On 17 November 2023, the European Network of Transmission System Operators for Electricity (ENTSO-E), on behalf of Transmission System Operators (TSOs), submitted to ACER an amendment proposal to the methodology for coordinating operational security analysis (CSAM). Following the receipt of the TSOs’ proposal, ACER has initiated a procedure to decide on these amendments.

What is the methodology about?

CSAM supports the EU’s operational security by outlining the requirements to ensure:

• the electricity transmission system is operated in a coordinated manner;
• effective system operational planning;
• transparency and reliability of information on transmission system operation.

What does the amendment proposal entail?

The proposed amendments relate to the implementation of the observability area (i.e. where TSOs implement real-time monitoring and modelling of their systems to maintain operational security) as recommended in the Incident Classification Expert Panel’s final report on Continental Europe Synchronous Area Separation on 8 January 2021.

The amendment proposal aims at:

• Aligning the reassessment period for the observability area with the one for the external contingency list (i.e., the list of contingencies to be simulated to test the compliance with the operational security limits). This alignment is important to ensure that the operational security analysis is carried over accurately across all timeframes.
• Including busbar couplers in the contingency lists and in the TSOs’ Individual Grid Models (IGMs). This update ensures that the power flows are kept within the operational security limits after a contingency has occurred.

What are the next steps?

ACER will decide on the TSOs’ proposals to amend the methodology for coordinating operational security analysis by May 2024.

Access the public notice initiating the procedure.

The recent energy crisis showed how shifting and reducing electricity demand plays a crucial role when electricity supply is scarce or at risk. Furthermore, Europe’s ambition to be a carbon neutral continent by 2050 also means that more flexibility in the power system is needed. Electricity flexibility is the ability of energy resources and consumers to change or adjust their consumption or production in response to price signals, or to provide services to system operators. Increased flexibility in the EU power system presents key opportunities for consumers to be part of the clean energy transition. One important solution to achieve electricity flexibility is enhanced demand response.

What is electricity demand response?

Electricity demand response occurs when consumers (or aggregators on their behalf) adjust their consumption or production, in response to price signals.

What’s holding electricity consumers back? In all Member States, many barriers to demand response persist. These impact consumers, new entrants, and small players in electricity markets. Examples of these barriers are:

• the lack of a (or limited) legal framework to allow distributed energy resources (e.g. consumers, small wind generation, roof-top solar) access the electricity markets and provide services to electricity grids operators,
• the unavailability or lack of incentives to provide flexibility,
• restrictive requirements,
• limited competition in the retail market,
• public interventions to fix the retail electricity price.  

ACER reports annually on the barriers to demand response, as part of its Market Monitoring Report series. This year’s report, to be published in mid-December, identifies several key barriers to the participation of distributed energy resources (i.e., demand response, energy storage and distributed generation) in the wholesale electricity markets and system operation services in the EU-27 Member States plus Norway. Furthermore, it presents key findings and specific recommendations per country.

What are ACER’s next steps?

From 15 December 2023 to 26 January 2024, ACER will run a public consultation on the removal of barriers to electricity demand response. The objective is to gather stakeholders' inputs on prioritising strategies for overcoming these barriers.

On 19 January 2024, ACER will also organise a webinar to present its report on monitoring the barriers to electricity demand response and discuss its findings.

Based on the findings of the report and the inputs gathered from stakeholders, ACER will focus its 2024 market monitoring work on the most relevant barriers.

The Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) provides an EU framework for ensuring the transparency and integrity of energy markets and deters market participants from manipulating the market. It has also an important role in protecting the interests of companies and consumers and ensuring trust in energy markets.

The REMIT Quarterly is ACER’s main channel of communication with stakeholders on REMIT-related matters. It provides updates on quarterly basis.

What are the updates of the 3rd quarter (July – September) of 2023?

This 34th edition releases the programme of the 7th ACER REMIT Forum (5 December, online) and provides insights into the following topics:

• an updated overview of the sanction decisions for the past year, with 364 REMIT cases under review at the moment;
• a fine of €80,000 for non-timely disclosure of inside information relating to the French electricity market;
• statistics for registered reporting mechanisms’ (RRMs’) contingency reports;
• an assessment of trading on organised market places.

Access the 34th issue of REMIT Quarterly.

Access all issues of REMIT Quarterly.

Today, ACER releases its report on the progress of EU electricity wholesale market integration, which is part of the 2023 Market Monitoring Report series.

The report evaluates the functioning of the EU’s internal electricity market in 2022, with a focus on the performance of the forward and balancing markets. The report also assesses whether the electricity markets were contributing to the delivery of clean, affordable, and reliable energy and therefore effectively pushing towards the decarbonisation targets set by the European Green Deal.  

In 2022, electricity markets saw significant price spikes, mainly due to the Russian invasion of Ukraine. In its analysis, the report underscores how market integration is essential to reinforce the electricity wholesale markets’ resilience.

What are the benefits of having an integrated EU electricity wholesale market?

Reinforcing the cross-border interconnector capacity between Member States allows to advance the integration of the European electricity wholesale market. This offers several benefits, such as:

• Consumers can benefit from more competitive (larger) markets.
• Reinforced long-term security of supply (at lower cost) and mutual assistance in case of crises.
• More efficient resource utilisation (balancing of demand and supply at EU level).
• Promotion of renewable energy sources (RES).
• Increased resilience and network stability.
• Encouraged innovation and infrastructure investments.

What are the report's key findings?

The report analyses the status of the electricity wholesale market integration in 2022, taking into account the exceptional circumstances caused by the energy crisis:

• Interconnected electricity markets provided increased resilience against the energy crisis and ensured security of supply.
• Ukrainian power system is synchronised with Continental Europe (since 16 March 2022) under the emergency regime. Cross-border capacity allocation and commercial exchanges contribute to market functioning. While progress was achieved, joint cross border capacity allocation is yet to be implemented.

    Main challenges of market integration

• The main challenge of electricity market integration is long-term markets. It is important to improve liquidity in the European forward markets. Member States’ Transmission System Operators (TSOs) must ensure sufficient capacity is available for cross-zonal trading when needed, especially in the short-term markets, which are now developed (coupled) throughout Europe, and face the challenge of ensuring cross-zonal capacity availability. The next significant step in the market evolution is the development of long-term markets.
• Scarce forward hedges have increased liquidity in the spot market. Hedging is a simple way to manage crisis uncertainty. However, measures like collateral requirements and high bank guarantees forced some market participants to switch from organized forward trading to spot or bilateral trading (potentially increasing volatility).
• On balancing markets, the limited engagement of TSOs and data availability are hindering the success of balancing platforms.
• In 2022, congestion income (i.e. the revenue generated as a result of congestion in electricity transmission systems) increased by more than three times compared to 2021 across Europe, accompanied by a surge in remedial costs (challenging overall price stability). Member States can address congestions without additional operating costs (i.e. grid topology change, phase shifter transformer usage). On the other hand, remedial measures (like re-dispatching, countertrading, or curtailment of allocated capacities) can come at a significant cost – potentially discouraging the deployment of renewable energy sources (RES).

Role of ACER and National Regulatory Authorities (NRAs)

ACER and the NRAs are exploring developments in the European forward electricity markets, continuing the debate which started in February 2023 (with the publication of ACER Policy Paper on the further development of the EU electricity forward market).

What are ACER’s recommendations?

• Improve cross-border electricity trade to strengthen market integration (and its resilience).
• Advance the progress of forward electricity markets by expanding their development and utilizing Long-Term Transmission Rights (LTTRs) for hedging.
• Reinforce the engagement of TSOs in balancing markets. This could be done by considering slower balancing reserves to manage price fluctuations more effectively.
• Manage re-dispatching expenses and promote the deployment of renewable energy sources, particularly in those regions with high RES-generation potential. This will clearly support the energy transition goals and ensure compliance with the legal requirement to stay below the 5% curtailment limit.

What are the next steps?

On 7 November 2023, ACER will organise a webinar to present its report and discuss with stakeholders. Register here.

Access the Progress of EU electricity wholesale market integration report.

On 24 October 2023, the National Regulatory Authorities (NRAs) of the Core capacity calculation region requested from ACER an extension of three months to agree on the Transmission System Operators’ (TSOs’) second proposed amendment to the Core day-ahead electricity capacity calculation methodology.

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

What is the methodology about?

The day-ahead capacity calculation methodology describes the rules of each Capacity Calculation Region (CCR) on how to calculate the amount of capacity available for trading between bidding zones at day-ahead market time frame.

What are the NRAs asked to decide about?

The TSOs’ proposal suggests an implementation of the Advanced Hybrid Coupling (AHC) aiming at reducing the volume of unscheduled allocated flows on the Critical Network Elements with Contingencies (CNECs) of the Core CCR. These unscheduled flows result from electricity exchanges on the bidding zone borders of adjacent CCRs.

What are the next steps?

ACER intends to act promptly on this request, aiming to reach a decision by mid-December.

Access the Public notice.

Today the annual report monitoring the internal gas market in 2022 and 2023 is published.

This ACER-CEER report provides an overview of the latest developments in European gas markets and examines the drivers of the gas price spikes in summer 2022. The report draws lessons from the crisis and identifies forward-looking implications to offer strategic perspective for policy makers to make the market more resilient. 

What are the key findings and lessons?

• The EU's integrated gas system showed a certain resilience against the energy crisis. Yet, the severe supply shock led to highly congested access to LNG terminals and pipelines, causing price surges, hub price disparities and trading disruptions.
• After the 2022 shock, the European gas market supply and demand balance improved thanks to consistent imports of Liquified Natural Gas (LNG) and a significant decreased gas demand. This resulted in gas prices to trend closer to pre-crisis levels.
• Global gas supply overall is still tight, exposing prices to unexpected developments. China’s LNG demand recovery remains an important influencing factor on EU gas prices going forward.
• The report highlights the lasting impact of the Russian supply shock on the EU energy market and the steps done to overcome the supply dependence. It draws some lessons for the future around the EU gas markets’ future resilience factors: increased EU reliance on LNG; reducing gas demand; revenue redistribution; and the enhanced security of supply role of underground storages.
  • European gas prices will be more exposed to global competition and hence will be more volatile.
  • The reduction in conventional gas demand shall assist the EU’s decarbonisation goals. Yet, it needs to be done smoothly in order to preserve the economic activity and the security of supply that gas offers to the EU’s energy system.

Also today, the European Securities and Markets Authority (ESMA) publishes its report examining the development of gas trading activity in summer 2022. ESMA analyses reveal a well-maintained trading activity despite a more challenging trading environment.

What’s next?

• Save the date: on 16 November 2023, ACER and CEER are organising a webinar on evolving trends in the European gas market. Register here.
• Early 2024: Analysis of LNG market developments.

Access the ACER-CEER European gas market trends and price drivers report.

Dive into ACER’s interactive dashboard and explore the evolution of price and demand supply metrics for the period 2015 to 2023.