The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today a decision approving the harmonised allocation rules for long-term transmission rights (HAR) proposed by all Transmission System Operators (TSOs) for electricity. These rules should ensure a transparent and non-discriminatory capacity allocation of long-term transmission rights to all market participants.

The HAR entail a uniform set of forward market rules for the whole EU that promotes the development of a liquid and competitive market, while providing market participants with equal opportunities to hedge their risk associated with cross-zonal electricity trading.

What common requirements do they set?

The HAR set out common requirements for participation in auctions, provide details on collaterals, specify the organization of auctions, specify the returns and transfers of long-term transmission rights, determine the rules for remuneration and compensation of long-term transmission rights, determine the fallback procedures, describe the principles of invoicing and payments and other related aspects needed for a proper functioning of forward capacity allocation.

The principles set out by the HAR will be applied together with the regional annexes that are approved by the concerned regulatory authorities. These annexes may introduce regional or bidding zone border specific requirements describing a particular type of long-term transmission rights, their remuneration regime, alternative fallback mechanism and compensation rules defining regional firmness.

Access the decision.

On 16 November 2021, the EU Agency for the Cooperation of Energy Regulators (ACER) received a proposal from the European Network of Transmission System Operators for Electricity (ENTSO-E) for the first pan-European resource adequacy assessment (ERAA 2021). The purpose of the assessment is to monitor the risks to security of electricity supply and identify adequacy concerns.

​​​Following the approval of the ERAA methodology in October 2020, ENTSO-E needs to carry out an annual ERAA to assess whether the EU has sufficient electricity resources to meet its future demand. ERAA describes the expected level of security of supply for a ten-year horizon.

Member States set their own electricity reliability standards based on the value of lost load and the cost of new entry for generation or demand response. The reliability standard indicates the necessary level of security of electricity supply for a given Member State.

By comparing these results, ERAA aims to identify potential resource adequacy concerns in the EU and provide an objective basis for assessing the need for additional national measures ensuring security of electricity supply such as the introduction of temporary capacity mechanisms.

To date, ENTSO-E performed the European Mid-term Adequacy Forecast (MAF) with the same ten-year time horizon. Mandated by the Clean Energy Package legislation and based on ACER-approved methodologies, ERAA replaces the MAF and will be key in improving the monitoring of security of electricity supply in Europe.

In order to inform its assessment, ACER invites interested third parties to submit their observations by 7 December 2021 to ACER-ELE-2021-011(at)acer.europa.eu.

The deadline for ACER to reach a decision on ERAA 2021 is 17 February 2022.​

Access the related ACER public notice. 

The European Green Deal sets ambitious targets that require vast investments into the electricity network. Some estimates claim the sector will need to double the investments rate into new infrastructure to help enable the green transition.

While recognising different hurdles on this path, from financing to public acceptance, the EU Agency for the Cooperation of Energy Regulators (ACER) believes special focus should be given on how to facilitate the most efficient use of the existing grid and technologies. In this context, the regulatory framework has an important role to play in promoting innovative investments and providing the right incentives to increase the efficiency of the electricity transmission network and therefore unlock its full potential.

How can the regulatory framework incentivise smart investments?

ACER has inquired the role of regulation in incentivising smart investments to improve the efficient use of electricity transmission assets in a new position paper, published today.  

In its position paper, ACER:

• Recognises the need to improve incentives for innovative solutions, especially those focusing on network efficiency and bringing immediate benefits to end consumers.

• Acknowledges the traditional regulatory framework favours high cost solutions over less costly ones - therefore affecting the setting Transmission System Operators (TSOs)’ work in and influencing their choices.

• Suggests a paradigm shift promoting a benefit-sharing regime to complement the classical cost-based remuneration scheme of the rate-of-return regulation. This will improve the efficiency in the usage of existing infrastructure and provide the incentives to invest in innovative assets.

• Explores the potential introduction of Key Performance Indicators (KPIs) to measure, in a harmonised way across Europe, the impacts and benefits of TSOs investments, as well as of KPI-based incentives to sustain innovative solutions.

What are the main conclusions?

ACER concludes the introduction of a benefit-based remuneration scheme can potentially represent a strong incentive for regulated entities to improve their efficiency, both when utilising future and existing infrastructure.

What comes next?

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Read ACER Position Paper to find out more.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its second report on the implementation of the EU Network Code on Harmonised Transmission Tariff Structures for Gas in Slovenia. In the report, ACER recommends that the Slovenian national regulatory authority for energy (NRA) improves the compliance of the reference price methodology with the requirements of the Tariff Network Code, including on transparency and on the choice of the cost drivers used to derive tariffs for all points of the network.

In addition, the Agency recommends that the NRA provides a clarification on the Transmission System Operator (TSO) revenue to be recovered through tariffs and on the reconciliation of past under-recoveries. This should improve transparency on the revenue to be recovered by the TSO and predictability on the calculation of future tariffs.

The recommendations made by the Agency aim at ensuring several requirements laid out in the Network Code, which relate to transparency, cost reflectivity and to preventing undue cross-subsidisation when setting transmission tariffs. These rules contribute to market integration, enhancing security of supply and promoting the interconnection between gas networks.

The Slovenian NRA shall take a motivated decision by 23 January 2022.

Access the report.

Find out more and access all ACER reports on national tariff consultation documents.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its report on  implementation of the Inter-Transmission System Operator Compensation mechanism (ITC) covering the year 2020.

In this latest edition, ACER notes the Inter-Transmission System Operator Compensation Fund amounted to 352.8 million Euros, reaching its highest ever value. The increase is mainly due to a significant increase (29%) of the losses volume due to transits in 2020 compared to 2019.

ACER also observes that after a gradual decrease of the weighted average of transmission losses costs in the period 2012-2017, it started to increase, reaching 51.21 EUR/MWh in 2020 (45% higher than its value in 2017).

In 2020, perimeter countries contributed with 10.8 million Euros to the Fund, reducing their contribution by almost 50% if compared with the previous year. This contribution is also the lowest value since the ITC Fund was established. ACER concludes this is due by the significant decrease in the volume of the scheduled flows between the Perimeter countries and the ITC parties in 2020 as well as the decrease of the Perimeter countries’ fee.

Access the Report. 

Background:

The Inter-Transmission System Operator Compensation (ITC) mechanism was established by the European Network of Transmission System Operators for Electricity (ENTSO-E) to compensate transmission system operators (‘TSOs’) for the costs incurred on national transmission systems due to hosting cross-border flows of electricity (‘transits’).

The ITC Fund is mainly a redistribution of yearly payments among the participating TSOs (‘ITC Parties’) who receive compensation from the ITC Fund based on the transits they carry and contribute to the ITC Fund based on their net import and export flows.

Non-participating countries connected to the ITC Parties’ networks (‘Perimeter countries’) pay a transmission system use fee for their scheduled imports from and scheduled exports to the ITC Parties’ networks.

The EU Agency for the Cooperation of Energy Regulators (ACER) today submitted to the European Commission its Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design.

The European Commission, in its “toolbox” Communication of 13 October 2021, tasked the Agency with carrying out an assessment of the current wholesale electricity market design by April 2022, and providing a preliminary assessment by mid November 2021.

What’s in ACER’s preliminary assessment?

The ACER Preliminary Assessment complements the analysis already presented in ACER’s Note on the High Energy Prices, published in October.

The Agency’s Preliminary Assessment:

• provides some key factors for the relatively uneven electricity price impacts across Member States, and shows how countries with high gas dependency and low interconnectivity were more exposed to high electricity prices;

• looks at how the move towards more spot pricing of gas in Europe (rather than long-term contracts) has yielded significant benefits over the past decade and how this relates to price volatility issues going forward;

• includes key characteristics of the current electricity market design, adding ACER’s initial perspective on certain price volatility issues, and (in light of the current political debates) on alternative market design approaches including the notion of possibly decoupling electricity market outcomes from gas price dynamics through price caps or technology-dependent average prices;

• adds the latest data and analysis from ACER’s energy market monitoring on related dynamics in the European electricity market; and

• provides an initial outline of ACER’s upcoming April 2022 assessment.

What to expect in the ACER April 2022 assessment?

In its broader assessment due in April 2022, ACER will provide an analysis of:

• the benefits and drawbacks of the current wholesale electricity market design and related matters;

• the issue of sufficient revenue certainty in electricity markets in view of the massive  investment needs up ahead; and

• the options for cushioning or shielding end-consumers from perceived excessive levels of price volatility that impact affordability.

What’s next?

ACER will hold a workshop with stakeholders in the first half of February 2022.

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Access the Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design.

The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on the proposal for the long-term capacity calculation methodology of the Core capacity calculation region (Core LT CCM) in cooperation with the regional regulatory authorities and transmission system operators (TSOs).

The Core region comprises of 13 countries: Austria, Belgium, Czech Republic, Croatia, France, Germany, Hungary, Luxemburg, the Netherlands, Poland, Romania, Slovakia and Slovenia.

The calculation methodology promotes effective long‐term cross‐zonal electricity trade by calculating reliable capacities and making them available to market participants at an early stage.

As such, long-term capacity calculation allows for long‐term planning and provides hedging opportunities.

In particular, the methodology will apply:

• in the yearly and monthly time frame

• a flow-based approach, compatible with the Core day-ahead capacity calculation methodology

• multiple grid scenarios for the calculation of flow-based parameters

• flow-based parameters for explicit flow-based long-term auctions

• in 3 years from now: starting from the yearly auctions for 2025 and the monthly auctions for January 2025

How did ACER contribute?

In April 2021, the Core regulatory authorities for energy asked ACER to decide on the methodology.

In the past 6 months, ACER has carried out additional analyses and consulted with relevant stakeholders to take an informed decision.

Following these consultations, the Agency has amended the initial Core TSO proposal to improve the efficiency, transparency and non-discrimination of the long-term capacity calculation process, as well as to ensure its compatibility with day-ahead and intraday markets.

Read more on the ACER’s Decision 14-2021 on Core LT CC methodology and its Annexes.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes an updated analysis on the implementation of the Grid Connection Network Codes, looking at the:

• Network code on requirements for grid connection of generators,

• Network code on demand connection, and

• Network code on requirements for grid connection of high voltage direct current systems and direct current-connected power park modules.

The latest editions of the Implementation Monitoring Reports concerning the Grid Connection Network Codes were published in December 2020. The analyses showed an overall satisfactory level of implementation, but also highlighted a few compliance issues in various Member States.

Following these publications, ACER requested regulatory authorities to provide an update of their national information (in particular those that were not compliant with the Grid Connection Network Codes).

The analysis published today provides an update based on the replies collected from the national regulatory authorities.

What are the latest findings?

ACER confirms the satisfactory implementation status as indicated in the previous reports. However, the analysis shows that only a few of the identified non-compliances have been addressed.

The report also outlines some key policy recommendations and invites relevant parties to ensure full compliance with the Network Codes. In particular, it emphasises:

• the importance of implementing the connection rules stipulated in the Network Code on requirements for grid connection of high voltage direct current systems, and

• the need for further actions to bring national legal frameworks into full compliance with the harmonized rules of the Grid Connection Network Codes.

Access the report.