On 8 May 2024, ACER received electricity system operators’ proposal for an EU-wide network code on demand response. The proposal was drafted by the EU Distribution System Operators Entity (EU DSO Entity) and the European Network of Transmission System Operators (ENTSO-E). Their proposal also includes amendments to the three related electricity network codes: balancing, system operation, and demand connection.

After reviewing and where necessary revising the system operators’ proposal, ACER will consult on its revised draft in autumn 2024 before submitting it to the European Commission by March 2025.

Why is this network code relevant?

The network code on demand response will:

• Establish harmonised rules to facilitate market access for demand response, including load, storage and distributed generation (aggregated or not).
• Enable market-based procurement of services by Distribution System Operators (DSOs) and Transmission System operators (TSOs).
• Be applicable in all EU Member States.

Demand response is key for integrating the growing share of renewable energy and new electricity loads (e.g. resulting from heat pumps and electric vehicles) in a cost-efficient way.

In developing this draft network code, ACER is contributing to a more cost-efficient and clean energy transition by facilitating access to EU wholesale electricity markets for smaller actors, including consumers.

Have your say!

ACER is running a public consultation from 5 September to 31 October 2024 on what will be ACER-revised draft proposal. ACER will run a  webinar during the consultation period, on 1 October 2024.

Background

In June 2022, ACER was mandated by the European Commission to draft a framework guideline on demand response which serves as guidance for the system operators to then draft the EU network code. After engaging stakeholders via a public consultation and a workshop during the summer of 2022, ACER submitted the framework guideline to the European Commission in December 2022. The European Commission cleared ACER’s framework guideline in March 2023, and asked the DSO Entity and ENTSO-E to draft the proposal for the new binding EU rules.

What are the next steps?

• ACER public consultation: 5 September - 31 October 2024.
• ACER webinar: 1 October 2024, 14:00-16:00 (CET).

ACER will submit the revised network code proposal to the European Commission by March 2025.

In the context of the ongoing revisions of the European grid connection network codes, ACER will consult with stakeholders (during summer 2024) to collect views on ACER’s concrete amendment proposals to the network code on grid connection requirements for high voltage direct current systems and related power park modules (NC HVDC).

What are the electricity grid connection network codes?

Network codes are binding rules governing connection requirements to the electricity networks in an effective and transparent manner. The codes are key for ensuring the safety of system operation and the efficiency of the EU's power grid. ​

There are three electricity grid connection network codes:

• The network code on requirements for grid connection of generators (RfG Regulation) establishes common standards for generators to connect to the grid.
• The network code on demand connection (DCC Regulation) sets up harmonised requirements for demand facilities to connect to the grid.
• The network code on requirements for grid connection of high voltage direct current systems (HVDC Regulation) covers the definition of harmonised standards for direct current (DC) connections.​​​​

Why change the rules?

The electricity grid connection codes were established in 2009, with the HVDC Regulation entering into force in 2016. Important developments to decarbonise the European energy and transport sectors happened since then:

• September 2022: ACER initiated the amendment process of the existing European grid connection network codes, as requested by the European Commission.
• December 2023: after consulting with stakeholders, ACER submitted to the European Commission its Recommendation 03-2023 proposing amendments to two grid connection network codes (on requirements for grid connection of generators and on demand connection).
• December 2023: the final report of the Grid Connection European Stakeholder Committee’s Expert Group on Connection Requirements for Offshore Systems was released (proposing amendments to the NC HVDC).
• End of 2024: ACER will submit to the European Commission its recommendation on proposed amendments to the third grid connection network code (the NC HVDC).

The revisions to the NC HVDC aim to:

• Enhance the existing grid connection regulatory framework.
• Align the code with the network codes on requirements for grid connection of generators and on demand connection.
• Ensure the interconnected system is adapted to emerging trends, such as the increasing generation capacity of offshore networks (AC hubs) and the connection of new system users (storage, demand facilities).

Have your say!

To inform its drafting of the amendment proposal to the NC HVDC, ACER will:

• run a public consultation from 17 June until 8 September 2024;
• hold a webinar on 24 June 2024 (09:30 – 11:00 CET).

On 13 May 2024, with its Decision No 07/2024, ACER amended the methodology for Coordinating Operational Security Analysis (CSAM).

The amendment proposal was submitted to ACER in November 2023 by the European Network of Transmission System Operators for Electricity (ENTSO-E), on behalf of Transmission System Operators (TSOs).

What is the role of the methodology?

CSAM supports the EU’s operational security by outlining the TSOs' requirements to ensure:

• the electricity transmission system is operated in a coordinated manner;
• an effective system operational planning;
• transparency and reliability of information on transmission system operation.

The methodology was first approved by ACER in 2019 under the Guideline on Electricity Transmission System Operation (SOGL) and amended in 2021.

What are the main improvements in the methodology?

The amendments relate to the implementation of the observability area (i.e., where TSOs implement real-time monitoring and modelling of their systems to maintain operational security), following the recommendations of the Incident Classification Expert Panel’s final report on Continental Europe Synchronous Area Separation on 8 January 2021.

The main changes include:

• Aligning the observability area reassessment period with that of the external contingency list (i.e., the list of contingencies to be simulated to test the compliance with the operational security limits). This alignment is important to ensure that the operational security analysis is carried out accurately across all timeframes.
• The inclusion of busbar couplers in the contingency lists and in the TSOs’ Individual Grid Models (IGMs), along with a defined timeline for implementation by the TSOs. This update ensures that the power flows are kept within the operational security limits after a contingency has occurred.

What are the next steps?

Within a year after the adoption of the new CSAM (by 13 May 2025), TSOs are required to update their ordinary contingency lists. These updates must specifically include the loss of a single busbar coupler, whether protected by an overcurrent protection device or by an over-/under-voltage protection device.

ACER approves the European Network of Transmission System Operators for Electricity’s (ENTSO-E’s) European Resource Adequacy Assessment for 2023 (ERAA 2023). However, ACER also calls for further enhancements in the next annual assessment (ERAA 2024).

ENTSO-E is required to assess, annually, the risks to EU security of supply in its ERAA. This assessment aims to provide an up-to-date outlook for 10 years ahead, helping policy makers to make timely security of supply decisions. The next edition, ERAA 2024, is due in November 2024.

What does ACER expect in the ERAA? 

ACER considers that a robust ERAA must:

• Forecast the level of EU security of electricity supply and identify concerns about potential scarcity of supply, basing this analysis on consistent assumptions and modelling approaches.
• Provide visibility on the electricity interdependencies of EU Member States by showing clearly how changes in one country’s demand and/or supply affect the electricity security of supply of another country.
• Show how Member States can rely on each other during times of power system stress.
• Provide an objective basis for assessing additional national measures (including State Aid) to improve the European security of electricity supply.

What does ACER say about ERAA 2023 and what improvements are needed for 2024?

ACER approves the European Resource Adequacy Assessment, marking a milestone for the security of electricity supply across the EU and acknowledging interdependencies among Member States. It is the first time in three years of ENTSO-E’s assessment that ACER has approved it (see ACER’s communications on ERAA 2022 and on ERAA 2021).

Considering that ERAA 2023 is the last assessment to be undertaken within the 3-year implementation period for complying with the ERAA methodology and the improvements made by ENTSO-E, ACER finds that ERAA 2023 is sufficient. In particular, ACER acknowledges the improvements made in:

• Increasing consistency of the assumptions used when modelling adequacy risks and investment behaviours.
• Analysing how the European network infrastructure evolved and expanded over time.
• Aligning more closely with the EU greenhouse gas emissions target for 2030.

However, for ERAA to fully comply with the methodology and be a reliable tool for policymakers, ACER considers that ENTSO-E must strengthen ERAA 2024 as follows:

• Adopt more robust modelling approaches.
• Estimate cross-zonal capacities by applying the flow-based capacity calculation method (as per current rules), rather than using Net Transfer Capacities (NTCs).
• Ensure greater consistency with market rules and improve the modelling of investment behaviour.

Failing to implement these improvements may compromise the robustness of the assessment. For example, without changing the modelling approaches, ERAA will be prone to inconsistencies between market entry and exit decisions and the estimated adequacy risks. Ultimately, the absence of improvements to ERAA would impede the adoption of robust security of supply decisions by Member States.

What are the next steps?

As ENTSO-E’s proposal for 2024 is expected by November 2024, ACER continues its engagement with ENTSO-E and others (e.g. Member States, the European Commission, the Joint Research Centre) so that the ERAA continues to improve.

• First, ACER's reply to ENTSO-E's public consultation (on preliminary input data), calls for ENTSO-E to increase the level of transparency concerning three main sets of assumptions: cross-zonal trading capacities, demand response and demand projections.
• Second, to facilitate timely implementation of ACER’s recommendations (which are included in the ACER Decision published today), ACER communicated these priority areas (and suggestions on how to address them) in a letter addressed to ENTSO-E already in March 2024. As stated above, the three priority areas that need to be strengthened concern robust modelling approaches, consistency of cross-zonal capacities and strengthening the consistency of market rules and investment behaviour.

ACER considers having a solid ERAA in place in 2024 important because:

• ERAA is relevant to the European Commission’s upcoming (2024) proposals to streamline the procedures concerning the application of capacity mechanisms.
• It links to the upcoming (2025) ACER methodology for the flexibility needs assessment performed by all Member States (which will complement the ERAA).

Would you like to dive into the topic?

Access ACER Decision 06/2024 and its annexes.

Access the consolidated version of the approved ERAA 2023 as provided by ENTSO-E: executive report and annexes.

ACER’s new dynamic dashboard allows stakeholders to explore the data categories used in ERAA’s different editions, including those proposed for ERAA 2024.

Today, ACER releases its Opinion, addressed to the European Parliament and European Commission, highlighting the urgency for Transmission System Operators (TSOs) to meet their obligation of making 70% of transmission capacity available for cross-border electricity trading by the end of 2025. The urgency relates to the approaching legal deadline and the delays with many of the necessary steps to reach the 70% transmission capacity rule that is needed to achieve the ambitious political objectives set for renewable generation. The ACER opinion makes clear that without significant uptake in progress on the “70% rule”, such ambitions will be hard to achieve.

Electricity transmission capacity connects Europe’s markets and benefits consumers

Transmission capacity is essential for cross-border trade of electricity, as it connects supply and demand. TSOs delivering maximal transmission capacity to trade electricity is therefore an essential condition to achieving the ambitious political objectives set for renewable generation.

What is the minimum 70% capacity requirement and where are we on the path?

When more capacity being made available for trading electricity with neighbouring countries did not happen fast enough, EU legislators introduced (in 2019) rules that require grid operators to ensure that at least 70% of their physical transmission capacity is available for cross-border electricity trading by the end of 2025 at the latest. ACER has reported yearly that significant steps remain to be taken for TSOs to fulfil this obligation. As the end of 2025 legal deadline approaches, ACER enlists the support of the European Parliament and the European Commission so that the final necessary steps are taken.

The last ACER report (July 2023) found that most Member States in highly meshed areas of the power grid made available on average 30-50% of the capacity for certain network elements. In parallel, the costs of managing grid congestions in the EU exceeded €4 billion in 2022.

Why is maximising transmission capacity important?

Maximising grid capacity refers not just to the ‘physical’ grid (high voltage lines) but also to the transmission capacity that TSOs make available on those lines for trading (‘commercial transmission capacity’) with neighbours.

Maximising interconnection capacity by reaching the minimum 70% requirement:

• is a pre-requisite for the energy transition;
• enhances security of electricity supply by optimising the use of the existing grid;
• mitigates prices and price volatility;
• provides the market with much-needed flexibility; and
• ensures a level playing field between domestic and cross-border trades.

There is much at stake in not reaching the minimum 70% requirement and Member States are still far off it. What does ACER call for to reach the 70% minimum requirement?

This ACER Opinion calls for the swift implementation by Member States and TSOs of the 3 tools foreseen by EU rules to get us to the 70% minimum requirement:

1. TSOs to do optimised and coordinated reduction of grid congestion. Such ‘remedial actions’ include coordinated re-dispatching and countertrading by TSOs (which relieves congestion and frees up more transmission capacity to the market). Currently, grid congestion is assessed mostly at national level. Fully coordinated processes and an adequate cost-sharing is yet to be done by TSOs.
2. TSOs to undertake targeted grid developments within specific bidding zones and targeted at reducing congestion in that zone.
3. TSOs to complete the technical assessment of the ongoing review of the EU’s bidding zones (and Member States/European Commission to then decide) to ensure alignment of the bidding zone configurations with structural grid congestion. The results of the EU electricity bidding zone review are expected, after several delays, by the end of 2024. In this review process, Member States, and if necessary, the European Commission, will have a key role to play in confirming or re-defining (as appropriate) the bidding zone configuration.

What are the next steps?

In June, ACER intends to publish its new Market Monitoring Report (MMR) on the capacity made available (in the year 2023) for cross-border trade with neighbours. This report will be followed by a public webinar.

ACER is seeking for applicants to join a new consultative expert group, which will work on Power Purchase Agreements (PPAs).

The main focus of the new expert group will be to advise on the need for standardised PPA contracts within the European energy market, exploring their feasibility, main benefits and drawbacks. Experts will help ACER assess whether standardised PPAs will foster the transparency, efficiency and integration of the European internal energy market, and will build the necessary knowledge to ensure alignment with other European energy policies and objectives.

The expert group will operate from spring to summer 2024, with the possibility of extending into 2025 for further analysis on the development of such contracts.

How to apply?

ACER is seeking for a diverse group of experts with experience in legal, financial, and technical fields related to energy regulation (especially electricity markets).

To apply, please follow the instructions in the Open Letter and make sure you fulfil all the application criteria​.

Application deadline is Friday 19 April 2024.​

In November 2023, Transmission System Operators (TSOs) submitted to ACER their proposal to amend the definition of two European electricity Capacity Calculation Regions (CCR).

On 19 March 2024, with its Decision No 04/2024, ACER has approved the amendments to the Core and Italy North CCRs.

What are the capacity calculation regions and why are they important?

CCRs define the geographic areas (i.e. by listing bidding zone borders) across the EU where TSOs coordinate the capacity calculation and other processes (i.e. subject to regional methodologies).

Currently, there are eight CCRs in the EU: Nordic, Baltic, Hansa, Core, Italy North, Greece-Italy (GRIT), South-West Europe (SWE) and South-East Europe (SEE).

Having an efficient definition of CCRs benefits European consumers and producers:

• It allows TSOs to run regional processes related to capacity calculation, re-dispatch and countertrading more effectively.
• It optimises the provision of cross-zonal capacity, allows for more cross-zonal trade and ensures security of supply.

What has changed?

• The Core CCR will include the Celtic interconnector, an undersea cable between Ireland and France. This will facilitate Ireland’s further integration into the European electricity market.
• The Core and Italy North CCRs will be merged and form a new CCR called Central Europe. Initially, this merger will only apply to the day-ahead capacity calculation process. It will improve the coordination and efficiency of capacity calculation and allocation processes in continental Europe.

How did ACER contribute?

ACER assessed whether the TSOs’ proposal contributes to market integration, non-discrimination, effective competition, and the proper functioning of the EU electricity market.

To make an informed decision, ACER consulted with stakeholders in winter 2023-2024.

Next steps

The Celtic interconnector will become part the Core CCR once it becomes operational (expected in 2026).

The TSOs shall submit the day-ahead flow-based capacity calculation methodology for the newly formed Central Europe CCR by January 2025.