Today, ACER releases its Opinion, addressed to the European Parliament and European Commission, highlighting the urgency for Transmission System Operators (TSOs) to meet their obligation of making 70% of transmission capacity available for cross-border electricity trading by the end of 2025. The urgency relates to the approaching legal deadline and the delays with many of the necessary steps to reach the 70% transmission capacity rule that is needed to achieve the ambitious political objectives set for renewable generation. The ACER opinion makes clear that without significant uptake in progress on the “70% rule”, such ambitions will be hard to achieve.

Electricity transmission capacity connects Europe’s markets and benefits consumers

Transmission capacity is essential for cross-border trade of electricity, as it connects supply and demand. TSOs delivering maximal transmission capacity to trade electricity is therefore an essential condition to achieving the ambitious political objectives set for renewable generation.

What is the minimum 70% capacity requirement and where are we on the path?

When more capacity being made available for trading electricity with neighbouring countries did not happen fast enough, EU legislators introduced (in 2019) rules that require grid operators to ensure that at least 70% of their physical transmission capacity is available for cross-border electricity trading by the end of 2025 at the latest. ACER has reported yearly that significant steps remain to be taken for TSOs to fulfil this obligation. As the end of 2025 legal deadline approaches, ACER enlists the support of the European Parliament and the European Commission so that the final necessary steps are taken.

The last ACER report (July 2023) found that most Member States in highly meshed areas of the power grid made available on average 30-50% of the capacity for certain network elements. In parallel, the costs of managing grid congestions in the EU exceeded €4 billion in 2022.

Why is maximising transmission capacity important?

Maximising grid capacity refers not just to the ‘physical’ grid (high voltage lines) but also to the transmission capacity that TSOs make available on those lines for trading (‘commercial transmission capacity’) with neighbours.

Maximising interconnection capacity by reaching the minimum 70% requirement:

• is a pre-requisite for the energy transition;
• enhances security of electricity supply by optimising the use of the existing grid;
• mitigates prices and price volatility;
• provides the market with much-needed flexibility; and
• ensures a level playing field between domestic and cross-border trades.

There is much at stake in not reaching the minimum 70% requirement and Member States are still far off it. What does ACER call for to reach the 70% minimum requirement?

This ACER Opinion calls for the swift implementation by Member States and TSOs of the 3 tools foreseen by EU rules to get us to the 70% minimum requirement:

1. TSOs to do optimised and coordinated reduction of grid congestion. Such ‘remedial actions’ include coordinated re-dispatching and countertrading by TSOs (which relieves congestion and frees up more transmission capacity to the market). Currently, grid congestion is assessed mostly at national level. Fully coordinated processes and an adequate cost-sharing is yet to be done by TSOs.
2. TSOs to undertake targeted grid developments within specific bidding zones and targeted at reducing congestion in that zone.
3. TSOs to complete the technical assessment of the ongoing review of the EU’s bidding zones (and Member States/European Commission to then decide) to ensure alignment of the bidding zone configurations with structural grid congestion. The results of the EU electricity bidding zone review are expected, after several delays, by the end of 2024. In this review process, Member States, and if necessary, the European Commission, will have a key role to play in confirming or re-defining (as appropriate) the bidding zone configuration.

What are the next steps?

In June, ACER intends to publish its new Market Monitoring Report (MMR) on the capacity made available (in the year 2023) for cross-border trade with neighbours. This report will be followed by a public webinar.

ACER sees the need to update the European rules on allocating gas transmission capacity. Hence, ACER will run a public consultation to collect proposals from stakeholders on which amendments to the gas Capacity Allocation Mechanisms Network Code (CAM NC) could be considered.

What is the Capacity Allocation Mechanisms Network Code?

The current Capacity Allocation Mechanisms Network Code has been in place since 2017. It harmonises how Transmission System Operators (TSOs) offer and allocate the available gas transmission pipeline capacity to the network users. In the context of Europe’s decarbonisation targets and the evolving gas market, the network code needs to be updated.

ACER had several interactions with stakeholders on how to do this. This included a preliminary analysis (from October 2023 to January 2024) of the main achievements of the network code to date and potential improvements (see the scoping consultation and the workshop).

After having shared its conclusions with the European Commission, the Commission invited ACER to launch the EU-wide network code revision process building on the scoping and problem identification work undertaken by ACER and considering the regulatory elements introduced by the recently agreed hydrogen and decarbonised gas market package. The CAM NC revision process will conclude with ACER recommending amendments to the Commission, which is responsible for revising the text of the network code.

What are the next steps?

ACER is preparing a policy paper on the revision of the Network Code on Capacity Allocation Mechanisms in the gas transmission systems, which will focus on the potential improvements to the network code.

A public consultation based on the policy paper will run from 8 May until 14 June 2024.

ACER will organise a workshop (by invitation only) on 9 July 2024 (09:00 – 11:00). Respondents of the public consultation that specifically expressed their interest in the survey will be invited to this workshop.

After considering stakeholders’ inputs, by the end of 2024, ACER will draft a recommendation to the Commission on amending the network code.

On 8 February 2024, ACER has received a request from the European Network System Operator for Electricity (ENTSO-E) to provide an opinion on the revised manual of procedures for its Transparency Platform.

Today, ACER releases its favourable opinion, attesting that ENTSO-E’s revision of the manual of procedures should improve the Transparency Platform and overall data transparency.

The updated manual of procedures mainly introduces new data items to be collected and additional clarifications to improve the existing definitions.

What is the ENTSO-E Transparency Platform?

The ENTSO-E Transparency Platform aims to collect and centralise data related to electricity generation, transportation, and consumption at European level. Its purpose is to ensure transparency within the EU electricity market by providing easily accessible data for all market participants, including generators, retailers, and traders. By fostering transparency, the platform contributes to preventing insider trading.

What are ACER’s conclusions?

ACER concludes that the updated manual of procedures aligns with the objectives of the Transparency Regulation and with other relevant legislation. ACER however suggests ENTSO-E to consider further improvements as outlined in its Opinion. These mainly relate to:

• enhancing the consistency on how certain data items are defined,
• improving balancing-related publications, and
• ensuring data quality on the transparency platform.

ACER releases its report on the Dutch gas transmission tariffs, directed at Autoriteit Consument & Markt (ACM), the National Regulatory Authority (NRA) of the Netherlands. The report provides guidance on addressing the requirements of the Network Code on Harmonised Transmission Tariff structures (NC TAR) when defining the gas transmission reference price methodology (RPM) for the period 2025–2029.

For the new methodology, building on the previous one, ACM proposes to:

• Apply the same postage stamp RPM of the past regulatory period (2020-2024).

• Increase the discount at the storage facilities’ entry and exit points.

• Introduce a discount at Liquified Natural Gas (LNG) facilities’ entry points.

What does ACER say?

ACER identified several elements (required by the NC TAR) that are not adequately addressed in the consultation process established by ACM. Consequently, it is not possible to conduct a complete assessment on whether the methodology resulting from this process complies with the network code.

To address these concerns, ACER recommends ACM to:

• Compare the proposed RPM with the capacity weighted distance methodology, that reflects the current network characteristics and utilisation, and consider these findings when justifying the RPM.

• Publish a representation of the networks' structure, including the relevant infrastructure changes compared to the previous motivated decision.

• Enhance future tariffs predictability by incorporating forecasts of contracted capacity for 2025–2029, along with the methodology and assumptions used for their calculation.

• Include a cost allocation assessment comparing different scenarios (with or without the storage and LNG discounts) for the relevant regulatory period.

• Further justify the reasoning for the proposed discount at LNG entry points, clearly distinguishing the role of the discount as a means to increase security of supply.

What are the next steps?

By 14 July 2024, ACM shall adopt a motivated decision on the new gas tariff methodology to be applied to the Dutch transmission network, taking into account ACER’s recommendations.

Access the report.

Access all ACER reports on national tariff consultation documents.

Today, ACER and the Council of European Energy Regulators (CEER) publish a paper reviewing the national treatment of anticipatory investments and proposing ways to facilitate the necessary electricity grid enforcement to meet the EU’s climate and energy targets.

Requested by the European Commission as a follow up of the 9th Energy Infrastructure Forum (June 2023), this paper analyses the main barriers to anticipatory investments and provides a set of recommendations to promote national incentive schemes to overcome them.

What are anticipatory investments?

Anticipatory investments reinforce the grid based on anticipated potential future needs, which go beyond confirmed generation and demand needs. On one hand, this will help ensure that the power grids are fit for the rapid uptake of renewable energy sources (RES), avoiding connection delays of RES caused by a slower grid capacity expansion. On the other hand, investing into anticipatory investments carry a risk that they may turn out be underused, at least until there are developments on the generation side.

What are the energy regulators’ key findings?

Reviewing the current national regulatory frameworks for energy infrastructure investment, ACER and CEER find that:

• The focus should be on implementation: several National Regulatory Authorities (NRAs) reported no need for further actions at national level with anticipatory investments but called for the already-foreseen measures to be properly implemented.

• System operators often adopt a forward-looking approach in planning and anticipate future generation and demand (including grid connection requests of renewable energy sources, electric vehicles’ charging infrastructure or other drivers of network expansion).

• The same regulatory treatment is applied to anticipatory investments as for other types of grid investments. Both are subject to the same regulatory incentives and penalties, as well as the same cost-recognition process.

What are the energy regulators’ recommendations?

Consistent with the recommendations in ACER’s Report on investment evaluation, risk assessment and regulatory incentives for energy network projects (June 2023), ACER and CEER  recommend:

• Reinforcing the role of energy regulators (and the tools at their disposal) in assessing energy infrastructure needs and projects; facilitate the NRA’s decision-making process by reducing uncertainties on the development of new network usages (e.g. such instruments include the identification of renewable acceleration areas, improved analysis of the electric recharging uptake in the network plan scenarios).

• Encouraging electricity network users (like generators) to flag their potential connection requests (including their capacity requirements and planned locations) as early as possible.

• Improving coordination and information exchange amongst future network users, network operators and energy regulators as a basis to speed-up the regulatory validation of grid investments. For example, better consultation is needed on the network planning scenarios and the priorities in addressing reinforcement needs.  

• Electricity Transmission System Operators (under oversight by the energy regulator) improving how electricity transmission needs are identified by providing detailed analysis (with higher spatial granularity at European and national level) and transparency of their results.

• Countries having separate regulatory approvals for permit granting and construction to expedite project implementation and minimise “sunk costs” in case the project will not be needed.

• Regulators evaluating the potential welfare loss from a “too early” or “too late” implementation of the projects.

What are the next steps? 

This paper aims to contribute to the discussions (and actions to be taken) on anticipatory investments foreseen in the framework of the European Commission’s Grid Action Plan to accelerate the development of smart electricity grids and support the rollout of renewables.

Access the ACER – CEER paper.

ACER is seeking for applicants to join a new consultative expert group, which will work on Power Purchase Agreements (PPAs).

The main focus of the new expert group will be to advise on the need for standardised PPA contracts within the European energy market, exploring their feasibility, main benefits and drawbacks. Experts will help ACER assess whether standardised PPAs will foster the transparency, efficiency and integration of the European internal energy market, and will build the necessary knowledge to ensure alignment with other European energy policies and objectives.

The expert group will operate from spring to summer 2024, with the possibility of extending into 2025 for further analysis on the development of such contracts.

How to apply?

ACER is seeking for a diverse group of experts with experience in legal, financial, and technical fields related to energy regulation (especially electricity markets).

To apply, please follow the instructions in the Open Letter and make sure you fulfil all the application criteria​.

Application deadline is Friday 19 April 2024.​