ACER (an EU Agency) is a valued partner to the EU Institutions providing data, insights and advice on the regulatory aspects of the Green Deal:

1. ​Regulating hydrogen and power-to-gas in the context of the Commission's Hydrogen Strategy for a Climate-Neutral Europe and the Strategy for Energy System Integration 
2. ​​Revising TEN-E Regulation (a legislative Initiative on energy infrastructure)
3. ​Offshore Renewable Energy Strategy

Hygrogen and Power to Gas​​

ACER and CEER have developed a series of European Green Deal Regulatory White Papers to increase public understanding on key regulatory aspects and to assist the European Institutions as part of the preparations for legislation.​

TEN-E Regulation

The Trans European Network-Energy (TEN-E) Regulation is the EU framework for planning and supporting cross-border energy infrastructure.

The European Commission proposal (December 2020) on the TEN-E Regulation revisions seek to modernising the TEN-E framework, reflecting the Green Deal objectives and making it fit for the infrastructure needs of the sustainable energy system of the future. 

As input to the European Commission's review of the TEN-E Regulation, in July 2019, regulators set out 18 recommendations on how to improve the TEN-E Regulation and energy infrastructure governance in the ACER-CEER Position Paper on Revision of the Trans-European Energy Networks Regulation (TEN-E) and Infrastructure Governance.

ACER and CEER see scope​ to further improve the Commission's proposals (December 2020)​.
 

Off-shore wind

The European Commission in its Offshore Renewable Energy Strategy has set a massive goal of increasing offshore wind capacity from 12 GW to 300WG in 2050.

It is important to facilitate the deployment of hybrid projects - combining power, storage and/or electrolysis - such as cross-border offshore windfarm projects (that also function as interconnectors) to enable the massive four-fold increase in offshore wind to 60 GW in 2030 and to 300GW by 2050.

A coordinated offshore strategy builds mutual reliance across EU Member States with cooperation needed on multiple aspects e.g. planning, governance, optimisation, plus potentially also proving an ill-fit over time with national energy or renewable strategies (risk of accounting or methodological rigour becoming aims 'in their own right').

Successfully scaling offshore is inextricably linked to Europe's infrastructure challenge and hence touches upon many elements of ACER's core work such as bidding zones, European infrastructure Projects of Common Interest (PCIs) and how to allocate costs (Cross-border cost allocation (CBCA).

This level of ramp up requires the right legal regulatory framework.  ACER notes that the European Commission's TEN-E proposal excludes ACER from off-shore network development process. Furthermore, it detaches off-shore network development from on-shore (through separate network development plans, run in different cycle lengths). 

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​​Energy System Integration

The decarbonisation of the energy system requires an increasing level of integration between its various components.

Energy system integration refers to the planning and operation of the energy system as a whole - across multiple energy carriers (e.g. electricity, gas, heat), infrastructures, and consumption sectors (industry, buildings, transport) - by more strongly linking them with the objectives of decarbonisation, energy efficiency, affordability and reliability of the energy system.

The European Green Deal is Europe's growth strategy to make its economy more sustainable.

This ambitious Green Deal strategy aims to make Europe “climate neutral" by 2050. This means “net-zero" emissions.

Energy accounts for more than 75% of the EU's greenhouse gas (GHG) emissions. Decarbonising the energy sector forms the backbone of the Green De​al and ACER's work is highly relevant.​

The Green​ Deal sees as key parts of the decarbonisation solution:​

• A massive increase in renewables (i.e. sustainable electricity)

• Increased electrification (i.e. using sustainable electricity to then decarbonise other sectors such as transport and heating)

• Sustainable or low-carbon hydrogen (for “hard to decarbonise" sectors) ​​

The Green Deal introduces concepts which until recently were not part of most policymakers' vocabulary: e.g. Climate Neutrality, Power-to-Gas, Energy System Integration, Sustainable Taxonomy. ​

Check out ACER's Green Deal Glossary.​ 

ACER, as an EU Agency, significantly contributes in two main ways to Europe's Green Deal objective and the broader energy and decarbonisation objectives set at political level​:

1. ​delivering on our core regulatory mandate which are rooted to Europe's (2019) Clean Energy laws. 

2. ​providing advice and expertise to Europe's co-legislators on key Green Deal energy files​. See also the ACER-CEER Green Deal Regulatory White Papers.​

Article 1 of the ACER Regulation in referring to the establishment and objectives of ACER explains that ACER contributes “to the consistent, efficient and effective application of Union law in order to achieve the Union's climate and energy goals".

The Agency (and national energy regulators) play a pivotal role paving the way to decarbonise the economy at least cost to consumers by facilitating:

• the massive increase in renewables that is needed (about 3 times the current renewable capacity base) to decarbonise the power sector

• increased electrification of sectors (e.g. heating and transport) previously powered by fossil fuels (e.g. the regulatory treatment of EV charging stations)

• the growth of a competitive renewable/low-carbon hydrogen market  for energy-intensive or “hard to abate" emissions sectors (like aviation or chemicals)

• more “flexibility" in the energy system (e.g. storage and Electric Vehicles (EV)) to enable a big shift to renewables. Put simply, more wind and solar is not enough. Storage (e.g. batteries, hydrogen storage) and adapting consumption are two examples of flexibility that is needed to plug the gaps when there is too much/little sun and wind.

• empowering consumers (enabled through technology) to actively contribute to the transition (transforming how we use and generate energy, how we move around, and heat our homes) through smart homes, microgeneration and EV charging stations. The Agency's mandate was extended under the Clean Energy legislation to monitor compliance with the new consumer rights as well as monitoring electricity and gas wholesale and retail markets.

Alongside decarbonisation, ACER must also ensure that the European energy market is fully integrated, interconnected and digitalised to maintain security of supply. With energy identified as a critical sector in terms of cyber security, ACER plays a key role in electricity cybersecurity resilience and thus contributes to the wider EU cybersecurity strategy.

Europe's decarbonisation objective cuts across ACER work.

ACER pushes low-carbon solutions through market design and well-regulated markets and networks.

Energy and climate are linked. Energy accounts for > 75% of Europe's Greenhouse Gas (GHG) emissions. The framework in Europe has evolved.  Europe has a 2020 climate and energy framework, a 2030 climate and energy framework, and now a 2050 climate neutrality objective.

Europe's (2019) Clean Energy laws facilitate the “clean energy transition" away from fossils towards a more sustainable energy. A core focus of ACER's work is implementation of the Clean Energy laws.​ ACER, an EU Agency, contributes from a regulatory perspective, to the implementation of the European Union's Green Deal and the broader energy and decarbonisation objectives set at political level.​

ACER drives the decarbonisation of the energy sector by:

• Developing, implementing and monitoring the Network Codes – the binding EU-wide rules governing the electricity and gas sector. Why? Completing a well-functioning “Internal Electricity Market" is key for sustainable, reliable and affordable energy.

• Ensuring the electricity market rules and design (originally not intended for large amounts of renewables) are “fit for purpose" to integrate the massive expansion in renewables. In particular:

• • ACER is reviewing the functioning of the real-time (intraday and balancing) electricity markets, to improve market access to renewables and help improve forecast accuracy and reduces balancing needs.​

• ​Ensuring the electricity market design foster all sources of flexibility (e.g. flexible storage, aggregators)
   
• Integrating national energy markets into a single European-wide market. An integrated electricity market allows electricity to move freely across borders and delivers benefits to generators (bigger market), operators (reducing the costs of balancing, reserves and system operation) and citizens (who have access to competitive markets and secure supply).
   
• Monitoring how markets are functioning and how national network tariffs can be structured to better suit the energy transition (e.g. incentivising grid companies to find the cheapest sources of flexibility and consumers to align their energy use with flexibility needs).
   
• Building cost-efficient infrastructure (e.g. to bring cheap offshore wind to consumers) based on robust regulatory scrutiny (and not building at any cost).
   
• Maximising the interconnection capacity made available to the market for trading so consumers can chose from the cheapest and lowest emitting power available across Europe.
   
• Cooperation and dialogue among relevant stakeholders e.g. to deliver on the envisaged level of off-shore wind requires cooperation among Member States, project developers, network operators etc.

The timely implementation of the necessary electricity transmission infrastructure in Europe is crucial for an efficient EU energy market and to facilitate the integration of increased renewable power generation in view of the decarbonisation objectives.

The projects' progress may defer from what was previously planned for various reasons. It is important to differentiate between delayed and rescheduled investments:

• A delayed investment means that it is still needed at the expected date, but it cannot be delivered on time because of external factors (e.g. environmental, permit granting or legislative reasons) or

• A rescheduled investment is voluntarily postponed by a project promoter due to changes of its external driver (e.g. lower demand, less urgent need or priority to other transmission solutions).​​

ACER is responsible for monitoring the implementation of investments to create new interconnection capacity as well as the Ten Years Network Development Plans' (TYNDP) progress.

If any inconsistency is found, ACER makes recommendations to the transmission system operators, national regulatory authorities or any other competent bodies concerned. The ACER monitoring of the implementation of investments in electricity transmission networks evaluates the following fundamental aspects: expected benefits, costs, increase of transfer capacity, and the status and time-progress of each investment.

​ACER found that several TYNDP investments encounters delays over time, most frequently due to permit granting reasons and even more have been rescheduled by the promoter. ACER also finds that a number of interconnectors have different investment status across the border, which could point to limited cross-border coordination among the parties.​

Development of the electricity transmission networks is crucial for market integration, security of supply and sustainability in Europe. The EU-wide Network Development Plan (EU TYNDP) developed by ENTSO-E is a major tool for coordinated and efficient network planning. However, given its non-binding nature, the TYNDP implementation strongly depends on National Development Plans (NDP).

This highlights the need for an efficient two-way interaction between the NDPs and the TYNDP.​

ACER assesses the consistency of the NDPs with the EU TYNDP. In case ACER identifies inconsistencies between the two, ACER recommends appropriate amendments. 

ACER found a growing consistency of the NDPs with the EU TYNDP over time. Yet, it identified that some of the national practices may negatively impact the robustness, credibility and transparency of the NDPs or they could result in inconsistencies with the EU TYNDP.

Therefore, ACER advised a number of measures to be pursued by the responsible parties when developing, reviewing or adopting the NDPs.​​​

Every two years, the European Network of Transmission System Operators for Electricity (ENTSO-E) adopts a non-binding Union-wide ten-year network developme​​nt plan ​(TYNDP), including a European generation adequacy outlook.

The TYNDP plays a central role in the development of electricity transmission infrastructure in Europe, which is needed for achieving the European policy goals.

The main objectives of the TYNDP are:

• to identify investment gaps, including cross border capacities

• to contribute to a sufficient level of cross-border interconnection and non-discrimination, effective competition and the efficient functioning of the market

• to ensure a greater transparency of the European electricity transmission network.

The TYNDP prepared by ENTSO-E builds on national investment plans prepared by the transmission system operators (TSOs) and takes into account the regional investment plans, published every two years.​

ACER is responsible for:

• Providing an opinion on the contribution of the TYNDP to ENTSO-E, the European Parliament, Council and Commission, whenever ACER considers this draft is not contributing to the market's transparency and effective competition.

• Assessing the consistency between the European TYNDP and the national plans. If inconsistencies are found, ACER recommends amending the national plan or the TYND.

• Monitoring the implementation of the TYNDP, after its positive evaluation. If ACER identifies inconsistencies, it investigates the reasons and makes recommendations to TSOs, NRAs and other competent bodies, in order to contribute to the investments' implementation.

In its latest Opi​nions (April 2023), ACER acknowledges the difficulties arising from the TYNDP process and welcomes a number of improvements in the draft 2022 electricity TYNDP.

However, significant steps forward are still needed, and for this purpose ACER recommends ENTSO-E to:

• Make all relevant inputs accessible in a clear and straightforward format as part of the 2022 final electricity TYNDP publication.
• Provide transparency on how the investment costs for the needs identification were derived by distinguishing between internal reinforcements and overall project costs.
• Publish for each cross-zonal boundary and each flow direction the transfer capacities of the current grid, starting grid (for the purpose of needs identification) and of the reference grid for 2030 and for 2040.
• Use the 10,000 EUR/MWh Value of Lost Load (VoLL) where no specific data is available.
• Explain how an assessment of resilience, if any, was carried out in the 2022 final electricity TYNDP (potentially including improvements for future TYNDPs).
• Review and eliminate the project-specific inconsistencies reported in ACER Opinion on electricity projects and consider the differences identified by national regulators between the NDPs and the 2022 draft electricity TYNDP.

Also, specific recommendations to ENTSO-E on a substantial improvement of future TYNDPs are provided, inter alia:

• Restructure the TYNDP development process in order to complete it by December of the TYNDP year (considering also ACER’s opinion).
• Conduct a substantial consultation of the important methodological elements and parameters considered in the various deliverables of the TYNDP early enough in the process to have the capability to consider stakeholders’ comments.
• Calculate the benefits of projects according to all the joint scenarios developed by ENTSOs, and for all relevant time horizons to ensure adequate consideration of uncertainty.
• Base the modelling of the grid on an appropriate starting grid (for the needs exercise) and reference grids (for the CBA assessments) by including only the projects which strictly comply with the rules set in the respective implementation guidelines.
• Calculate the additional transfer capabilities of each project (and not leave this task to the promoters themselves), perform the calculations with more granularity (e.g. calculate at least seasonal NTCs) and improve their transparency.
• Consider the impact of the 70% interconnection capacity availability targets where relevant in the modelling of the power system for the development of the TYNDP.
• Enhance the consistency between the NDPs and the EU TYNDP by implementing the measures recommended in the ACER Opinion on electricity projects.

​​​​​Network development scenarios represent visions of the future, according to which the assessment of projects’ benefits is made using the CBA. The TEN-E Regulation defines which variables should comprise scenarios for electricity and gas. The European Network of Transmission System Operators (ENTSOs) are responsible for developing common network development scenarios for gas and electricity. 

​Every two years, ACER provides an Opinion on the draft TYNDP, encompassing our views on scenarios either as its integral part, or through a separate, dedicated opinion on scenarios. ​

In its latest Opinion (July 2022), ACER identified some key issues, namely:

• the absence of long term effects on the European energy markets caused by the Russian invasion of Ukraine (e.g. effects on the gas prices, the location of gas sources, the speed-up of renewable energy sources (RES) intake, etc.),

• the (recurrent) lack of a common “slow economic development” scenario (describing how the energy system is to develop under less favourable economic conditions),

• the need to further clarify the connection between various scenarios (to enable a better understanding of diverse scenarios’ results).

ACER suggests that the diversity of scenarios should be better addressed in the new Scenario Guidelines.

However, ACER further notes the consequences of the Russian invasion of Ukraine should be included in the analysis of ENTSOs’ final report for 2022, as it could have a significant effect on the 2022 TYNDPs and subsequent PCIs selection.

When developing new networks, setting up an appropriate and transparent cost estimation plays a key role. Using the reference values of specific costs can significantly facilitate many processes, increase their credibility and enable reliable comparisons at European level.

Pursuant the TEN-E Regulation (Article 11(9)), every three years ACER shall establish and publish a set of indicators and corresponding reference values for the comparison of unit investment costs (UICs) for comparable projects of the energy infrastructure categories included in Annex II.

ACER shall publish the first indicators for the infrastructure categories set out in points (1), (2) and (3) of Annex II by 24 April 2023. These reference values may be used by the European Network of Transmission System Operators for electricity (ENTSO-E) and gas (ENTSOG) for the cost-benefit analyses carried out for subsequent Union-wide ten-year network development plans (TYNDP).

These indicators and reference values can be used for preparation of the TYNDP, for assessment of the projects of common interest (PCIs) and their selection for the PCI list, for developing cross-border cost allocation (CBCA) decisions and many other analyses. This time UICs indicators have been established for the electricity infrastructure category and corresponding assets, based on data (and it’s robustness) provided by project promoters.

The unit investment costs values for indicators provided are: average, median, first and third quartile UIC indicator.

Would you like to know more?

Take a look at our report on UICs of European energy infrastructure and watch the recording of our workshop on the same topic. 

According to new TEN-E regulation, ACER shall publish the first indicators for the energy infrastructure categories concerning large electrolyser facilities and carbon dioxide by 24 April 2025.

For the purpose of data collection, ACER will request project promoters to provide data on the commissioned projects every three years. Based on data received ACER will establish and publish a set of indicators and corresponding reference values for the comparison of unit investment costs for comparable projects of the energy infrastructure categories.

The Regulation on guidelines for trans-European energy infrastructure ('TEN-E Regulation') foresees the development of a harmonised EU-wide methodology for cost benefit analysis (CBA) of projects included in the future Ten Year Network Development Plans (TYNDP), and for selecting the Projects of Common Interest (PCIs) and Projects of Mutual Interest (PMIs) at European level. 

The Regulation also foresees the use of this methodology for deciding on the cost allocation of cross-border infrastructure projects (CBCA). The CBA methodology is developed and improved over time by ENTSO-E and is approved by the European Commission. ​

Whenever an updated CBA methodology is proposed by ENTSO-E, ACER provides an opinion on it to ENTSO-E. ​

In its latest Opinion, ACER notes improvements, which include:

• the assessment of hybrid offshore projects (i.e. grid projects that serve a dual purpose, to connect offshore generation and interconnect two bidding zones);
• the definition of the reference grid; and
• the assessment of projects’ commissioning dates and the commissioning year of projects involving multiple investments.  

However, important shortcomings are also identified, such as the need to extend the analysis of security of supply by considering future extreme weather events, to simplify the assessment of hybrid offshore projects, to foresee the identification of beneficiaries and cost bearers at national level, and the lack of concrete methodologies for the assessment of ancillary services’ benefits.

ACER urges ENTSO-E to adapt the draft CBA Guideline in line with the considerations included in its Opinion before submitting it to the European Commission for approval. ​​

Developing new networks in Europe in order to facilitate cross-border flows requires a close coordination of several processes and actors.

A common EU-wide Cost-Benefit Analysis methodology was developed by ENTSO-E to be used for infrastructure projects assessment, and it is reviewed when needed. 

Every two years, based on the scenarios on the future state of the electrical system, ENTSO-E assesses the projects included in the EU-wide Ten-Year Network Development Plan (TYNDP). ​

ACER is strongly involved in all network development aspects, assessing not only the methodologies and guidelines developed by ENTSO-E for the various elements of the TYNDP, but also how they are implemented for the project assessments in the TYNDP. The Agency also verifies the consistency of the TYNDP with national development plans and provides an overview of related infrastructure reference costs. ​

Significant enhancement in electricity grid capacity is needed to realise Europe’s decarbonisation objectives and ensure a high level of security of supply. New grid build-out is just one way and proving to be the costliest way to do it. Despite their advantages, innovative solutions are not yet spearheading investment choices.

In the context of the European Commission’s EU Action Plan for Grids, ACER is looking at best practices to promote smart grids and network efficiency technologies through tariff design. 

ACER has thus commissioned the Florence School of Regulation (FSR) to conduct a study on existing regulatory frameworks and how regulators could incentivise a more efficient use of existing and future electricity grids.

Building on the previous research conducted by FSR on behalf of ACER, the report presents a new regulatory scheme which focuses on the value projects bring (i.e. benefit) and not on their costs. By sharing this benefit between the grid user and grid operator, a stronger incentive for technology-neutral solutions is created while mitigating the tariff increase (in comparison to the business as usual, e.g. investing into infrastructure alone).

Maximising cross-zonal trading opportunities is a core element to ensure an efficient internal electricity market. It is also important for meeting a number of future challenges in Europe's energy trajectory, including the decarbonisation targets.

The Clean Energy Package offers a new opportunity to increase the capacity offered for cross-zonal trade. In particular, Transmission System Operators are required to ensure that at least 70% of the transmission capacity is offered for cross-zonal trade, while respecting operational security limits. ​

For more information about the 70% minimum target, read our dedicated Q&A. 

The minimum 70% target has become a key element of market integration, which requires intensive monitoring. To ensure a harmonised approach on how to monitor the achievement of the minimum level of available cross-zonal capacity (MACZT), ACER is monitoring the MACZT in relation to the 70% target.

The results are published yearly in dedicated reports.