Today, ACER publishes its report on electricity network tariff methodologies. This report analyses how network tariffs are set across the EU and how network costs are allocated across different network users (e.g. generators, consumers, battery facilities or other storage operators). 

The report enhances transparency and comparability in electricity network tariff setting by sharing national practices. It also examines and offers insights into various tariff challenges faced by energy regulators. 

How is it relevant to the European Commission’s Action Plan for Affordable Energy?

Network charges finance the operation and upgrade of the power grid. ACER has repeatedly flagged that, for EU competitiveness, network costs need to be contained as they are one of the main drivers of electricity costs.

Action 1 of the European Commission’s Action Plan for Affordable Energy (February 2025) is to make electricity prices more affordable. The ACER tariff practices report, which emphasises fair and cost-reflective electricity network tariffs, is timely as the European Commission puts forward (Q2 2025) a design of tariff methodologies for network charges to incentivise the use of flexibility and investments in electrification.

What are ACER’s key messages? 

• Getting the price signals right is key. As the energy transition advances, network costs are expected to rise (possibly to double by 2050) and account for a bigger share of the electricity bill (see ACER report on electricity infrastructure, December 2024). This calls for a regular ‘fitness check’ by regulators of network tariff methodologies. Ensuring the network tariffs send the right price signals optimises grid use and keeps network costs down.
• Containing the rise in network costs is important for EU competitiveness and affordable electricity. Future-proof measures should ensure all network users receive signals for flexibility and system efficiency, rather than unduly shifting costs among them.
• Network tariffs should be cost-reflective to encourage users to adapt their behaviour. Together with market prices, they provide a combined price signal, influencing users’ electricity generation and consumption patterns. 
• Two-thirds of EU countries have recently made (or plan to make) major revisions to their network tariff methodologies. Many of these changes align with ACER’s past recommendations (including increasing the use of power-based tariffs in alignment with the cost-causality principle, introducing time-of-use signals and removing unjustified discounts).
• Local power system context matters. No ‘one-size-fits-all’ solution can be easily found: this ACER report presents select national practices from which regulators can draw inspiration to increase system efficiencies and keep electricity network costs down, tailoring them to local needs.

ACER offers 10 principles for national regulatory authorities (NRAs) to consider when setting or approving their next electricity transmission or distribution tariff methodologies. These aim to:

• enhance transparency and comparability of network tariff methodologies;
• ensure non-discrimination among network users;
• promote cost-reflectivity and efficient price signals; and
• foster stakeholder engagement before major methodology revisions.

What are the next steps?

ACER will continue to facilitate the exchange of best practices among NRAs, engaging closely with stakeholders to gain valuable insights.  

ACER stands ready to support the European Commission as it develops its guidance on the design of electricity network methodologies (2025) and its Electrification and Grids Package (2026).

ACER kicks off its 2025 Monitoring Report series with key insights into the EU energy markets, highlighting major developments in 2024, and examining the interplay between gas and electricity markets in the energy transition.

What are the key findings?

The report highlights progress towards Europe’s transition to clean energy, persistent challenges (such as high and volatile energy prices for European consumers and businesses), and how to address them. It sets out ACER’s recommendations on how Europe can unlock a clean, secure and competitive energy future.

• 2024 recorded the lowest energy prices since 2021, but with noticeable regional differences. Gas prices averaged 34 €/MWh and electricity averaged 81 €/MWh. The surge in negative and very low prices in 2023 intensified in 2024.
• Energy market prices remained volatile (but less extreme than during the crisis), driven by gas supply risks and renewables’ variability. Frequent swings in electricity prices (within a day) persist – on 70% of days, electricity price variations within the day reached 50€ or higher. Electricity price swings reveal a need for more short-term flexibility.
• Renewables grew significantly, accounting for 35% of power generation. Solar power confirmed its leading role in the energy transition whilst nuclear and hydro came back.
• Europe’s clean energy transition faces persistent challenges. Gas supply risks and unpredictable weather later in the year kept market prices volatile. In December, a ‘dunkelflaute’ episode in Germany sent electricity prices to nearly 1,000 €/MWh (far above the 81 €/MWh annual average). 
• Gas as a flexibility provider. Fossil fuels, especially gas and coal, remain essential for meeting peak electricity demand.

ACER’s recommendations to address these challenges:

For decarbonisation and global competitiveness, Europe must place renewed effort on further expanding EU energy market integration, enhancing energy efficiency, and driving power grid innovation:

• Target new transition cost drivers: Network costs are at risk of doubling by 2050. Enhancing grid capacity (rather than new build) is part of the solution. Better network tariffs and 'efficiency first' incentives to prevent stranded assets play an important role. Ensure capacity, flexibility, and renewables remain affordable while securing long-term supply.
• Harness energy efficiency and flexibility: Use demand response, electric vehicles (EVs), and batteries to balance supply and demand, cut price swings, and strengthen grid resilience, especially at peak times.
• Expand energy market integration: Support cross-border renewable use for flexibility and security. Strengthen interconnections to cut fossil fuel reliance and build trust in Europe’s energy markets.

Looking ahead 

In its 2025 Monitoring Report series, ACER will continue to pave the way for a clean, secure and competitive energy future by shedding light on:

• strengthened cross-border cooperation;
• energy transition monitoring; and
• efficient grid investment.

Upcoming reports:

• ACER's Monitoring Report on removing barriers to demand response (to be published here on 8 April).
• ACER’s report on EU electricity tariff practices (coming on 26 March).

In October 2024, ACER published its assessment on the need to develop Power Purchase Agreement (PPA) contract templates in the EU energy markets, concluding that existing templates, developed by industry associations and national bodies, are largely sufficient for current market needs.

To support market participants and facilitate PPA contracting, ACER has committed to gathering and publishing a list of publicly available templates on its website.

What are PPAs?

PPAs are contractual arrangements between electricity producers (often renewable energy generators) and buyers. By providing renewable electricity at mutually agreed rates, these contracts foster stability for both parties and promote renewable energy sources (RES).

Share your template!

ACER invites stakeholders to submit their PPA templates (not actual contracts), along with the following information:

• Organisation name.
• Link to the online template (do not submit PDFs or Word documents).
• Functional email address.
• Date of the last update.
• Jurisdiction, applicable legal basis and any comments.
• Language of the template.

Please submit the requested information to PPA.assessment@acer.europa.eu by 11 April 2025.

What are the next steps? 

After the deadline, ACER will publish the collected templates and continue to update the list throughout the year.

Today, ACER publishes its second monitoring report on the reporting obligations of Regional Coordination Centres (RCCs).

Regional Coordination Centres (RCCs) were introduced in 2022 under the Electricity Regulation to facilitate coordination among electricity transmission system operators (TSOs) across regions. Their aim is to enhance grid stability, foster security of supply, and contribute to the EU’s climate and energy goals.

As part of their reporting obligations, RCCs are required to detail the outcomes of their activities, including:

• operational performance monitoring;
• coordinated actions;
• issued recommendations; and
• designated tasks.

What is ACER’s report about?

Since 2023, ACER has been monitoring RCC reporting, as required by the ACER Regulation.

ACER’s second monitoring report provides an overview of how RCCs fulfilled their reporting obligations in 2023, their first full year of operation. The report was drafted in close cooperation with national regulatory authorities (NRAs), with input from the European Network of Transmission System Operators for Electricity (ENTSO-E) and RCCs.

What did ACER monitoring find? 

RCCs provided detailed reporting on nine out of sixteen tasks:

• coordinated capacity calculation;

• coordinated security analysis;

• common grid model;

• consistency defence and restoration plans; 

• short-term adequacy;

• outage planning coordination;

• training and certification; 

• post-disturbance analysis; and 

• regional sizing of reserve capacity.

ACER finds that, compared to their initial period of operation (i.e. the second half of 2022, where no tasks were fully implemented by all RCCs), important progress was made. Specifically, all RCCs reported having implemented four tasks: 

• common grid model;
• post-disturbance analysis;
• outage planning coordination; and
• short-term adequacy.

Additionally, coordinated capacity calculation is now operational in most RCCs, though further development is needed for long-term timeframes.

RCCs reported challenges in the performance of some of their tasks, including:

• coordinated capacity calculation (e.g. missing or invalid TSOs’ inputs);
• coordinated security assessment and outage planning coordination (e.g. inadequate IT infrastructure);
• common grid model (e.g. performance issues); and
• post-disturbance analysis (e.g. communication issues).

What does ACER conclude?

ACER encourages RCCs to:

• Ensure swift implementation of their tasks.
• Clarify how responsibilities are rotated among RCCs.
• Improve the performance of the common grid model task and regularly report on any obstacles encountered.
• Extend capacity calculation to cover all timeframes (including long-term and balancing timeframes). 
• Broaden outage planning coordination to include power-generating modules and demand facilities.
• Assess whether relevant RCCs can contribute to the system monitoring of TSOs where necessary. 
• Improve the quality of RCC reporting by providing more detailed and clear information.

What are the next steps?

The next ACER monitoring report is scheduled for late 2025 and will cover the 2024 reporting period (monitored by ACER during 2025).

ACER publishes today its annual report on the implementation of the Inter-Transmission System Operator Compensation (ITC) mechanism for 2023. 

What is the ITC mechanism?

The ITC mechanism, coordinated by the European Network of Transmission System Operators for Electricity (ENTSO-E), compensates transmission system operators (TSOs) for the costs of hosting cross-border power flows, including power losses and infrastructure investments. This compensation is financed through the ITC Fund, also managed by ENTSO-E. European TSOs contribute and receive money from the ITC Fund depending on how much electricity they import and export across national borders, as well as on the volume of transits they carry through their networks. 

The ITC mechanism is part of Europe's electricity infrastructure cost-sharing framework, which also includes cross-border cost allocation and congestion income distribution. In 2023, 35 parties participated in the mechanism, covering most of Europe.

ACER is responsible for overseeing the yearly implementation of the ITC mechanism and reporting its findings to the European Commission.

What are the report's key findings? 

• In 2023, the ITC fund reached a record high of nearly €1.24 billion, marking the fifth consecutive year of record values, with a 105% increase compared to 2022.

• The cost of power losses varied significantly, ranging from €56 to €400 per MWh, due to different procurement strategies and hedging instruments. These differences raised concerns about fairness for consumers.

• The average cost of losses rose by 165% (reaching €202 per MWh), with one third of ITC parties experiencing three- to six-fold increases in their losses, because of unprecedented heights and volatility of electricity wholesale prices in 2021, 2022 and 2023.

• Denmark, Austria, Switzerland, Poland, Slovakia and Czechia received over 75% of the total net compensation, while Italy and Norway paid more than half of the total net contributions.

• Perimeter countries (non-participating countries connected to the ITC parties’ networks), including Belarus, Morocco, Russia, Turkey, Ukraine and Moldova, contributed €16.7 million to the fund.

• Errors in Austria's electricity load data caused incorrect compensations for 2022 and 2023, leading to voluntary corrective payments by 20 ITC parties. 

• ENTSO-E improved its audit process by incorporating ACER data, enhancing transparency and raising data quality standards for both EU and non-EU ITC parties.

What are the next steps?

ACER reiterates its recommendations for further improving the ITC mechanism, including:

• incorporating more granular information on the measured volume of losses;

• implementing ex-post reconciliation of loss costs; and

• using forward markets to determine the value of losses when their valuation and coverage are market-based. 

Finally, ACER acknowledges that the current ITC mechanism, particularly its infrastructure fund, together with cross-border cost allocation and congestion income distribution does not fairly distribute the costs and benefits of cross-border electricity trade in Europe. ACER sees the need to review existing mechanisms to share costs and benefits of electricity network infrastructure arising from cross-border trade.

Access all ACER ITC monitoring reports.

On 7 March 2025, ACER submitted its proposal for a new EU-wide network code on demand response to the European Commission. This is the result of close collaboration with network operators and extensive consultation.

What is demand response?

Demand response is when consumers (retail and industrial) intentionally adjust their electricity consumption in response to a change in the electricity market price or a financial incentive to increase/decrease/shift the timing of their electricity consumption. This can be done for the purpose of balancing supply and demand or for solving congestion in the grid. For example, retail consumers can provide balancing services through bi-directional charging of their electric vehicles (EVs). Demand response development will enable lowering electricity supply costs (which are a key driver of electricity bills).  

Demand response in electricity markets is increasingly important to support more variable renewable generation such as wind and solar (with variable output that must be balanced), being added to the power grid. 

Why does this network code matter?

This network code will ensure that demand response resources (such as consumers, storage providers, and distributed generation) can fully participate in wholesale electricity markets, providing much needed flexibility to an evolving power system driven by renewable energy and thereby contributing to energy security and the transition to clean energy. 

To achieve this, the network code and the related amendments to existing regulations (balancing, system operation, and demand connection) cover four main areas:

• Market access: The new EU-wide rules will make it easier for smaller energy players to participate in electricity markets. A new European registry will standardise how demand response is measured, ensuring fairness and consistency.

• Service provider qualification process: New measures will make it easier for all resources to provide services to system operators, with simpler prequalification, product verification, and a national system for managing participation.

• Procurement processes: Clear rules will ensure that system operator services (such as congestion management and voltage control) are procured transparently and efficiently, with any exceptions to market-based methods requiring justification. Guidelines will also prevent distortions between different electricity markets.

• System operators’ coordination: Stronger collaboration between distribution and transmission system operators will help integrate more renewables, address congestion and voltage control issues, and prevent system disruptions. Clear rules will ensure that actions in one part of the system do not create problems elsewhere.

The process

In May 2024, ACER received the electricity system operators’ (EU DSO Entity and ENTSO-E) proposal for the draft network code, including the amendments to the three related electricity regulations. ACER revised the draft and consulted on it in autumn 2024. After making final amendments, ACER now submitted its proposal to the European Commission. 

What are the next steps?

The Commission will review the proposal and initiate the process of establishing the Demand Response (DR) Regulation and amending the three related regulations. Once adopted by Member States, these will become legally binding across the EU.

Get involved!

ACER will hold a webinar on 27 March 2025 to present its proposal for the network code on demand response, along with amendments to the three related electricity regulations. Register for free here.

Today, ACER releases its report on the Hungarian gas transmission tariffs directed at Magyar Energetikai és Közmű-szabályozási Hivatal (MEKH), the national regulatory authority (NRA) of Hungary.

The report assesses whether the proposed reference price methodology (RPM) complies with the requirements of the Network Code on Harmonised Transmission Tariff structures (NC TAR). 

What is the proposed RPM about?

The NRA proposes to:

• Apply a postage stamp RPM complemented by a 90% discount at entry points from storage and 100% discounts at exit points from storage. It also suggests applying a 50/50 entry-exit split but is open for adjustments within a 40/60 to 60/40 range subject to stakeholder feedback.
• Adopt an in-kind flow-based charge (commodity-based tariff). However, taking into consideration inputs received from stakeholders, MEKH already informed ACER about its intent to switch back to a monetary flow-based charge (already in place since 2021).
• Introduce two non-transmission services, respectively for gas odorisation and for connecting users to the network. 

What are the key findings? 

After analysing the consultation document, ACER concludes that: 

• The RPM largely complies with requirements set in Article 7 of the NC TAR. 
• ACER could not assess the compliance of the proposed flow-based charge, as the relevant NRA decision is only available in Hungarian. However, given MEKH’s intent to switch to a monetary flow-based charge, ACER referred to its 2021 analysis, assessing the compliance of the tariffs proposed at that time.
• The proposed non-transmission services also comply with EU rules. 

What does ACER recommend? 

ACER recommends that the NRA, when adopting its final decision:

• Ensure the compliance of the commodity-based tariffs with the NC TAR, particularly considering that the monetary flow-based charge will be applied instead of the in-kind one (e.g. stakeholders were consulted upon the latter, but not the former).
• Reconcile the proposed non-transmission services as required by Article 17(3) of the NC TAR.

See all ACER reports on national tariff consultation documents.