Market rules’ development started in 2011, when ACER drafted the Framework Guidelines on Capacity Allocation and Congestion Management for electricity (adopted on 29 July 2011). 

The development of the Electricity Balancing Regulation started the same year, when ACER drafted the Framework Guidelines on Electricity Balancing (adopted on 18 September 2012).  

The Framework Guidelines set the foundations for the forthcoming development of the Network Codes on Capacity Allocation and Congestion Management, Forward Capacity Allocation and on Electricity Balancing.

The process

Based on these Guidelines, ENTSO-E developed the three Network Codes, which were submitted to ACER for opinion and revised, if needed.

As a last step, ACER issued a recommendation to the European Commission to adopt them subject to specific amendments. Following this recommendation, the European Commission further revised the network codes, and finally adopted them as Commission Guidelines.

Respectively:

• The CACM Regulation was adopted by the European Commission in July 2015 and entered into force in August 2015

• The FCA Regulation was adopted in September 2016 and entered into force in October 2016

• The EB Regulation was adopted in November 2017 and entered into force in December 2017.

Stakeholders are engaged across the various stages of the development and implementation of the market rules:

Development and amendments of Regulations

The Capacity Allocation and Congestion Management (CACM), Forward Capacity Allocation (FCA) and the Electricity Balancing (EB) Regulations have been developed in close cooperation with ACER, ENTSO-E and other stakeholders, in order to adopt effective, balanced and proportionate rules in a transparent and participative manner.

ACER always consults stakeholders before proposing amendments to the European Commission.

Development and amendment of terms and conditions or methodologies

Proposals by Transmission System Operators (TSOs) and Nominated Electricity Market Operators (NEMOs) for the terms and conditions or methodologies are publicly consulted upon, where relevant, before submitting for regulatory approval. The TSOs or NEMOs performing the consultation should duly consider the views of stakeholders. In any case, a clear and robust justification for including or not the stakeholders’ inputs needs to be developed and published in a timely manner before or simultaneously with the publication of the respective proposal.

Implementation of market codes

Market European Stakeholder Committee (MESC): the Market European Stakeholder Committee has been established by ACER and ENTSO-E to facilitate stakeholders’ involvement and general discussion about the implementation of the market codes. The Committee holds regular meetings to identify problems and propose improvements, particularly related to the integration of the electricity balancing market.

Find out more about the Market European Stakeholder Committee.

Electricity Balancing Stakeholder Group (EBSG)

The Electricity Balancing Stakeholder Group (EBSG), has been jointly established by ACER and ENTSO-E as a sub-group of the MESC in order to organise specific stakeholder involvement on the implementation of the EB Regulation. The Committee meets regularly to identify issues and propose improvements related to the integrated electricity balancing markets.

Find out more about the Electricity Balancing Stakeholder Group.

The EU Agency for the Cooperation of Energy Regulators (ACER) and the European Network of Transmission System Operators for Electricity (ENTSO-E) are mandated to monitor the market rules’ implementation.

Specifically, ACER and ENTSO-E monitor:

• the effective implementation of the Regulations’ requirements and provisions by Transmission System Operators (TSOs) and Nominated Electricity Market Operators (NEMOs)

• the impact of the Regulations on the overall efficiency of the electricity markets.

As such, ACER and ENTSO-E issue different monitoring reports.

Legal basis:

Regulation (EU) 2019/942

Capacity Allocation and Congestion Management (CACM) Regulation - Article 82

Forward Capacity Allocation (FCA) Regulation - Article 63

Electricity Balancing (EB) Regulation

ACER monitors the implementation of the market codes, as well as their impact at European level, and reports to the European Commission.

This facilitates market integration as well as non-discrimination, effective competition and the efficient functioning of the market.

ACER investigates also the performance of regional coordination centres and of market coupling operators, and assesses its effectiveness and efficiency.

Read more about the implementation and effect monitoring strategy of ACER.

Reports on the market codes’ implementation

ACER aims to issue biennial reports on the market codes’ implementation:

• CACM and FCA Regulation: The first general monitoring report on the implementation of the CACM Regulation and the FCA Regulation was issued in 2019.
• EB Regulation: As the implementation of the EB Regulation is still in a development stage and little effective implementation has taken place before 2019, ACER did not include any monitoring assessment of the EB Regulation in its first report.

ACER expects to publish the second general monitoring report in 2022.

Market Monitoring Report – Electricity Wholesale Volume

Although several provisions of the market codes have not been implemented yet, the ACER annual Market Monitoring Report analyses the effects of the early implementation activities of electricity market integration, such as:

• market coupling in the day-ahead and intraday timeframe
• introduction of flow-based capacity calculation
• existence and quality of hedging opportunities in forward markets at different bidding zone borders in Europe
• imbalance netting and
• other regional integration projects in balancing timeframe.

Read more about ACER’s monitoring of the internal electricity market.

Report on capacity calculation and allocation

The CACM and FCA Regulations requires ENTSO-E to report on capacity calculation and allocation and submit the findings to ACER.

The ENTSO-E report on capacity calculation and allocation describes the status of capacity calculation and allocation for the day-ahead, intraday and long-term timeframe. It also reviews the regional capacity calculation methodologies and assesses the status of the pan-European common grid model.

Legal basis:

Capacity Allocation and Congestion Management (CACM) Regulation - Article 31

Forward Capacity Allocation (FCA) Regulation - Article 26

ENTSO-E should submit the report to ACER every two years, if requested.

In July 2021, ENTSO-E submitted to ACER its latest report on capacity calculation and allocation.

Previous versions: 2019 and 2017

Report on the operation of market coupling algorithms - SDAC and SIDC

The CACM Regulation requires all TSOs and NEMOs to report on the market coupling algorithms’ operation. NEMOs and TSOs jointly issue the report on a yearly basis and submit it to ACER.

The annual report on the operation of market coupling algorithms for the Single Day-Ahead Coupling (SDAC) and Single Intraday Coupling (SIDC) includes:

• operations,
• incidents,
• the decisions on the requests for change and on the application of corrective measures.

The report also includes an analysis of the algorithm performance, its scalability, and an update on research and development. 

Legal basis:

Capacity Allocation and Congestion Management (CACM) Regulation - Article 37

Find the latest version of the CACM Annual Report 2020

Report on the costs of establishing, amending and operating SDAC and SIDC

The CACM Regulation requires all relevant NEMOs and TSOs to provide a yearly report to the regulatory authorities explaining the costs of establishing, amending and operating single day-ahead and intraday coupling and the forecast for the upcoming year.

The report includes the actual yearly costs directly related to the establishment, amendment and the operation of single day-ahead and intraday coupling and the forecast of the costs for the upcoming year. It also provides the breakdown of regional SDAC and SIDC costs.

Legal basis:

Capacity Allocation and Congestion Management (CACM) Regulation - Article 80

Find the latest version of the CACM Cost Report 2024

Previous versions: 2023, 2022, 2021, 2020, 2019, 2018 and 2017

ENTSO-E Market Report

The CACM, FCA and EB Regulation requires ENTSO-E to monitor the progress and status of the electricity markets. Therefore, ENTSO-E publishes an annual report covering the different timeframes where electricity is traded. The report shows the progress of TSOs and NEMOs in regards to the implementation of the market codes. It further assesses the status of each cross-border market in the different timeframe including a description of the governance and operation, shows the related expenditures for the provision of these markets and presents their latest developments.

Find the latest version of the ENTSO-E Market Report 2021.

ENTSO-E’s European Report on Integration of Balancing Markets

The EB Regulation requires ENTSO-E to publish a report on monitoring, describing and analysing its implementation  and describes the progress made with the integration of balancing markets in Europe.

Every two years,  ENTSO-E needs to publish a detailed report (starting from June 2020), while starting from June 2021 it shall publish a shorter version to review the progress and update the performance indicators.

Additionally, at least once every two years, each TSO shall publish a report on balancing covering the previous two calendar years, which shall either be in English or at least contain an executive summary in English.

The latest available executive summaries of these national reports are included in the detailed version of the European report on integration of balancing markets of the same year.

Access the first European Report on Integration of Balancing Markets

Report on the costs of establishing, amending and operating the European balancing platforms

The EB Regulation requires all TSOs to provide a yearly report to the regulatory authorities explaining the costs of establishing, amending and operating the European balancing energy platforms for the exchange of balancing energy from frequency restoration reserves and replacement reserves and for the imbalance netting process are explained in detail.

Legal basis:

EB Regulation – Article 23

Find the latest version of the Balancing Cost Report 2025

Previous versions: 2024, 2023, 2022, 2021, 2020

The European market rules establish obligations for Transmission System Operators (TSOs), the European Network of Transmission System Operators (ENTSO-E), regulatory authorities and ACER on the development and approval of terms and conditions or methodologies. To be approved, terms and conditions or methodologies must:

• be consulted upon by relevant stakeholders

• include a  timescale for implementation

• clearly address their expected impact on the objectives of the Regulations

• meet the necessary requirements as set out in the legal basis.

While terms and conditions or methodologies (TCMs) developed by all TSOs or all NEMOs are directly submitted to ACER for approval, regional terms and conditions or methodologies are submitted to the relevant national regulatory authorities (NRAs) for a regional approval process. Once submitted, the regulatory authorities or ACER should decide within six months after the receipt of the proposal.

In case NRAs are not able to agree, they can request an amendment. This provides TSOs an extra two months for amending the proposal and another two months for the regulatory authorities to approve the amended proposal.

In case NRAs are not able to reach unanimous agreement on a regional proposal (or upon their joint request), ACER is competent to decide on the proposal within six months from the referral.

Once the  terms and conditions or methodologies are adopted, the TSOs responsible for developing the proposals or the regulatory authorities responsible for their adoption, can request amendments. If this happens, the amended proposals should be submitted for new consultation and the approval process starts again.

Common market codes (or rules) at EU level make it easier to trade electricity across borders. The market codes correspond to the different timeframes of the wholesale electricity market:

• forward market

• day-ahead market

• intraday market

where market participants exchange energy with different lead times.

A separate balancing market is run by the Transmission System Operators (TSOs) which allows them to settle imbalances and avoid blackouts if demand and supply do not match.

The Forward Capacity Allocation (FCA) Regulation ensures the availability of sufficient hedging opportunities in the forward timeframe and includes provisions for the allocation of long-term transmission rights by TSOs.

Main characteristics:

• Market participants hedge the risk and/or exposure against possible price fluctuation on spot markets (i.e. day-ahead, intraday) with the financial trade taking place up to several years before the physical delivery in a specific bidding zone.

• Price formation is based on the expected average price of the day-ahead timeframe.

• If a bidding zone does not offer a sufficiently liquid forward market to hedge risks, this has consequences on:

  • consumers (which often need to pay significant risk premiums)

  • Increase in bankruptcy cases (in case of unexpected prices).

The Capacity Allocation and Congestion Management (CACM) Regulation increases welfare effects while ensuring the well-functioning of the day-ahead and intraday markets (including operational security).

Main characteristics:

• The physical trades take place up to one day-ahead or some minutes (e.g. 15 minutes) ahead of the physical delivery.

• To ensure the efficient use of the available cross-zonal capacity for the exchange of electricity between different bidding zones in those market timeframes, the cross-zonal capacity is allocated implicitly in the so-called single day-ahead and intraday market coupling.

The process flow chart for the current situation in day-ahead (on the left) provides an overview of the involved parties and tasks.

ACER recently proposed reasoned amendments for a new CACM Regulation (“CACM 2.0”) including changes to this set-up.

The Electricity Balancing (EB) Regulation establishes and regulates the smooth exchange of balancing energy across the European Union.

Main characteristics:

• If demand and supply of the market participants trading in the electricity markets do not match, the imbalance needs to be corrected by TSOs.

• TSOs procure balancing services (i.e. balancing capacity and energy) from market participants (with reserve-providing units/groups) which enable the electricity transmission grid’s frequency to be maintained.  

• The procurement of balancing capacity is done in parallel to other timeframes while the procurement of balancing energy takes place during or after the intraday timeframe (see graph on the left)

Find out more on ENTSO-E’s market report.