The EU Agency for the Cooperation of Energy Regulators (ACER) is running a public consultation on the Transmission System Operators’ (TSOs’) proposal to include Norway in the capacity calculation regions (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 in which the task of capacity calculation and other processes are coordinated by TSOs (i.e. subject to regional methodologies).

There are 8 CCRs in Europe: Nordic, Hansa, Core, Italy North, Greece-Italy (GRIT), South-west Europe (SWE), Baltic and South-east Europe (SEE).

In 2021, the CACM Regulation has also become binding for Norway. The TSOs’ amendment proposes to add the Norwegian bidding zone borders into the Hansa and Nordic CCRs.

Forming CCRs benefit European consumers, as:

• Dividing Europe into different CCRs allows TSOs to run regional processes related to capacity calculation, re-dispatch & countertrading more effectively;
• Having an efficient determination of CCRs facilitates the optimal provision of cross-zonal capacity, which allows more cross-zonal trade while remaining security of supply; and
• The addition of the Norwegian bidding zone borders further facilitates welfare increases by integrating these bidding zone borders in European and regional processes.

What is the process to amend the current bidding zones?

Any amendments proposed by TSOs to the definition of CCRs are subject to the approval of ACER.

ACER has six months (until 13 April 2023) to decide on the TSOs’ proposal.

Next steps

ACER will assess whether the TSOs’ proposals contribute to market integration, non-discrimination, effective competition and the proper functioning of the EU electricity market.

To collect views of the stakeholders, a public consultation on the TSOs proposed amendments runs from 28 October to 25 November 2022.

Access the Public Consultation.

Access the Public Notice.

The EU Agency for the Cooperation of Energy Regulators (ACER) has decided not to grant the Swedish Transmission System Operator (TSO) a derogation from the requirement to provide minimally 70% of the transmission capacity for cross-zonal trade (‘70% requirement’).

What is the decision about?

The 70% requirement is one of the cornerstones of the internal market for electricity. However, the relevant  Regulation 2019/943 on the internal market for electricity (Regulation) allows a temporary derogation for the TSOs who cannot comply with this requirement. The derogation may be granted under strict conditions and is subject to the agreement between the concerned National Regulatory Authorities (NRAs) or, in case of their disagreement, the decision on granting such a derogation is submitted to ACER.

Background

On 6 October 2021, the Swedish NRA (Energy Markets Inspectorate, Ei) received the request from the Swedish TSO (Svenska kraftnät, Svk) for a derogation from the 70% requirement for multiple electricity interconnections for the year 2022.

Ei decided that Svk should be granted the derogation for the interconnectors between the bidding zones Finland – Sweden 3 (FI-SE3) and Sweden 3 - Denmark 1 (SE3-DK1). However, the Finnish NRA (EV) and the Danish NRA (DUR) opposed granting the derogations to Svk due to various reasons. Among others, EV and DUR highlighted that the Svk’s request for derogation is incomplete and that Svk does not provide sufficient efforts to ensure required level of redispatching and countertrading to support the 70% requirement. The question of derogation was therefore submitted to ACER.

In its decision of 26 October 2022, ACER concluded that the derogation from the 70% requirement should not be granted to Svk.

How did ACER contribute?

ACER has thoroughly assessed Svk’s derogation request against the relevant requirements specified in the Article 16(9) of the Regulation, and analysed the Svk’s application of the 70% requirement in the previous years.

The assessment confirmed that:

• The derogation was not necessary for maintaining operational security;
• The derogation request did not provide the minimum capacity targets,
• The derogation request did not provide the methodology on how to avoid the discrimination between internal and cross-zonal exchanges.

Based on the above, ACER has concluded the derogation should not be granted.

Access the Decision 17-2022.

Europe’s long-term electricity market relies on so-called long-term transmission rights (LTTRs), which allow market participants to hedge their exposure across bidding zones. The allocation of those LTTRs is currently not coordinated across different borders, which leads to inefficiencies in some capacity calculation regions (CCRs).

To enable the implementation of the long-term flow-based allocation in the Core and Nordic CCRs, and following the all Transmission System Operators’ (TSOs’) proposals, the EU Agency for the Cooperation of Energy Regulators (ACER) is reviewing three proposals for amendments of forward capacity allocation methodologies related to:

• Single allocation platform, including the methodology for sharing costs for its establishment, development and operation;
• Congestion income distribution; and
• Sharing costs incurred to ensure firmness and remuneration of LTTRs.

As part of its review, ACER seeks stakeholder input via:

• Public Consultation, which runs from 26 October to 23 November 2022;
• Public Workshop on 17 November 2022.

Why change the rules?

Cross-zonal capacity is currently allocated at the long-term electricity market with no coordination between different borders (i.e. using a flow-based allocation approach), which leads to inefficiencies in some CCRs. The proposed amendments include requirements for flow-based allocation of LTTRs, aiming to make the long-term market more efficient and align it with the day-ahead market design.

In particular, this revision is needed to enable the implementation of two ongoing projects for long-term flow-based capacity calculation and allocation in the Core and the Nordic CCRs.

How does ACER contribute?

ACER will assess the amendments proposed by all TSOs and revise them where necessary in order to ensure their contribution to market integration, non-discrimination, effective competition, proper functioning of the market, and their compliance with the Regulation on the internal market for electricity and the Forward capacity allocation guideline.

What are the next steps?

ACER has six months (until 28 March 2023) to decide on the TSOs’ proposals.

To collect the views of the stakeholders, ACER’s Public Consultation on the TSOs’ proposed amendments runs from 26 October to 23 November 2022.

ACER invites interested stakeholders to register for a Public Workshop, which will take place on 17 November 2022.

Access the Public Notice.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its first stand-alone report on the performance of Member States (MSs) regarding security of electricity supply in 2021 (‘Report’). The Report extends the depth and scope of past reporting on the subject in ACER market monitoring reports.

The Report looks into three main areas:

• The implementation of the methodologies to calculate the value of lost load, the cost of new entry and the reliability standard by MSs;

• The short- and long-term adequacy assessments at European and national level; and

• The measures implemented by MSs to address security of electricity supply concerns.

The report does not cover measures deployed as a response to the current crisis.

What are the Report’s key findings?

• MSs gradually implement the ACER’s harmonised methodology to calculate the value of lost load, the cost of new entry and the reliability standard defining the necessary level of security of electricity supply. However, non-uniform approaches in implementation need further attention.

• The short-term and seasonal adequacy assessment framework is largely in place. Only two incidents were identified in 2021 and were tackled by Transmission System Operators (TSOs) in a coordinated manner to avoid possible supply interruptions.

• While ENTSO-E’s pan-European resource adequacy assessment is under development, MSs assess security of supply at a national level. Out of the 14 national assessments conducted in 2021, 7 revealed adequacy concerns in at least one of the next ten years. 

• Cost of additional capacity mechanisms rises to €5 billion in 2021 (+81% from 2020) and is expected to reach €7 billion in 2023, largely directed to conventional power generation. ACER raises attention on potential lock-in effects stemming from long-term contracts and points to incompatibility of such capacity mechanisms’ outcomes with future climate and energy targets.

What are the next steps?

ACER will intensify efforts to monitor the implementation of the adequacy-related methodologies at European and national level and will continue to report on security of supply measures, including those applied as a response to the current energy crisis.

Access the Report.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its first monitoring report on the use of congestion income in 2021 (‘Report’).

According to Regulation (EU) 2019/943, all income generated as a result of the cross-zonal capacity allocation must be used as a priority for either guaranteeing the actual availability of the allocated capacity, or for maintaining or increasing cross-zonal capacities. Only where these objectives are fulfilled, the revenues can be used as income when determining network tariffs. Potential residual revenues shall be placed on an internal account line until they can be spent for the abovementioned purposes.

In addition, National Regulatory Authorities (NRAs) must publish a report and inform ACER detailing:

• the amount of collected revenues;
• the amount placed on a separate account line;
• the amount used as income when determining network tariffs;
• explain how the collected revenues were used in view of fulfilling priority objectives.

What are the Report’s key findings?

In summary, the Report finds that the total available congestion income (CI) in 2021 was €6.9 billion. Out of these, €4.9 billion were collected during 2021 and €2 billion were already saved in separate accounts before 2021.

In 2021, the available CI (€6.9 billion) was used as follows:

• €3.1 billion (45%): used on priority objectives;
• €3.4 billion (49%): saved on internal accounts;
• €342 million (5%): used for tariff reductions;
• €89 million (1%): spent on taxes.

ACER welcomes the fact that, compared to 2020, the amount of CI used for priority objectives or saved for future priority objectives-related use increased for 7% (from 88% to 95%), and that the share of CI used for tariff reduction compared to the available CI was reduced by 7% (from 12% to 5%). These figures show an increasing use of CI to fulfil the priority objectives. Despite that, ACER concludes that the priority objectives cannot be deemed fulfilled for five countries, namely for BG, ES, GR, HU, and SI.

ACER prepared this report in line with its duties to monitor the internal electricity markets, the implementation of Projects of Common Interests (PCIs), the EU Ten-Year Network Development Plan (TYNDP) and in order to avoid the lack of prioritisation of necessary interconnection projects at a national level.

Access the Report.

The EU Agency for the Cooperation of Energy Regulators (ACER) has revised and approved the all Transmission System Operators’ (TSOs’) proposal to amend the implementation frameworks for the European balancing platforms for the exchange of balancing energy from automatic and manual frequency restoration reserves (aFRR, mFRR) and for the imbalance netting.

In March 2022, all TSOs proposed an entity to perform the capacity management function for all platforms. This entity shall be a different one from those performing other functions of the respective platforms:

The amendment of the implementation framework of the mFRR platform also includes technical aspects, such as clarifications regarding complex bids and mFRR demand.

What are the benefits?

The implementation frameworks for the European balancing platforms provide the rules for the efficient cross-border exchange of balancing energy from frequency restoration reserves with automatic activation (aFRR) and manual activation (mFRR) and for the imbalance netting. This fosters the liquidity of balancing markets, lowers the cost of balancing energy at European level by using the cheapest resources, and contributes to operational security. 

What are the main elements of ACER’s decision?

ACER amended the TSOs’ proposals to further specify the designation of the entities performing the relevant functions of these platforms. In order to ensure the efficient and effective governance, operation and regulatory oversight of these platforms, ACER introduced several changes on:

• transparency and reporting,
• governance and decision making,
• cooperation framework, and
• operational aspects.

In particular, ACER suggested:

• establishment of a joint steering committee for all three platforms,
• requirements on the annual work program, and
• requirements to ensure proper fall-back and backup mechanisms.

The decision is in line with the objectives of the Electricity Balancing Regulation.

What are the next steps?

Following ACER’s decision, and within 6 months, all TSOs will designate CEPS as the entity to perform the capacity management function for the European balancing platforms for the aFRR, mFRR and the imbalance netting. All TSOs will implement the capacity management function of all three platforms by July 2024.

Access the Decisions 14-2022, 15-2022, 16-2022 and their annexes here.

The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on the methodology optimising the inter-TSO settlements related to electricity redispatching and countertrading, in cooperation with all European National Regulatory Authorities (NRAs), ENTSO-E and Transmission System Operators (TSOs).

What is the decision about?

ACER’s decision seeks to ensure the effective and optimal application of inter-TSO cost settlements relevant for all European TSOs. Inter-TSO settlements are an important element of cross-border trading. Optimisation of inter-TSO settlements contributes to reducing costs and improves clarity on the settlement procedure for the benefit of all electricity market stakeholders.

How did ACER contribute?

The proposal for a new methodology was submitted to ACER by ENTSO-E on 1 July 2022, for the 3-months decision-making process.

ACER has carried out assessments and consulted relevant stakeholders to take an informed decision on any needed adjustments related to both the technical part and the financial settlement part of the cost sharing.

On this basis, ACER has amended the initial proposal of the methodology to further improve the clarity and transparency principles of the inter-TSO settlements.

This ACER decision on inter-TSO settlement was reached in cooperation with all energy NRAs, ENTSO-E and the TSOs.

Read more on the ACER’s Decision 13-2022 on the Methodology for the Optimisation of Inter-TSO Settlements related to Redispatching and Countertrading and its Annex here.

ACER launches today a public consultation inviting stakeholders to submit their proposals for amendments to the Network Code on Requirements for Grid Connection of Generators, and the Network Code on Demand Connection.

The aim is to update the network codes to further support the EU power grid embracing emerging developments such as e-mobility, storage and energy communities.

The European Commission invited ACER to initiate the process to amend the existing EU network codes. ACER published a draft Policy Paper in May 2022 and gathered initial feedback from stakeholders during a public workshop and a public consultation in June 2022 (access the responses of the June 2022 public consultation in the Evaluation of Responses Report).

The public consultation runs from 26 September until 21 November 2022.

Policy Paper on the amendments to the grid connection network codes

ACER sets out in its Policy Paper published today potential ways to improve the Network Code on Requirements for Grid Connection of Generators and the Network Code on Demand Connection.

The ACER Policy Paper on Grid Connection Network Codes reflects ACER’s conclusions on possible amendments to the grid connection network codes following input received from stakeholders during the summer 2022.

The Policy Paper addresses potential amendments to the European network codes concerning:

• technical requirements for electrical charging points and electric vehicles (EVs);
• requirements for mixed customer sites (MCSs), active customers and energy communities;
• significant modernisation of system users’ facilities and equipment;
• grids with significant distributed energy resources (DER) and converter-based technologies; and
• generators’ resilience to weather hazards.

Next steps

A public workshop on the amendment to the grid connection network codes will be held on 25 October.

Following this process, ACER plans to submit to the European Commission its proposed amendments to the grid connection network codes by the end of 2023.

Access the Policy Paper.

Access the public consultation.

Access the public workshop.

Europe’s electricity spot markets have an automatic maximum price adjustment mechanism in case of extraordinary high prices. ACER is reviewing the methodologies for automatically increasing the maximum price limit in case of price spikes. As part of its review, ACER seeks stakeholder input via a public consultation and a public workshop (3 October).

With expected high prices on the electricity markets ahead, on 2 September, ACER urged the Nominated Electricity Market Operators (NEMOs) to submit proposals to amend the Capacity Allocation and Congestion Management methodologies related to:

• the Harmonised Maximum and Minimum Clearing Price (HMMCP) methodology for Single Day-Ahead Coupling (SDAC) and,
• the Harmonised Maximum and Minimum Clearing Price (HMMCP) methodology for Single Intraday Coupling (SIDC).

These methodologies define Europe’s single day-ahead and intraday electricity markets maximum and minimum price limits. Following receipt of the NEMOs’ proposals on 15 September, ACER is now conducting its review of the HMMCP methodologies.

Why change the rules?

With expected high prices on the electricity markets ahead, ACER considers this review as a high priority. The aim of the review is to limit the frequency of increases of the maximum clearing price in the spot markets, allowing consumers and market participants to gradually and better adapt to the scarcity situation in the market.

In addition to this urgent review, a full HMMCP SIDC methodology revision is needed to account for the forthcoming implementation of the SIDC auctions as well as for a newly developed automatic mechanism for adapting the maximum and minimum clearing price limits of the SIDC continuous market.

How does ACER contribute?

ACER ensures that the amendments proposed by all NEMOs are in line with the Regulation on the internal market for electricity, the Capacity Allocation and Congestion Management guideline and fulfil the legal obligations. ACER will assess if the proposed amendments are fit-for-purpose considering the exceptional market situation and its possible evolution.

Process

ACER formally has six months (until 15 March 2022) to reach a decision on the NEMOs’ proposals but the Agency aims to conclude its review much faster.

To collect the views of the stakeholders, an ACER public consultation on the NEMOs proposed amendments runs from 19 September to 9 October 2022.

ACER also invites interested stakeholders to a public workshop on 3 October 2022.

What to remain vigilant of in the coming months?

Price spikes can occur more frequently if not enough cross-border interconnector capacity is made available for trade and/or demand response is not being brought to the market. In some instances, this may even endanger security of supply.

Therefore, and irrespective of the ongoing review of the mechanism, in the coming months, ACER calls on:

• Transmission System Operators (TSOs) to make sufficient cross-zonal capacity available for cross-border trade.
• Market participants to bring significant demand response to the market.

Access the Public Notice.

Access the Public Consultation page.

Access the Public Workshop page.