The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today a methodological study to measure barriers to efficient price formation and easy market entry and participation for new and small players in the EU electricity wholesale markets. The study proposes a set of indicators and a methodology that will enable ACER to fulfil more effectively its new monitoring responsibilities set by the Clean Energy Package.

In particular, the study defines more than 70 indicators to be progressively included in future editions of the yearly ACER Market Monitoring Report (MMR) - Electricity Wholesale Market Volume. This will provide a comprehensive picture of the relative performance of the EU Member States in terms of efficient price formation and easy market entry and participation for new entrants and small actors.

The report describes:

• ​13 barriers to efficient price formation and nine barriers to easy market entry and participation for new entrants and small actors.

• More than 70 qualitative and quantitative indicators to measure these barriers.

• The methodology to combine these indicators and create two composite indicators:

  • ACER index on efficient price formation

  • ACER index on easy market entry for new players and small actors

• A pilot study conducted to test the data collection process, as well as the robustness of the composite indicators´ calculation tool.

The study has been conducted with the support of the consultancy DNV. Relevant inputs have also been collected from the National Regulatory Authorities (NRAs) and a wide range of stakeholders through a public consultation and a set of interviews.

ACER aims to enhance this methodology over the years by adapting some barriers and indicators proposed in the study and including new ones, as the market develops.

Access the study and read more about its main findings.

Background information

Following the adoption of the Clean Energy Package, ACER has expanded the scope of its monitoring activities. Among the others, ACER is required to monitor state interventions preventing prices from reflecting actual scarcity and regulatory barriers for new market entrants and smaller actors.

Furthermore, ACER is legally required to identify and report any barriers to the completion of the internal markets for electricity and natural gas. In order to fulfil this requirement, ACER produces an annual Market Monitoring Report. Its objective is to assess the functioning of the Internal Energy Market and to show how energy markets can work more efficiently.

The Market Monitoring Report comprises of three different volumes on the Electricity Wholesale Market, the Gas Wholesale Market, and the Retail Markets & Consumer Protection.​

Save the Date: The 2020 edition of the Electricity Wholesale Market and Retail Markets & Consumer Protection Volumes are upcoming in November 2021. Sign up to our Infoflash newsletter not to miss them.

The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on the proposals for market-based cross-border capacity allocation processes in the Baltic and Core regions.

These processes aim to maximise the welfare generated by the provision of cross-border capacities to the day ahead energy and balancing capacity markets.

In February 2021, the national regulatory authorities for energy from both regions have asked ACER to decide on the respective methodologies.

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

The Baltic region comprises of 6 countries: Estonia, Finland, Latvia, Lithuania, Poland and Sweden.

Two further proposals (submitted on a voluntary basis), respectively on the market-based cross-border capacity allocation process in the Hansa capacity calculation region (CCR) and on the regional cross-border capacity allocation process based on economic efficiency in the Core CCR, were withdrawn from the respective transmission system operators (TSOs).

Therefore, ACER will not take any decision on these two methodologies.

How did ACER contribute?

ACER revised both methodologies to improve the efficiency, transparency and non-discrimination of these capacity allocation processes for the exchange of balancing capacity or sharing of reserves.

Both ACER Decisions contribute to the integration of the balancing capacity markets by establishing the rules for allocating the cross-border capacity needed to facilitate the balancing capacity procurement at regional level.

Read more about ACER Decision 10-2021 on the Baltic CCR methodology and its Annexes.

Access ACER Decision 11-2021 on the Core CCR methodology and its Annexes.

Today, the EU Agency for the Cooperation of Energy Regulators (ACER) has published its non-binding Framework Guideline on sector-specific rules for cybersecurity aspects of cross-border electricity flows.

The Framework Guideline provides high-level principles for the development of a binding Cybersecurity Network Code that will further contribute to maintaining the security and resilience of the electricity system across Europe.

The Framework Guideline covers various security-related topics, such as:

• governance

• cross-border risk assessment & management (defining the scope of cross-border electricity flows’ cybersecurity risk assessment)

• a common electricity cybersecurity framework (defining both the basic and advanced lists of principles and requirements)

• information sharing and essential information flows

• incident handling and crisis management (including data collection)

• an electricity cybersecurity exercise framework

• protection of information exchange in the context of data processing

• monitoring, benchmarking and reporting

The journey towards a Network Code on Cybersecurity

In April 2021, ACER ran a public consultation for two months on the draft version of the Framework Guideline, inviting stakeholders to share their views on the document.

ACER received 42 responses to the consultation, the majority from energy industry companies or associations based within EU Member States.

The feedback collected showed:

• respondents welcome the draft Framework Guideline

• 88% believe the Framework Guideline contributes to further protecting cross-border electricity flows

• 65% say that there are still gaps concerning the cybersecurity of cross-border electricity flows, which the draft Framework Guideline proposal should address.

Main changes to the draft Framework Guideline

Following the feedback received, ACER revised the content of its draft Framework Guideline.

It now includes:

• An improved risk assessment methodology: tailored for the cybersecurity network code.

• A more balanced role and governance for ENTSO-E and the EU DSO entity in implementing the risk assessment of cross-border electricity flows, while reducing the role of Regional Coordination Centers.

• An updated verification methodology to prove compliance with a common cybersecurity framework: allowing the use of three different paths to verification (including certification, government inspection and peer review schemes).

• The possibility for Computer Security Incident Response Teams (CSIRTs) to withhold information from the information sharing network where dissemination is considered a risk.   

• The right for Cyber Security National Competent Authorities and national energy regulatory authorities to issue derogations for maximum two years for any entities that do not directly or indirectly affect cross-border electricity flows.

• A possibility for those stakeholders not listed as entities in scope of the network code to still be nominated and covered by it, e.g. small and micro entities.

What are the next steps?

ACER has now submitted the non-binding Framework Guideline to the European Commission.

As a next step, a specific drafting committee for the cooperation of ENTSO-E and the EU DSO entity will prepare a proposal for the network code based on the ACER Framework Guidelines. This proposal shall be submitted to ACER within 12 months after ENTSO-E receives the European Commission’s request.

ACER will then review the proposed network code to ensure compliance with its Framework Guideline and make sure it does not hamper market integration, nor the market’s efficient functioning.

ACER shall submit the revised network code to the European Commission within six months.

Would you like to find out more?

Framework Guideline on sector-specific rules for cybersecurity aspects of cross-border electricity flows.

ACER and energy regulators will draft new Framework Guidelines on sector-specific cybersecurity rules for cross-border electricity flows.

ACER and Cybersecurity.

The EU Agency for the Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators (CEER) publish their joint White Paper on Rules to Prevent Methane Leakage in the Energy Sector. The White Paper is the outcome of a survey of National Regulatory Authorities.

It presents the views of ACER and CEER on the European Commission’s Communication on an EU strategy to reduce methane emissions.

The paper has 13 recommendations covering six areas:

• the general scope and the overall approach to the introduction of rules to prevent methane leakage in the energy sector,
• monitoring and detection
• quantification
• reporting
• validation and mitigation, and
• the regulatory treatment of costs related to methane emissions.

Access the White Paper. 

The paper is one of a series of ACER-CEER “European Green Deal” Regulatory White Papers.

Register for the ACER-CEER Methane Emissions Webinar (14 September).

The EU Agency for the Cooperation of Energy Regulators (ACER) has published its latest Balancing Monitoring Report including a comparative performance assessment of the gas balancing zones of 22 Member States with the aim to assist National Regulatory Authorities for Energy (NRAs) and Transmission System Operators (TSOs) understand the strengths and weaknesses of each regime.

Transparent balancing systems pave the way for fairly priced balancing products, and consequentially lead to efficiency gains at the wholesale level, which should ultimately benefit final consumers.

Most relevant findings on balancing systems design, imbalances, and TSO’s balancing actions are:

• Greece – No trading platform is evident.
• Romania – Several days of TSO balancing actions on both sides of the market with inverted prices, which is not a straightforward outcome.
• Italy – The use of storage tools side by side with short-term standardised products and high levels of long and short imbalances subject to cash-out, compared to other balancing zones.
• France – The availability of the linepack service (GRTgaz’s Alize, Teréga’s SET) partly undermines the incentive of network users to balance themselves fully on a daily basis. 
• Germany – High levels of costs visible in balancing, although these might be justified in the context of wider benefits of variant 2 insofar as it supports competition amongst gas suppliers and which might be the subject of a cost-benefit assessment.
• Croatia – Pricing effects may result from the combination of illiquid balancing market and default imbalance pricing rules that may create instability.
• Lithuania – The system is apparently always short, necessitating only TSO balancing buys, and the balancing regime may be distorted via facilities that allow network users to trade after-the-end of the gas day.
• Hungary – Still using two trading platforms which may fragment short term market liquidity and transparency of price formation.
• Czech Republic – Most imbalance cashouts are avoided via an after-the-day trading of linepack flexibility whereby, effectively, network users are allowed to trade after the end of the gas day.
• Spain – The data submission implies that only within-day title products are used for TSO balancing, yet some aspects raise questions about the need to refine the TSO’s balancing policy.
• Slovakia – Limited TSO balancing actions are fragmented across balancing platform trades and balancing services rather than being focussed on the trading platform.
• Slovenia – Outcomes may be distorted by wide imbalance price differentials which give rise to a bias towards balancing sells other than during some discrete periods within year when balancing buys are dominant.
• Ireland and Latvia-Estonia – The TSO balancing actions are dominated by system sells.
• Denmark-Sweden – Imbalances are higher than observed in our analysis in earlier years, possibly due to a temporary decrease in domestic gas production.

The report, which is the 5th annual report published by the Agency on the matter, has suggestions for further research on balancing implementations in the EU gas markets. ACER considers that a closer look at national balancing systems is needed in case of:

• High price differentials between TSOs balancing actions buy/sell and network users buy/sell.
• High values of network users’ imbalances or TSOs’ actions.
• System asymmetries on either the buy or sell side.

Access the report.

How was the assessment done?

The principal objective of this year’s monitoring has been to offer automated calculations for the indicators of the Balancing Analytical Framework (BAF). These indicators, which describe various aspects of balancing implementation, were first presented by ACER in its 2nd Report on the Implementation of the Balancing Network Code. The work has involved setting up a new IT system to capture data inputs and to process them. The automation will support to systematically assess individual balancing regime performance and cross-balancing regime comparison in the future.

What does the cross-balancing regime comparison show?

ACER compared the 22 balancing regimes using 8 key indicators and paid particular attention where the selected indicators showed extreme values in this cross-country comparison. Briefly, the indicators describe:

• Four of them, the residual role of the TSO with a reference to the frequency and the average price spreads concerning the TSOs’ buy and sell actions.
• Three of them, the network users’ balancing activity looking at the imbalance quantities of the network users, the average imbalance prices and price spreads, in order to understand the different incentives network users might face within the different EU balancing regimes.
• Finally, a single indicator explains the net payments charged or credited to network users, assessing whether these payments are of a high value.

The indicators suggest that some implementations could evolve in order to maximise the benefits from the implementation of the Balancing Code.

What comes next?

The Agency sees two significant strands of activity that could support implementation in the upcoming years:

• The first strand would involve enhancing the IT application, for example allowing access to the data and outputs for individual NRA/TSO.
• The second strand would be for ACER to perform further studies with increased interaction with NRAs/TSOs/stakeholders about the local specificities of balancing regime implementations and deepen the qualitative part of the analysis, as it was done in earlier reports.

The Agency welcomes the stakeholders’ feedback on this report and solicits views about the suggested next steps. 

Main recommendations

The application of the BAF, in particular the cross-regional comparison, may help NRAs to refine the national balancing regimes. In ACER’s view, key regime parameters (e.g. small adjustment in imbalance cashout pricing, the performance of the information systems) should change, as the market evolves. The evolution of the market will create further opportunities to refine the design and/or certain parameters to deliver more efficient outcomes.

The Agency notes that progress has, and continues, to be made. The Agency observes as well that a few countries may be incompliant with certain provisions of the Balancing Code. Whilst this year’s analysis has been focussed on an assessment of effectiveness, it remains desirable to review compliance in a future study.