The EU Agency for the Cooperation of Energy Regulators (ACER) and the Energy Community Secretariat (ECS) launched today a joint public consultation regarding gas capacity on a number of interconnection points (IPs) on the borders of the EU and the Energy Community and within the Energy Community.
The consultation focuses on capacity offering and use and aims at reaching a better understanding of market needs, approaches to avoiding network interruptions, and optimising capacity availability at gas interconnectors between the EU and the Energy Community and within the Energy Community. The results of the consultation will benefit market integration, competition and ultimately gas consumers.
ACER and the Energy Community Secretariat are particularly interested in hearing from users (actual and potential) of gas transport capacity and other services provided by transmission system operators (TSO) on the gas pipelines concerned.
By way of this consultation, both organisations seek to gain a firmer understanding of stakeholders' views on best practices in pursuit of enhancing connectivity, optimal use of existing capacity, market integration, and competition at the concerned IPs.
ACER and ECS consult the market to better understand market needs and to learn about possible approaches to avoid network interruptions and to optimise in general terms the capacity availability at EU/ Energy Community IPs.
The questionnaire is framed to allow respondents to share their views on approaches ensuring the optimal use of capacity and secure and reliable flow of gas, whilst allowing for proper cooperation with regard to improving gas network services at the relevant IPs.
Input from the consultation will be used by ACER and ECS to derive and share possible best practices in view of achieving better functioning markets, efficient use of infrastructure and improved security of supply.
Replies to the consultation can be submitted by 30 June 2021 23:59 hrs (CET).
To learn more and submit your views, visit the Public Consultation webpage.
ACER and the ECS will analyse the responses received will publish a summary of the consultation, including an evaluation of the responses.
The European Union Agency for the Cooperation of Energy Regulators (ACER) has reached a Decision on all Transmission System Operators (TSOs)' proposal defining the Capacity Calculation Regions (CCR).
This definition includes all the European Union's bidding zone borders and groups them into the different capacity calculation regions. This is relevant for the functioning of the internal energy market, as it simplifies processes by forming such sub-groups (i.e. CCRs).
The determination of CCRs should combine the bidding zone borders for which the need of coordination is the highest (e.g. taking into account the interdependencies between their cross-zonal capacities) and consider where it is most efficient to apply cross regional coordination. Different regional methodologies (such as capacity calculation, re-dispatching and countertrading) will be applied on the various capacity calculation regions.
This will promote an effective coordination between bidding zone borders, which enables an optimal use of transmission infrastructure across Europe, with consequential benefits for consumers.
This Decision reflects the latest status of the internal energy market, including new or evolved bidding zone borders, additional TSOs and considering UK's withdrawal from the European Union.
Every 2 years, ACER provides an opinion on the draft grid plans (called Ten-Year Network Development Plans or TYNDPs) proposed by the network operators.
In its Opinions on the draft 2020 plans, ACER finds that the electricity and gas plans (developed by ENTSO-E and ENTSOG respectively) do not sufficiently contribute to the efficient market due to several shortcomings. With respect to electricity, in ACER's view:
The TYNDP core building blocks such as scenarios development, infrastructure needs identification and cost-benefit analysis (CBA) implementation need to be improved. There are also shortcomings in public consultations on key elements of the methodologies used for the assessment of the energy projects being proposed by network operators.
A number of shortcomings could be remedied by legislators in the current TEN-E reforms by strengthening the independent assessment of projects and the regulatory oversight of network operators. ACER has previously pointed to risks of lack of neutrality of the European Network of Transmission System Operators (ENTSOs) and the need for step changes in TEN-E governance to avoid conflict of interests while ensuring transparency.
See also the ACER Opinion on the ENTSOG gas network plan.
Shortcomings could be remedied by improving the TEN-E Regulation
The EU framework for energy infrastructure needs to be robust for cost-efficient cross-border projects which are best for the energy transition.
ACER believes that the shortcomings of the TYNDP process as can be remedied by improving the TEN-E investment framework in line with the European Green Deal. To this end, regulators (through ACER and CEER) issued two position papers, one in March 2021 and one in June 2020 on how to improve the revision of TEN-E Regulation including on infrastructure development governance.
ACER has called on the European co-legislators to consider the regulators' proposals as a solution to promote a neutral technical assessment of infrastructure projects in line with the European Green Deal, avoiding risks of unjustified costs to European consumers.
For example, currently the transmission system operators (TSOs), through the European Network of Transmission System Operators (ENTSOs), develop the scenarios to assess projects in different futures. TSOs can be perceived as biased towards favouring more infrastructure as it is in their interest. The neutrality of scenarios and the credibility of the TYNDP process can thus be compromised. To safeguard neutrality, regulators have proposed the introduction of ACER framework guidelines for TYNDP scenarios for the ENTSOs to follow. This has been taken up in the European Commission's legislative proposals but should be further strengthened and streamlined, as suggested by regulators.
Europe's energy regulators have pointed to the need for strengthened regulatory scrutiny over the ENTSO's to safeguard the public interest, for ACER to be given the powers to approve the methodologies for the Cost-Benefit Analysis (CBAs) and to issue binding guidelines to the ENTSOs for the TYNDP development.
What are ACER's key findings of the 2020 draft electricity TYNDP?
ACER has issued two Opinions on the European Network of Transmission System Operators for Electricity (ENTSO-E) TYNDP 2020, one on methodological aspects of the electricity TYNDP 2020 and one on the TYNDP projects.
The ACER Opinions are addressed to ENTSO-E, the European Commission, the European Parliament and the Council.
What are the key improvements in the 2020 draft electricity TYNDP?
The ACER Opinions acknowledge that the TYNDP process is complex and resource intensive, and needs to be carried out within a two-year timeframe. For the electricity TYNDP, ACER welcomes a number of improvements for instance in the so-called Inclusion Guidelines, the data collection process, the needs identification, and the transparency of the CBA assessment.
What are the key shortcomings of the 2020 draft electricity TYNDP?
ACER's opinion notes limited improvements and evolution of the draft plan in comparison to previous TYNDP and identifies 4 main shortcomings:
Delays of scenario development process and lack of data release which compromised the integrity of the TYNDP.
Unbalanced CBA due to the missing, non-traceable Current Trends scenario.
Lack of CBA analysis after the study year 2030.
Poor and insufficient consultations of the scenarios methodology and of the needs methodology.
In ACER's opinion the draft electricity TYNDP 2020 does not sufficiently contribute to the objective of efficient functioning of the market.
What does ACER recommend for improving future electricity TYNDPs?
ACER encourages the ENTSOs to address the remaining shortcomings and stands ready to provide guidance or clarifications where needed. ACER proposes several recommendations to ENTSO-E in pursuit of an efficient, further integrated and transparent network planning to serve European consumers and Europe's decarbonisation and sector integration ambitions:
For the Final Electricity TYNDP 2020
Provide the storyline and full data for the missing Current Trends scenario.
Publish the baseline capacities per border as used in the starting grid for the needs exercise and in the reference grids for the CBA calculations.
Include a Benefit / Cost ratio and Net Present Value calculation for all projects for each of the four scenarios.
For the Electricity TYNDP 2022 and beyond
Restructure the scenario development process in order to be completed by December of the year before the TYNDP.
Involve relevant stakeholders and experts in the development of scenario assumptions.
Ensure transparency of scenario development and availability of scenario data. All scenarios should be used in the needs exercise and the CBA analysis in a balanced way, using the premise of economic growth.
Early and substantial consultation of the needs methodology (including important parameters like the horizons to be studied, the zones modelling, the climatic years to be used).
Define an appropriate starting network for the needs identification.
Duly implement the provisions of the TYNDP Inclusion Guidelines - non-compliant projects should be excluded.
Consider the impact of the 70% minimum interconnection capacity target in the modelling of the power system, where relevant.
Transfer capacities should be calculated for all projects and with more granularity and transparency.
Consult the main elements of the TYNDP CBA (e.g. study horizons, criteria for the construction of the reference grid, scope of the CBA) before the inclusion of projects in the future TYNDP.
Build the reference grid considered for the CBA analysis, according to the Agency's recommendations.
ENTSO-E should extend the study horizons for which a CBA analysis is conducted for the TYNDP 2022 at least to one study year after 2030 (e.g. 2035 or 2040).
What is the TYNDP?
The main objectives of the TYNDP are to:
identify investment gaps (including cross border capacities
contribute to a sufficient and non-discriminatory level of cross-border interconnections, the effective competition and the efficient functioning of the market, and
ensure a greater transparency of the European electricity transmission network.
The TYNDP builds on national investment plans prepared by the transmission system operators (TSOs) and takes into account the regional investment plans, published every two years.
Projects of Common Interest (PCIs) are selected from the TYNDP via a separate process led by the European Commission. The TYNDP should provide essential and comprehensive information for the selection of PCIs, in particular through complete, monetised, and reliable cost-benefit analysis (CBA) and assessment of projects.
What is the role of ACER and its overall assessment?
ACER issues an opinion on the draft network plan developed by network operators taking into account the objectives of non-discrimination, effective competition, and the efficient and secure functioning of the internal electricity market.
Every 2 years, ACER provides a non-binding opinion on the draft grid plans (called Ten-Year Network Development Plans or TYNDPs) proposed by the network operators.
In its Opinions on the draft 2020 plans, ACER finds that the electricity and gas plans (developed by ENTSO-E and ENTSOG respectively) do not sufficiently contribute to the efficient market due to several shortcomings. With respect to gas, in ACER's view:
See also the ACER Opinion on the ENTSO-E electricity network plan.
Shortcomings could be remedied by improving the TEN-E Regulation
The EU framework for energy infrastructure needs to be robust for cost-efficient cross-border projects which are best for the energy transition.
ACER believes that the shortcomings of the TYNDP process as can be remedied by improving the TEN-E investment framework in line with the European Green Deal. To this end, regulators (ACER and CEER) issued two position papers, one in March 2021 and one in June 2020 on how to improve the revision of TEN-E Regulation including on infrastructure development governance.
ACER has called on the European co-legislators to consider the regulators' proposals as a solution to promote a neutral technical assessment of infrastructure projects in line with the European Green Deal, avoiding risks of unjustified costs to European consumers.
For example, currently the transmission system operators (TSOs), through the European Network of Transmission System Operators (ENTSOs), develop the scenarios to assess projects in different futures. TSOs can be perceived as biased towards favouring more infrastructure as it is in their interest. The neutrality of scenarios and the credibility of the TYNDP process can thus be compromised. To safeguard neutrality, regulators have proposed the introduction of ACER framework guidelines for TYNDP scenarios for the ENTSOs to follow. This has been taken up in the European Commission's legislative proposals but should be further strengthened and streamlined, as suggested by regulators.
Europe's energy regulators have pointed to the need for strengthened regulatory scrutiny over the ENTSO's to safeguard the public interest, for ACER to be given the powers to approve the methodologies for the Cost-Benefit Analysis (CBAs) which are used to assess projects, and to issue binding guidelines to the ENTSOs for the TYNDP development.
What are ACER's key findings of the 2020 draft gas TYNDP?
ACER has issued an Opinion on the European Network of Transmission System Operators for Gas (ENTSOG) TYNDP 2020 for gas. The ACER Opinion is addressed to ENTSOG, the European Commission, the European Parliament and the Council.
ACER finds that the draft gas TYNDP 2020 follows a similar methodology as previous editions.
What are the key improvements in the 2020 draft gas TYNDP?
ACER's opinion notes limited improvements and evolution of the draft plan in comparison to previous TYNDP. Improvements are mainly limited to a better presentation of results and for the first time, the inclusion of a heterogeneous category of projects addressing the energy transition. ACER concurs with ENTSOG that current gas infrastructure in Europe is resilient, near to the completion of the internal gas market and that the limited infrastructure investment gaps will be closed in the next five years by projects already currently under development.
What are the key shortcomings of the 2020 draft gas TYNDP?
ACER regrets that the TYNDP includes a broad investment portfolio of conventional gas projects close to € 75 billion, clearly exceeding reasonable needs, in view of the lack of market appetite for developing additional transmission capacities and the decarbonisation objectives. Less than half of these are assessed by ENTSOG in the TYNDP framework. As regards the sustainability assessment of projects, although progress in observed in this TYNDP, there is room to refine it further in the future.
ENTSOG should consider ways to increase stakeholders' interest and engagement in the TYNDP development process, in view of the low number of responses (9) received during its public consultation.
ACER identifies 4 main shortcomings:
Lack of proper analysis of the existing and forecasted use of gas infrastructure as critical criterion to take into account when analysing the need of additional gas infrastructure.
Shortcomings in the applied methodologies, such as a lack of a complete quantitative needs assessment and doubtful quality of the cost-benefit analysis (CBA) methodology and its application which still requires improvement to demonstrate benefits exceed costs so that each individual gas project contributes to sustainability.
The asymmetric treatment of candidate projects depending on whether the projects are intending to apply for Project of Common Interest (PCI) selection or not. ACER expects ENTSOG to apply project-specific cost-benefit analysis for all projects, the same way it is done for the electricity.
Shortcomings in the public consultations of the scenarios methodology and the needs methodology.
In ACER's Opinion the draft gas TYNDP 2020 does not sufficiently contribute to the objectives of non-discrimination and efficient functioning of the market.
What does ACER recommend for improving future gas TYNDPs?
ACER is of the view that improvements in European infrastructure planning are feasible. ACER encourages the ENTSOs to address the remaining shortcomings and stands ready to provide guidance or clarifications where needed. ACER proposes several recommendations to ENTSOG in pursuit of an efficient, further integrated and transparent network planning at the service of consumers, decarbonisation, and sector integration ambitions:
For the Final Gas TYNDP 2020
Consider the National Regulatory Authority's (NRA's) comments on the TYNDP 2020 projects
Provide a feedback document on how the Public Consultation and ACER's Opinion have been taken into account
Classify the energy transition projects into gas supply/ production projects and network related investments
Complete information related to project CBA assessments
Update information on projects' status by end of year 2020
For the Gas TYNDP 2022 and beyond
Implement ACER's recommendations on scenarios
Improve planning process to avoid recurring delays, by publishing next TYNDP by mid-2022
Incorporate the market perspective on infrastructure gaps
Improve the implementation of CBA methodology
Include a number of “conventional" gas infrastructure projects commensurate to the assessed needs, by flagging and filtering out unrealistic projects during the data collection stage
Roll out modelling tools allowing for sector-integrated assessments of electricity and gas projects
Provide the same (maximum) level of cost transparency for all TYNDP regulated projects
More attention focused on adaptations of gas infrastructure for the injection of higher shares of renewable, low carbon and de-carbonised gases (hydrogen, synthetic methane, and bio-methane)
Together with ENTSO-E, identify suitable locations for power-to-gas installations in the system needs analysis
Factor the level of utilisation and congestion of existing infrastructure in the needs assessment
Consider ways of covering methane emissions associated with gas infrastructure
What is the TYNDP?
Every two years, ENTSOG publishes a non-binding TYNDP which looks forward over a ten-year horizon and includes a European supply adequacy outlook for natural gas. TYNDPs are essential for assessing and identifying the need of new infrastructure projects to ensure an adequate level of security of gas supply, market integration and competition. The TYNDP must be consistent with National Development Plans (NDPs) and should take into account the energy policy objective of decarbonisation under the European Green Deal.
Projects of Common Interest (PCIs) are selected from the TYNDP via a separate process led by the European Commission. The TYNDP should provide essential and comprehensive information for the selection of PCIs, in particular through complete, monetised, and reliable cost-benefit analysis (CBA) and a sustainability assessment of projects.
What is the role of ACER and its overall assessment?
ACER monitors the development and execution of the plan, and issues an opinion on the draft TYNDP taking into account the objectives of non-discrimination, effective competition, and the efficient and secure functioning of the internal gas market. ACER also looks to the alignment of the plan with broader energy transition and decarbonisation goals.
ACER organises this online webinar to present the results of the methodological study aimed at identifying and measuring barriers to the development of competitive electricity prices and the entry and participation of new market players in the EU electricity wholesale markets.
Access the webinar's Agenda.
Registration is closed, as the event reached its full capacity.
The study – which has been carried out with the support of a consultant over several months – will enable ACER to fulfil effectively its new monitoring responsibilities set in the Clean Energy Package. In particular, the study has defined some indicators to be progressively included in future editions of ACER's Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets (the so called Market Monitoring Report).
This study has benefited from inputs collected from a wide range of stakeholders through a public consultation and some interviews. In this webinar, stakeholders will get information about the barriers identified, the indicators to measure them and the methodology to combine these indicators.
Following a six-month consultation with stakeholders and with the objective to contribute to the improvement of REMIT data reporting, ACER published updated REMIT guidance.
It comprises a new version of Annex II of the Transaction Reporting User Manual (TRUM) and of Annex VII of the Manual of Procedures on data reporting, as well as the updated frequently asked questions (FAQs) on transaction reporting and on fundamental data and inside information.
Annex II of TRUM describes several examples of transaction reporting (including orders to trade) related to contracts reportable to ACER, pursuant to the REMIT Implementing Regulation.
More specifically this new publication aims to:
Consulted stakeholders include associations of market participants, organised market places, and registered reporting mechanisms.
Access the new version of Annex II of the Transaction Reporting User Manual.
ACER also published the updated Annex VII of the Manual of Procedures (MoP) on Data Reporting, describing data fields for inside information and the new electronic formats for reporting. The changes reflect the results of the ACER's Public Consultation on the revision of electronic formats.
Finally, ACER published the 12th edition of the FAQs on REMIT transaction reporting and the 7th edition of the FAQs on fundamental data and inside information, which include new frequently asked questions to better reflect the continuous evolution of EU markets and facilitate data reporting.
Find the new versions of the FAQ documents on the REMIT Portal.
Today, the European Union Agency for the Cooperation of Energy Regulators (ACER) has opened a public consultation on its draft Framework Guideline on sector-specific rules for cybersecurity aspects of cross-border electricity flows, inviting stakeholders to share their views on the document ahead of its submission to the European Commission.
The non-binding Framework Guidelines will set out clear and objective principles for the development of a binding Cybersecurity Network Code that will contribute to maintain the security of the electricity system across Europe. As such, the proposed Framework Guideline covers various security-related topics for the electricity sector, such as cross-border risk management, harmonized minimum cybersecurity, information sharing, incident handling and crisis management.
The public consultation will run from 30th April until 29th June 2021.
To learn more and submit your views, visit the Public Consultation webpage.
Upcoming webinar: ACER will also organise a workshop to introduce and explain the content of the proposed Framework Guideline in May 2021. More information will be published soon on the ACER website.
Background information
The Electricity Market Regulation provides the legal basis for the establishment of cybersecurity rules in the context of cross-border electricity flows. On 28 January 2021, the European Commission invited ACER to draft the Framework Guidelines for a Network Code on Cybersecurity.
Average gas supply sourcing costs declined in 2020 in most EU Member States and the Energy Community Contracting Parties by more than 4 Euros/MWh year on year, according to today's preliminary assessment of the EU Agency for the Cooperation for Energy Regulators (ACER) and the Energy Community. When comparing gas sourcing costs in 2020 to their average between 2012-2019, prices declined by 8 Euros/MWh.
The assessment measures the average yearly price at which nationwide suppliers can source their wholesale gas. The calculation considers the prices of products traded at the national hubs as well as declared cross-border gas imports and domestically produced gas.
The main drivers of the price decline were the demand reduction caused by COVID-19 and the highest-ever liquefied natural gas (LNG) deliveries registered during the first half of 2020. These resulted in historically low EU hub spot prices in the second quarter of 2020. The decline in the prices of other energy commodities and the above average underground storage stocks at the beginning of the injection season were other contributing factors. Even though hub prices partly recovered from the third quarter, average yearly supply sourcing costs reached their record low since ACER started to assess them in 2012.
Convergence in sourcing prices remained overall robust amongst a majority of Member States, with the largest differences rounding about 3 Euros/MWh. This demonstrates the benefits of the Internal Gas Market. For example, in 2013 sourcing cost spreads of more than 5 Euros/MWh were frequent, implying extra yearly expenditure from 40 to 60 Euros for the average final household consumers in higher costing gas markets. Increased convergence in gas sourcing cost is estimated to have yielded average annual welfare gains in the range of 3 billion Euros for EU gas consumers since 2013.
Source: ACER and Energy Community calculation based on Eurostat Comext, ICIS Heren and National Regulatory Authorities.
Note: Gas sourcing cost within a given Member State vary per shipper and supply period, shaped by the features of the various contracts, hedging strategies as well as distinct supply origins. To infer an average yearly gas supply price, the Agency uses a methodology that considers three main types of sourcing costs (see MMR 2015, Annex 6): i) based on an explicit basket of hub products (in markets with sufficient forward transactional activity), ii) based on declared cross-border imports and iii) based on domestic production prices. The map displays the arithmetic average of all sourcing mechanisms; the report will contain the exact price estimates per supply mechanism.
Despite the impact of COVID-19 on gas demand and the enhanced availability of liquefied gas, the average gas price did not decline uniformly across the EU. This resulted in some price gaps between the Dutch Title Transfer Facility (TTF) hub-based benchmark and the sourcing costs of some Member States. Prices were higher on average at Member States with a higher reliance on long-term supply contracts indexed either to oil or longer-curve' hub products. The highest average sourcing costs were reported in Southern East, Mediterranean and some Central East Member States. All Baltic countries (excluding Finland), and also Greece, reported very price-competitive import prices in 2020. ACER considers that in both cases this is due to the larger relative indexation to hub prompt products in their more recent LNG supply contracts.
Sourcing costs at the Energy Community Contracting Parties were uneven, shaped by the characteristics of the diverse markets. In the majority of them, gas prices continued to be somewhat higher than for the average of EU Member States due to a prevalence of less favourable long-term contracts and more limited upstream supply competition. However for example in Ukraine the price gap have lessened following market reforms that have made import prices more correlated with EU hubs. Ukraine retains also ample cost-competitive domestic gas production.
In a related exercise, the upcoming 2020 ACER Gas Wholesale Market Monitoring Report will analyse the level of price convergence of spot products traded at EU hubs. The preliminary results indicate a strong price alignment across the North West European region, where price differences against the TTF benchmark remained below 1 Euro/MWh for almost all trading days, as the figure below illustrates. Hub spreads commonly remain below transportation costs despite the gradual expiration of long-term capacity contracts, which is reducing in turn EU shippers' short-run marginal costs bidding (the Market Monitoring Report will analyse this trend in depth). Record liquefied gas deliveries and flexible North Sea supplies, together with the structural fostering of hub trading at the region, are deemed as limiting price decoupling.
While hub price convergence tends to be stronger at regional level, Central and South Eastern hubs, as well as Mediterranean and Baltic ones, still show some higher spreads when comparing against the TTF benchmark. Those differences arise because of higher transportation tariffs as well as from the specific interplay of marginal supply and opportunity pricing at the individual markets. Nonetheless, overall, spot price alignment increased year on year with lower demand combined with high liquefied gas deliveries and storage stocks. The improvement was notable at the Hungarian, Italian and Spanish hubs. For example, unusually, the Italian hub quoted at a discount to the Austrian hub across the summer months, on the grounds of extra liquefied gas deliveries.
Sourcing costs and hub price individual assessments will be further examined in the next edition of the Gas Wholesale Market Monitoring Report, to be published in July 2021. Furthermore, the report will focus on presenting the results of the ACER Gas Target Model metrics for the year 2020 as well as on assessing the effects of gas network codes implementation. It will include a new chapter identifying the contributions that the gas sector can make to the EU decarbonisation ambitions.