Europe requires significant investment in energy infrastructure that is cost-efficient to successfully achieve the energy transition. Every two years, the European grid operators submit their Ten-Year Network Development Plan (or TYNDP) to ACER. Today, ACER identifies, in its two opinions, improvements and shortcomings of the 2022 draft electricity TYNDP developed by the European Network of Transmission System Operators for Electricity (ENTSO-E):

• ACER Opinion on the methodological aspects of the ENTSO-E TYNDP 2022; and
• ACER Opinion on electricity projects in the draft ENTSO-E TYNDP 2022 and in the National Development Plans (NDPs).

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, effective competition and efficient functioning of the market;
• Ensure a greater transparency of the European electricity transmission network.

The TYNDP also provides essential and comprehensive information for the selection of projects of common interest (PCIs).

What are ACER’s main findings?

In ACER’s opinion, the draft electricity TYNDP 2022 does not sufficiently contribute to the efficient and secure functioning of the electricity market.

While the 2022 draft electricity TYNDP shows certain improvements…

ACER acknowledges the resource intensiveness and complexity of the TYNDP process and welcomes a number of improvements in the 2022 draft electricity TYNDP, for instance in the:

• Inclusion Guidelines;
• Consultation on the Implementation Guidelines;
• Needs identification; and
• Increased transparency of the cost benefit analysis (CBA) assessment.

…ACER also finds shortcomings

ACER finds that the plan does not sufficiently contribute to the efficient and secure functioning of the electricity market, especially compared to previous TYNDPs, mainly due to five shortcomings:

• Insufficient and untimely consultations on the main methodological elements of the TYNDP package (i.e. the scenarios methodology, the needs methodology and the implementation of the CBA methodology).
• Delays in the draft TYNDP delivery, resulting in outdated data and delays in the PCI selection processes.
• Insufficient scope of the CBA analysis, focusing on the 2030 study year, and mainly on one scenario.  
• The starting grid (used as a starting point for the calculation of infrastructure needs) and the reference grids (used as counterfactual in the TYNDP CBA for the calculation of the project benefits) are not fully in line with the criteria set by ENTSO-E.
• Inconsistent data regarding the transfer capabilities.

In addition, ACER was not able to assess whether the system’s resilience to climate change impacts is addressed in the draft electricity TYNDP 2022.

What does ACER recommend for future electricity TYNDPs?

ACER proposes several recommendations to ENTSO-E to serve European consumers and Europe’s decarbonisation and sector integration ambitions.

For the 2022 final Electricity TYNDP, 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.

For the 2024 electricity TYNDP and beyond, ACER recommends ENTSO-E to, 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.

Access the ACER opinions:

ACER Opinion 03/2023 on the methodological aspects of the ENTSO-E TYNDP 2022.

ACER Opinion 04/2023 on electricity projects in the draft ENTSO-E TYNDP 2022 and in the National Development Plans (NDPs).

On 1 March 2023, ACER received the Transmission System Operators (TSOs) proposal for the amendment of the Harmonised Allocation Rules (HAR) for long-term electricity transmission rights, mainly to allow for their long-term flow-based allocation. ACER launched a public consultation on 29 August 2023 on the amendments to the rules.

Why change the rules?

Cross-zonal capacity is currently allocated in the long-term electricity market with no coordination between different bidding zone borders, causing inefficiencies in some capacity calculation regions. This HAR amendment is needed to introduce the flow-based allocation of long-term transmission rights, enabling cross-zonal coordination. This will make the long-term market more efficient and aligned with the day-ahead market design.

What is the flow-based approach and what are its benefits?

Flow-based allocation of long-term transmission rights is a mechanism that efficiently allocates cross-border transmission capacity in the electricity market. It takes into account the physical reality of the transmission network by calculating the available capacities of physical network elements (so-called Remaining Available Margins) for electricity exchanges between different areas, as well as sensitivity factors (so-called Power Transfer Distribution Factors).

A flow-based mechanism enables cross-zonal coordination in long term electricity markets, leading to better network representation and more accurate price signals for cross-border trade, reducing market distortions and ensuring that the prices reflect the true cost of generating and transmitting electricity.

Amending the rules will allow the implementation of two projects for long-term flow-based capacity calculation and allocation; in the Core and the Nordic capacity calculation regions. The HAR revision is the final step needed for the implementation of these projects, following the approval of the single allocation platform, the congestion income distribution and sharing costs incurred to ensure firmness and remuneration of long-term transmission rights on 22 March 2023.

What are the next steps?

In addition to this proposal, TSOs submitted to ACER their proposal for amending the HAR provisions on collaterals by 1 August 2023.

ACER will decide on both proposals for amending the rules in a single procedure by the end of 2023.  

To make an informed decision, ACER runs a public consultation (from 29 August to 26 September 2023) on the amendments to harmonised allocation rules for long-term electricity transmission rights.

Public notice.

Update of 22 December 2023

On 22 December 2023, with its Decision 18/2023, ACER approved the TSOs' proposal to amend the Harmonised Allocation Rules (HAR) for long-term electricity transmission rights. 

On 31 March 2023, ACER issued an Opinion on the revised statutory documents of the European Network of Transmission System Operators for Electricity (ENTSO-E).

To inform its assessment, ACER consulted, from 3 to 17 February 2023, stakeholder organisations, in particular organisations representing the system users, including customers.

What are the next steps?

ACER's opinion is addressed to the European Commission. Following ACER’s opinion, the Commission has three months to provide its own opinion to the transmission system operators (TSOs). Subject to a favourable opinion of the Commission, the TSOs must adopt and publish the revised statutory documents.

Access the Opinion.

The European Union Agency for the Cooperation of Energy Regulators (ACER) launched its daily Liquefied Natural Gas (LNG) benchmark on Friday, 31 March 2023, as required by Council Regulation (EU) 2022/2576.

The LNG benchmark provides for greater market transparency based on mandatory data reporting, and hence is expected to reflect real-world prices for LNG. Stakeholders may use the LNG benchmark voluntarily.

The daily LNG benchmark complements ACER’s daily LNG price assessments, launched on 13 January 2023.

Access the LNG Price Assessment and LNG benchmark (of 31 March 2023).

Learn more about the LNG price assessment and benchmarks.

What is the difference between the LNG price assessment and the LNG benchmark?

ACER publishes three distinct and independently calculated Delivered Ex-Ship (DES) Spot LNG price assessments: for Europe (EU), for North West Europe (NWE) and South Europe (SE).

In addition, ACER publishes a daily LNG benchmark determined by the spread between the daily LNG price assessment for DES LNG Spot EU and the settlement price for the TTF Gas Futures front-month contract established by ICE Endex Markets B.V.

How is the LNG benchmark determined?

ACER’s daily LNG benchmark (published daily from 31 March 2023) is determined by the spread between ACER’s daily LNG price assessment for ‘delivery ex-ship’ (DES) LNG Spot EU and the settlement price for the TTF Gas Futures front-month contract established by ICE Endex Markets B.V.

When and where will the daily benchmark be published?

ACER will publish the LNG benchmark every weekday as soon as technically possible. The results will be published on TERMINAL.

How has ACER’s price assessment methodology evolved so far?

ACER published the first beta version of its LNG price assessment methodology on 13 January 2023 and the second one on 8 March 2023. The second version increased the robustness of the methodology and reduced the time-lag resulting from the rolling window used to calculate the price (see 6 March news).

The latest version, published on 23 March 2023 and with effect from 31 March 2023, covers both the LNG price assessment methodology and the benchmark methodology.

ACER will continue to periodically revise the methodology and the guidance on reporting LNG market data, in consultation with stakeholders.

Check out ACER’s LNG price assessment methodology documents.

When will the methodology be revised next?

The exact date of the next update is not determined yet.

ACER publishes today its report on Lithuania’s proposed gas transmission tariffs.

ACER provides recommendations to the Lithuanian national regulatory authority (NRA), VERT, particularly regarding the existing regional networks and the need to enhance transparency on the proposed asset splits.

What is in the report?

ACER assessed the proposed methodology to calculate the gas tariffs, including:

• The treatment of regional networks;
• The tariffs applicable to the transmission service to the Kaliningrad District; and
• The tariffs applicable to the domestic exit to the Achema fertilizer plant.

What are ACER’s main findings?

ACER recommends to the Lithuanian NRA, VERT, to implement improvements:

• On regional networks, ACER recommends that VERT changes the category of regional networks from transmission to distribution.
• On the asset split applicable for the transmission to Kaliningrad, VERT should provide clarity on the criteria used to establish the asset split.
• On the proposed tariff differentiation to the domestic exit point to the Achema fertilizer plant, ACER recommends specifying the criteria on which a consumer, including Achema, could get a different tariff compared to all other regional network exits.

Access the report on the Lithuanian gas tariffs.

Access all ACER reports on national tariff consultation documents.

ACER is organising three hybrid workshops in its premises in Ljubljana and online in April/May 2023 on certain technical requirements related to the electricity grid connection network codes:

• ACER workshop on electromobility, power-to-gas demand units and heat-pumps (17 April 2023);
• ACER workshop on rate of change of frequency and grid forming capabilities (10 May 2023); and
• ACER workshop on electricity storage (11 May 2023).

The objectives of these workshops are:

• To present and discuss potential amendments to two network codes namely the Network Code on Requirements for Grid Connection of Generators and the Network Code on Demand Connection; and
• To clarify the purpose, process and timeline for the amendments of the network codes.

EU stakeholder associations that are interested in presenting their views (up to 10 slots of 8 min each) on the topics tackled in the workshops should contact ACER on ACER-ELE-2022-015(at)acer.europa.eu before the deadline indicated in the event pages. ACER will consider the expressions of interest and will announce the final agendas ahead of the events.

What are the next steps?

These workshops precede a Public Consultation, to be organised later in 2023 on concrete amendment proposals regarding the two network codes.