In its 10th Report on Congestion in the EU Gas Markets and How it is Managed, ACER finds a tripling of network congestion. ACER calls on gas Transmission System Operators (TSOs) and National Regulatory Authorities (NRAs) to relieve the bottlenecks.

In the gas market crisis, short-term mitigating actions are important. Europe’s voluntary gas-demand reduction target has been extended until 31 March 2024 and storage-filling trajectories for 2023 have been updated. Addressing the most acute bottlenecks presents a no-regret measure to improve market efficiency in the short term.

Understanding congestion and shift in gas supply routes

Congestion occurs first at the level of contracts when network users cannot obtain the capacity contract they need to flow gas. It is addressed by bringing any unused capacity back to the market.

In the wake of the Russian invasion of Ukraine, the changes in supply and demand created gas transportation bottlenecks. With liquified natural gas (LNG) and increased pipeline supplies primarily entering the EU from the west (in a system originally designed for transporting Russian supplies to Europe), bottlenecks in transportation occurred.

Due to physical congestion at LNG terminals and at cross-border pipelines in North-West Europe, the system was used at full capacity and gas could not easily flow to where it was needed most during the 2022 energy crisis, which drove hub price-spreads high. To address these bottlenecks in the short term, the existing gas infrastructure must be optimised to accommodate new supply routes.  

What are Report’s key findings?

• Congestion emerged at 50 interconnection points following tight market conditions and the need to reroute gas flows away from historic east-west routes to predominantly west-east routes in Europe (with the Russian invasion of Ukraine);
• Congestion revenues collected by TSOs rose sharply from €55 million in 2021 to around €3.4 billion in 2022;
• In North-West Europe, congestion was also physical, meaning that LNG terminals and gas pipelines in North-West Europe were fully used; and
• The most used mitigating measure to avoid unused capacity was selling interruptible capacity, while oversubscription remained the most used among the congestion management procedures (CMPs) that aim to make (unused) firm capacity available.

What does ACER recommend?

ACER urges:

• TSOs to address congestions and maximise availability of capacities;
• NRAs to monitor the congestion in their markets more closely to contribute to the efficient functioning of the internal market for gas.

Access ACER’s 10th Report on Congestion and its technical annex.

ACER invites EU electricity experts to help identify and define 'structural congestion”, in electricity networks. The Regulation on capacity allocation and congestion management (CACM) defines structural congestion in rather vague terms as congestion:

• that can be unambiguously defined;
• is predictable;
• is geographically stable over time; and
• is frequently recurring under normal power system conditions.

ACER considers that the current definition of structural congestion needs to be improved and would benefit from quantitative criteria to better identify such congestion.

Hence, ACER seeks EU electricity network experts' views on how structural congestion should be defined quantitatively and invites them to fill in a survey by 15 June 2023.

ACER encourages interested stakeholders to join the ENTSOs’ new Stakeholder Reference Group (SRG), called ‘Scenarios ETAG’.

ACER’s Framework Guidelines (January 2023) seek to ensure robust joint scenarios for electricity and gas network development planning for the EU’s ten-year network development plans (TYNDPs).

The Framework Guidelines introduce a larger role for stakeholders in the scenarios’ preparation process with a new scenarios SRG to be facilitated by the ENTSOs. 

What is the role of this Stakeholder Reference Group?

The SRG will:

• Offer scrutiny, independently from the ENTSOs, on the inputs, assumptions and methodologies proposed by the ENTSOs and provide its advice to the ENTSOs, within an agreed timeframe. This advice shall be included in the draft Scenario Report submitted for ACER’s Opinion and European Commission’s approval.
• At the end of the scenarios-development process, formulate (a second) advice including an evaluation of the process and recommendations for improvements for the next biennial cycle. The SRG shall share this advice with ACER and the ENTSOs.
• Be an instrument through which the ENTSOs can organise the broad consultation foreseen in Article 12(3) of the TEN-E Regulation.

ACER expects the SRG to offer continuity beyond the biennial TYNDP cycle. ACER encourages the SRG to be involved in the TYNDP 2024 scenarios to the extent possible and formulate an evaluation of the process, while preparing the next scenarios-development cycle.  

What are the next steps?

ACER calls on all interested stakeholders to sign up for the ‘Scenarios ETAG’ Stakeholder Reference Group (via the ENTSOs’ online form). ACER will be an observer to the group and will check that it can function independently as foreseen in the Framework Guidelines.

Access the calls by ENTSO-E and ENTSOG.

ACER publishes today the 32nd edition of its REMIT Quarterly.

What is the REMIT Quarterly?

The REMIT Quarterly is ACER’s main channel of communication with stakeholders on REMIT-related matters, providing updates on ACER’s REMIT activities.

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

The 32nd edition of the Quarterly has an improved format and wider scope. It covers the first quarter of 2023 and features:

• Cross-border capacity hoarding;
• A summary of the European Commission’s proposals for amending REMIT;
• A report on the potentially distortive use of cross-border wash trades in Single Intraday Coupling (SIDC);
• The statistics for registered reporting mechanisms’ (RRMs’) contingency reports;
• An updated overview of the sanction decisions for the past four quarters, with 364 REMIT cases under review at the end of the first quarter;
• A brief overview of trading on organised market places in the first quarter; and
• Other latest REMIT updates.

Access the 32nd issue of REMIT Quarterly.

Access all issues of REMIT Quarterly.

ENTSOG is required to publish a draft cost-benefit analysis (CBA) methodology for hydrogen infrastructure projects, in accordance with Article 11 of the recast Trans-European Networks for Energy (TEN-E) Regulation.

ACER contracted VIS Economic & Energy Consultants to conduct a study to identify recommendations for European Network of Transmission System Operators for Gas’s (ENTSOG’s) future CBA methodology for hydrogen infrastructure.

What are the key findings?

The VIS study:

• Assesses existing CBA documents and technical-economic assessments for hydrogen infrastructure;
• Reviews hydrogen transportation plans and supply/demand targets in selected EU Member States;
• Assesses market and network conditions justifying building hydrogen infrastructure; and
• Provides recommendations to ENTSOG for a CBA methodology for hydrogen infrastructure consistent with CBA methodologies used for other types of energy infrastructure projects.

The recommendations have been clustered into four thematic groups:

The main findings of this study were presented during the ACER webinar on 14 April 2023.

What are the next steps?

• ENTSOG’s CBA methodology will first be used for the development of the European wide ten-year network development plan (TYNDP) 2024 and the following selection process of Projects of Common Interest (PCI).
• ENTSOG is currently consulting on its preliminary CBA methodology. After concluding the consultation, ENTSOG will adapt its preliminary methodology and submit a draft CBA methodology to ACER, the EU Member States and the European Commission.
• ACER shall provide its Opinion within three months upon ENTSOG’s submission, which is expected in June 2023. This consultancy study provides ideas that ACER will consider for its Opinion. However, the information and the views set out in this study are those of the author (VIS) only and may not, in any circumstances, be regarded as stating ACER’s official position, opinion, or recommendation. ACER does not guarantee the accuracy of the data and the statements contained in the study.

Access the consultancy study about cost-benefit analysis for hydrogen networks.

On 19 December 2022, the national regulatory authorities (NRAs) of the Nordic Capacity Calculation Region (CCR) requested an extension to decide on the Nordic Transmission System Operators’ (TSOs’) proposed amendment to the market-based cross-zonal capacity allocation methodology.

On 14 April 2023, ACER granted an extension of six months to the Nordic CCR NRAs (Denmark, Finland, Sweden).

What is the market-based allocation process?

The market-based allocation process compares the market value of cross-zonal capacity for the electricity balancing capacity market with the forecasted market value for the day-ahead electricity market. It then allocates the capacity to the market that generates the most welfare by using the cross-zonal capacity, which:

• allows the integration of balancing capacity markets;
• creates welfare;
• lowers the costs for the procurement of balancing capacity;
• lowers the costs for tariff payers; and
• ensures security of supply.

What are the next steps?

Nordic NRAs have until 28 June 2023 to decide on the proposal of the Nordic TSOs’ for amendment to the market-based cross-zonal capacity allocation methodology.

Access the ACER Decision 09/2023 on the extension request for Nordic CCR.