to support their citizens and economy, and to mitigate security of energy supply risks. In March, ACER published an inventory of 400+ measures adopted by Member States.

As part of its series of 2023 Market Monitoring reports, ACER publishes today its assessment of emergency measures in electricity markets.

What is it about?

More than 400 measures were adopted by Member States in response to the energy crisis. Member States had to swiftly respond to complex issues during the crisis, sometimes lacking a comprehensive overview of potential short- and long-term implications of choices made. This report’s objective is not to assign blame but rather to assist decision-makers in making informed choices in similar situations in the future.

The ACER Assessment focuses on lessons learned. This ACER report assesses drawbacks and merits of types of emergency measures against the achievement of 5 regulatory goals, namely how the measures;

1. Help consumers in terms of electricity affordability;
2. Contribute to security of supply;
3. Support energy transition and investment signals;
4. Promote energy efficiency and demand response; and
5. Contribute to efficient cross-border trading and market integration to benefit European consumers. Market integration allows for the mitigation of price shocks and increases security of supply.

ACER’s assessment of emergency measures is timely:

• As energy and fiscal policy makers consider next steps now to cope with persistent short-term energy challenges;
• With Member States starting to re-evaluate their energy emergency support measures in the context of falling energy prices;
• Given recent calls (by certain EU bodies) for fiscal policy (in the current high inflation environment) to be targeted, tailored and temporary.

Lessons from 2022 can help Member States determine where and when to direct any future energy support measures, to those in need.

What’s next?

Save the date – 6 September 2023 – when ACER will present and discuss the conclusions of the report.

ACER welcomes feedback ahead of the webinar, to be sent to 2023_emergency_measures(at)acer.europa.eu.

Access:

• ACER Assessment of emergency measures in electricity markets – 2023 Market Monitoring Report.
• ACER emergency measures infographic.
• ACER interactive inventory of 439 energy crisis measures adopted by Member States (you can filter by country, type of emergency measure).

Seasonal outlooks of the European Network of Transmission System Operators for Electricity (ENTSO-E) provide observations and foresight for challenges associated with the security of electricity supply for winter and summer. They help Member States and transmission system operators to make informed decisions related to future risks of power shortages.

The importance of these European wide seasonal assessments is heightened in the context of gas supply uncertainties, changing weather patterns and generation outages.

Highlights of ENTSO-E’s Summer Outlook (2023)

ENTSO-E’s Summer Outlook 2023 identified no electricity security of supply concerns for EU consumers. Nevertheless, close monitoring is suggested for Cyprus, Crete, Malta and Ireland.

Adequacy risks flagged for island Member States (and Crete) show the importance of interconnections in ensuring security of supply. With limited interconnections, the islands cannot benefit from the resilience the meshed network of the continental Europe offers, which allows for enhanced sharing of resources.

Source: ACER based on Summer Outlook 2023 - Figure 13: Adequacy risk overview - considering non-market resources

ENTSO-E’s report also points to comfortable gas storage levels by the end of summer and highlights the need to resort to any gas withdrawals with prudence over the summer period.

What does ACER say about ENTSO-E’s Summer Outlook?

• ACER appreciates ENTSO-E’s commitment to adapting its seasonal outlooks to the prevailing circumstances, such as developments in the gas system situation.
• ACER also stresses the importance of considering interconnection capacity when assessing the adequacy of electricity supply.
• ACER highlights, as in its past opinions, that ENTSO-E’s Summer Outlook assessment lacks flow-based modelling to optimise cross-zonal exchanges in line with the current market design.

For the next seasonal assessment (the Winter Outlook), ACER suggests that ENTSO-E addresses the following considerations to support management of security of electricity supply over the coming winter:

• Analyse the consequences of alternative scenarios including sensitivity to factors such as the impact of low precipitation (prolonged droughts) over the year.
• Assess the potential rebound of demand in case energy-saving measures introduced last year (2022) are not in effect and demand side response to prices is less pronounced.

From 21 July to 15 September 2023, ACER will run a public consultation on its upcoming report on cross-border capacity in EU electricity markets in 2022, to be published on 21 July 2023.

What is the report about?

ACER’s monitoring is crucial for integrated markets, as it contributes to efficient cross-border trade, integration of renewables, ensuring security of supply and reducing price volatility.

The ACER report on cross-border capacity in electricity markets will:

• Address network element usage, barriers, and potential solutions;
• Highlight the importance of maximizing cross-zonal trading for efficiency and decarbonization; and
• Evaluate the progress made towards the Clean Energy Package's target of achieving a minimum of 70% transmission capacity for cross-zonal trade by 2025.

What are the next steps?

After publishing its report on cross-border capacity in electricity markets on 21 July 2023, ACER will:

• Run a public consultation to collect stakeholders’ views on the report (from 21 July to 15 September 2023); and
• Organise a workshop to discuss the report’s conclusions (6 September 2023).

Based on its findings and stakeholders’ input, ACER will issue a formal opinion with recommendations to the European Commission and European Parliament by November 2023.

ACER runs a public consultation from 17 July 2023 to 25 September 2023 to gather stakeholders’ views on concrete amendment proposals on two European electricity grid connection network codes:

• Network Code on Requirements for Grid Connection of Generators; and 
• Network Code on Demand Connection.

Stakeholders can submit their comments separately, to one or both GC NCs.

The public consultation will last for 10 weeks.

Why change the rules?

Since the development of the first European grid connection codes in 2012, there have been important policy developments in decarbonising Europe’s energy and transport sectors.

The revisions of network codes are needed to update the existing regulatory framework to ensure Europe’s interconnected power system adapts to emerging trends, such as increasing number of electricity storage modules, electrical charging points for e-vehicles, or the proliferation of distributed energy resources.

What is the process of amending the rules?

In September 2022, the European Commission asked ACER to initiate the process of amending the existing European network codes. Since then, ACER has:

• published a Policy Paper;
• launched an initial public consultation to gather amendment proposals from stakeholders;
• held workshops on different technical topics; and
• developed concrete amendment proposals to the network codes for stakeholders' consultation.

On the basis of the input from this summer consultation, ACER prepared a recommendation for amendments to the European Commission later in 2023.

Access the public consultation page.

Learn more about the electricity grid connection codes.

Subscribe to receive automatic notifications on ACER’s public consultations.