​​Currently, the links in the energy sector between energy carriers (electricity, gas, heat) and between them and the consuming sectors (industry, buildings, transports) are limited.

The market and regulatory rules are designed separately.

Beyond the current electricity and gas market designs, the main market-based mechanisms currently in place are:

• Emission Trading Scheme - ETS: the ETS currently applies to power generation and heavy industries only. CO2 and greenhouse gas emitting sectors such as shipping are left out.

• Guarantees of Origin: as part of the Clean Energy Package, the “Recast Renewable Energy Directive" (2018) has extended the scope of guarantees of origin from 'electricity produced from renewable sources only' to 'gases produced from renewable and decarbonised sources, including hydrogen'. Discussions on whether the scope should be broadened in terms of energy/vectors, but also in terms of functions, are ongoing.

• Storage: the “Recast Renewable Energy Directive" (2018) has clarified the definition of energy storage for electricity, which now also includes power-to-gas installations.

• Flexibility markets: mainly focused on electricity (intraday, balancing, reserves). Currently a “circular economy approach" is missing (i.e. waste-to-energy).

• Bidirectional energy flows: the current electricity and gas demand side response mechanisms mainly involve big energy intensive companies. A more distributed generation/consumption approach is often missing. 

​​One of the key elements of the European Commission Communication “Powering a climate-neutral economy: An EU Strategy for Energy System Integration" is to make energy markets fit for decarbonisation and distributed resources.

The European Commission plans to achieve this by:

• Promoting a level-playing field across all energy carriers - by, among others, issuing guidance to Member States aligning non-energy price components across energy carriers, a possible proposal for the extension of the ETS scheme to new sectors, the revision of the Energy Taxation Directive

• Reviewing the legislative framework to design a competitive decarbonised gas market which can easily integrate renewable gases

• Improving customer information

Studies and impact assessments will be carried out in the next months and will contribute to the EC legislative revisions to be proposed by June 2021.

​​​​​​Most energy conversion technologies have not yet reached an efficient scale. They are likely to develop with an effective price signal, investments in research and development, and a system integrated network planning and operation.

Decarbonised gases, electrolysers, demand side response mechanisms and increased flexibility are likely to develop with more distributed generation and integrated market signals. 

The energy efficiency-first principle, together with the role of energy storage (thermal, gas, electricity, chemical) and the need for an improved access to and operation of the energy flexibility mechanism, are key elements to reach the decarbonisation and other energy system integration targets.

From a regulatory perspective, all technologies must be guaranteed a level playing field, so they can compete on the merits. Any obstacles or barriers to their equal treatment should be identified and removed, following an integrated energy system perspective.

​The Network Code on Emergency and Restoration (NC ER) provides the rules and standards for safeguarding a good level of operational security, preventing the propagation or deterioration of an incident to avoid a blackout, as well as allowing for an efficient and rapid restoration of the electricity system. The NC ER entered into force on 14 September 2017.

The NC ER's development was closely coordinated among ENTSO-E, ACER and the stakeholders.

As the NC ER does not foresee approvals by more than one regulatory authority, ACER will not be called upon to adopt decisions when regulatory authorities cannot agree on terms, conditions and methodologies. ​

​​​​​ACER and ENTSO-E have established the System Operations European Stakeholder Committee (SO ESC), to organise stakeholders' involvement on the implementation of the operation codes.

The SO ESC meets regularly to:

• Contribute to a more informed decision-making process regarding the implementation's methodologies and rules;

• Monitor the progress in the implementation, as well as in the operation and functioning of all the processes – at local, regional and pan-European level;

• Serve as a platform to share general views on the implementation, fostering stakeholders' engagements, receiving feedback and proposing amendments.

​​ACER and ENTSO-E monitor the implementation of the SO Regulation and of the NC ER​.The purpose of these tasks is generally twofold. 

First, ACER and ENTSO-E monitor the implementation of the operation codes in terms of requirements and provisions by TSOs. 

Second, once the specific req​​​​uirements have been implemented, ACER must monitor and analyse the implementation of the network codes and their effect on the harmonisation of applicable rules aimed at facilitating market integration, as well as on non-discrimination, effective competition and the efficient functioning of the market, and report to the Commission. 

ACER and ENTSO-E will publish different monitoring reports addressing the implementation.

​​​​​Network codes and guidelines are binding rules governing connection requirements to the electricity networks in an effective and transparent manner. They were established in 2009 by the EU Regulation on conditions for access to the network for cross-border exchanges in electricity  and recast in 2019 by the Regulation on the internal market for electricity .

The codes are crucial for ensuring the safety of system operation and the efficiency of the European Union's power grid.​

​Development and amendments to the FCA Regulation

The FCA Regulation has been developed in close cooperation with the Agency, ENTSO-E and stakeholders, in order to adopt effective, balanced and proportionate rules in a transparent and participative manner. In accordance with Article 18(3) of the Regulation (EC) No 714/2009, the Commission will consult the Agency, ENTSO-E and other relevant stakeholders, before proposing any amendment to the FCA Regulation.

Development of terms and conditions or methodologies

​

Every proposal for the terms and conditions or methodologies should be submitted to public consultation before its submission for regulatory approval, in accordance with Article 6 of the FCA Regulation. The entities responsible for performing the consultation should duly consider the views of stakeholders resulting from the consultation, prior to its submission for regulatory approval. In all cases, a clear and robust justification for including or not the views resulting from the consultation should be developed and published in a timely manner before or simultaneously with the publication of the respective proposal.​

Implementation of the FCA Regulation​

​

Pursuant to Article 5 of the FCA Regulation, the Agency, in close cooperation with ENTSO-E, has established the Market European Stakeholder Committee (MESC), in order to organise stakeholder involvement regarding the aspects of the implementation of the FCA Regulation and holds regular meetings with stakeholders to identify problems and propose improvements notably related to the operation and development of the issues described in the FCA Regulation.

Details of the activities of MESC can be found here.​

​​The FCA Regulation together with Regulation (EU) 2019/942 sets out the obligations for TSOs, ENTSO-E, regulatory authorities and ACER regarding the development and approval of terms and conditions or methodologies. The terms and conditions or methodologies should be consulted on, contain a timescale for implementation and the expected impact on the objectives of the FCA Regulation.

While terms and conditions or methodologies developed by all TSOs are directly submitted to ACER for approval, regional terms and conditions or methodologies are submitted to the relevant national regulatory authorities for a regional approval process. Once submitted, the relevant regulatory authorities or ACER should take decisions concerning the proposed terms and conditions or methodologies within six months after the receipt of the proposal. 

Where the regulatory authorities are not able to agree on the approval of the proposal, they can request an amendment, which gives TSOs an extra two months for amending the proposal and another two months for the regulatory authorities to approve the amended proposal. If, in case of a regional approval process, the regulatory authorities are not able to reach unanimous agreement or upon their joint request, ACER shall adopt a decision within six months from the referral.

After the adoption of the terms and conditions or methodologies, the TSOs responsible for developing the respective proposals or the regulatory authorities responsible for their adoption, may request amendments of these terms and conditions or methodologies. In that case the proposals for amendment to the terms and conditions or methodologies shall be submitted to consultation and follow the approval procedure as described above.​