ACER kicks off its 2025 Monitoring Report series with key insights into the EU energy markets, highlighting major developments in 2024, and examining the interplay between gas and electricity markets in the energy transition.

What are the key findings?

The report highlights progress towards Europe’s transition to clean energy, persistent challenges (such as high and volatile energy prices for European consumers and businesses), and how to address them. It sets out ACER’s recommendations on how Europe can unlock a clean, secure and competitive energy future.

• 2024 recorded the lowest energy prices since 2021, but with noticeable regional differences. Gas prices averaged 34 €/MWh and electricity averaged 81 €/MWh. The surge in negative and very low prices in 2023 intensified in 2024.
• Energy market prices remained volatile (but less extreme than during the crisis), driven by gas supply risks and renewables’ variability. Frequent swings in electricity prices (within a day) persist – on 70% of days, electricity price variations within the day reached 50€ or higher. Electricity price swings reveal a need for more short-term flexibility.
• Renewables grew significantly, accounting for 35% of power generation. Solar power confirmed its leading role in the energy transition whilst nuclear and hydro came back.
• Europe’s clean energy transition faces persistent challenges. Gas supply risks and unpredictable weather later in the year kept market prices volatile. In December, a ‘dunkelflaute’ episode in Germany sent electricity prices to nearly 1,000 €/MWh (far above the 81 €/MWh annual average). 
• Gas as a flexibility provider. Fossil fuels, especially gas and coal, remain essential for meeting peak electricity demand.

ACER’s recommendations to address these challenges:

For decarbonisation and global competitiveness, Europe must place renewed effort on further expanding EU energy market integration, enhancing energy efficiency, and driving power grid innovation:

• Target new transition cost drivers: Network costs are at risk of doubling by 2050. Enhancing grid capacity (rather than new build) is part of the solution. Better network tariffs and 'efficiency first' incentives to prevent stranded assets play an important role. Ensure capacity, flexibility, and renewables remain affordable while securing long-term supply.
• Harness energy efficiency and flexibility: Use demand response, electric vehicles (EVs), and batteries to balance supply and demand, cut price swings, and strengthen grid resilience, especially at peak times.
• Expand energy market integration: Support cross-border renewable use for flexibility and security. Strengthen interconnections to cut fossil fuel reliance and build trust in Europe’s energy markets.

Looking ahead 

In its 2025 Monitoring Report series, ACER will continue to pave the way for a clean, secure and competitive energy future by shedding light on:

• strengthened cross-border cooperation;
• energy transition monitoring; and
• efficient grid investment.

Upcoming reports:

• ACER's Monitoring Report on removing barriers to demand response (to be published here on 8 April).
• ACER’s report on EU electricity tariff practices (coming on 26 March).

In October 2024, ACER published its assessment on the need to develop Power Purchase Agreement (PPA) contract templates in the EU energy markets, concluding that existing templates, developed by industry associations and national bodies, are largely sufficient for current market needs.

To support market participants and facilitate PPA contracting, ACER has committed to gathering and publishing a list of publicly available templates on its website.

What are PPAs?

PPAs are contractual arrangements between electricity producers (often renewable energy generators) and buyers. By providing renewable electricity at mutually agreed rates, these contracts foster stability for both parties and promote renewable energy sources (RES).

Share your template!

ACER invites stakeholders to submit their PPA templates (not actual contracts), along with the following information:

• Organisation name.
• Link to the online template (do not submit PDFs or Word documents).
• Functional email address.
• Date of the last update.
• Jurisdiction, applicable legal basis and any comments.
• Language of the template.

Please submit the requested information to PPA.assessment@acer.europa.eu by 11 April 2025.

What are the next steps? 

After the deadline, ACER will publish the collected templates and continue to update the list throughout the year.

Today, ACER publishes its second monitoring report on the reporting obligations of Regional Coordination Centres (RCCs).

Regional Coordination Centres (RCCs) were introduced in 2022 under the Electricity Regulation to facilitate coordination among electricity transmission system operators (TSOs) across regions. Their aim is to enhance grid stability, foster security of supply, and contribute to the EU’s climate and energy goals.

As part of their reporting obligations, RCCs are required to detail the outcomes of their activities, including:

• operational performance monitoring;
• coordinated actions;
• issued recommendations; and
• designated tasks.

What is ACER’s report about?

Since 2023, ACER has been monitoring RCC reporting, as required by the ACER Regulation.

ACER’s second monitoring report provides an overview of how RCCs fulfilled their reporting obligations in 2023, their first full year of operation. The report was drafted in close cooperation with national regulatory authorities (NRAs), with input from the European Network of Transmission System Operators for Electricity (ENTSO-E) and RCCs.

What did ACER monitoring find? 

RCCs provided detailed reporting on nine out of sixteen tasks:

• coordinated capacity calculation;

• coordinated security analysis;

• common grid model;

• consistency defence and restoration plans; 

• short-term adequacy;

• outage planning coordination;

• training and certification; 

• post-disturbance analysis; and 

• regional sizing of reserve capacity.

ACER finds that, compared to their initial period of operation (i.e. the second half of 2022, where no tasks were fully implemented by all RCCs), important progress was made. Specifically, all RCCs reported having implemented four tasks: 

• common grid model;
• post-disturbance analysis;
• outage planning coordination; and
• short-term adequacy.

Additionally, coordinated capacity calculation is now operational in most RCCs, though further development is needed for long-term timeframes.

RCCs reported challenges in the performance of some of their tasks, including:

• coordinated capacity calculation (e.g. missing or invalid TSOs’ inputs);
• coordinated security assessment and outage planning coordination (e.g. inadequate IT infrastructure);
• common grid model (e.g. performance issues); and
• post-disturbance analysis (e.g. communication issues).

What does ACER conclude?

ACER encourages RCCs to:

• Ensure swift implementation of their tasks.
• Clarify how responsibilities are rotated among RCCs.
• Improve the performance of the common grid model task and regularly report on any obstacles encountered.
• Extend capacity calculation to cover all timeframes (including long-term and balancing timeframes). 
• Broaden outage planning coordination to include power-generating modules and demand facilities.
• Assess whether relevant RCCs can contribute to the system monitoring of TSOs where necessary. 
• Improve the quality of RCC reporting by providing more detailed and clear information.

What are the next steps?

The next ACER monitoring report is scheduled for late 2025 and will cover the 2024 reporting period (monitored by ACER during 2025).

ACER publishes today its annual report on the implementation of the Inter-Transmission System Operator Compensation (ITC) mechanism for 2023. 

What is the ITC mechanism?

The ITC mechanism, coordinated by the European Network of Transmission System Operators for Electricity (ENTSO-E), compensates transmission system operators (TSOs) for the costs of hosting cross-border power flows, including power losses and infrastructure investments. This compensation is financed through the ITC Fund, also managed by ENTSO-E. European TSOs contribute and receive money from the ITC Fund depending on how much electricity they import and export across national borders, as well as on the volume of transits they carry through their networks. 

The ITC mechanism is part of Europe's electricity infrastructure cost-sharing framework, which also includes cross-border cost allocation and congestion income distribution. In 2023, 35 parties participated in the mechanism, covering most of Europe.

ACER is responsible for overseeing the yearly implementation of the ITC mechanism and reporting its findings to the European Commission.

What are the report's key findings? 

• In 2023, the ITC fund reached a record high of nearly €1.24 billion, marking the fifth consecutive year of record values, with a 105% increase compared to 2022.

• The cost of power losses varied significantly, ranging from €56 to €400 per MWh, due to different procurement strategies and hedging instruments. These differences raised concerns about fairness for consumers.

• The average cost of losses rose by 165% (reaching €202 per MWh), with one third of ITC parties experiencing three- to six-fold increases in their losses, because of unprecedented heights and volatility of electricity wholesale prices in 2021, 2022 and 2023.

• Denmark, Austria, Switzerland, Poland, Slovakia and Czechia received over 75% of the total net compensation, while Italy and Norway paid more than half of the total net contributions.

• Perimeter countries (non-participating countries connected to the ITC parties’ networks), including Belarus, Morocco, Russia, Turkey, Ukraine and Moldova, contributed €16.7 million to the fund.

• Errors in Austria's electricity load data caused incorrect compensations for 2022 and 2023, leading to voluntary corrective payments by 20 ITC parties. 

• ENTSO-E improved its audit process by incorporating ACER data, enhancing transparency and raising data quality standards for both EU and non-EU ITC parties.

What are the next steps?

ACER reiterates its recommendations for further improving the ITC mechanism, including:

• incorporating more granular information on the measured volume of losses;

• implementing ex-post reconciliation of loss costs; and

• using forward markets to determine the value of losses when their valuation and coverage are market-based. 

Finally, ACER acknowledges that the current ITC mechanism, particularly its infrastructure fund, together with cross-border cost allocation and congestion income distribution does not fairly distribute the costs and benefits of cross-border electricity trade in Europe. ACER sees the need to review existing mechanisms to share costs and benefits of electricity network infrastructure arising from cross-border trade.

Access all ACER ITC monitoring reports.

On 7 March 2025, ACER submitted its proposal for a new EU-wide network code on demand response to the European Commission. This is the result of close collaboration with network operators and extensive consultation.

What is demand response?

Demand response is when consumers (retail and industrial) intentionally adjust their electricity consumption in response to a change in the electricity market price or a financial incentive to increase/decrease/shift the timing of their electricity consumption. This can be done for the purpose of balancing supply and demand or for solving congestion in the grid. For example, retail consumers can provide balancing services through bi-directional charging of their electric vehicles (EVs). Demand response development will enable lowering electricity supply costs (which are a key driver of electricity bills).  

Demand response in electricity markets is increasingly important to support more variable renewable generation such as wind and solar (with variable output that must be balanced), being added to the power grid. 

Why does this network code matter?

This network code will ensure that demand response resources (such as consumers, storage providers, and distributed generation) can fully participate in wholesale electricity markets, providing much needed flexibility to an evolving power system driven by renewable energy and thereby contributing to energy security and the transition to clean energy. 

To achieve this, the network code and the related amendments to existing regulations (balancing, system operation, and demand connection) cover four main areas:

• Market access: The new EU-wide rules will make it easier for smaller energy players to participate in electricity markets. A new European registry will standardise how demand response is measured, ensuring fairness and consistency.

• Service provider qualification process: New measures will make it easier for all resources to provide services to system operators, with simpler prequalification, product verification, and a national system for managing participation.

• Procurement processes: Clear rules will ensure that system operator services (such as congestion management and voltage control) are procured transparently and efficiently, with any exceptions to market-based methods requiring justification. Guidelines will also prevent distortions between different electricity markets.

• System operators’ coordination: Stronger collaboration between distribution and transmission system operators will help integrate more renewables, address congestion and voltage control issues, and prevent system disruptions. Clear rules will ensure that actions in one part of the system do not create problems elsewhere.

The process

In May 2024, ACER received the electricity system operators’ (EU DSO Entity and ENTSO-E) proposal for the draft network code, including the amendments to the three related electricity regulations. ACER revised the draft and consulted on it in autumn 2024. After making final amendments, ACER now submitted its proposal to the European Commission. 

What are the next steps?

The Commission will review the proposal and initiate the process of establishing the Demand Response (DR) Regulation and amending the three related regulations. Once adopted by Member States, these will become legally binding across the EU.

Get involved!

ACER will hold a webinar on 27 March 2025 to present its proposal for the network code on demand response, along with amendments to the three related electricity regulations. Register for free here.

Peak-shaving products are market-based tools that enable market participants to reduce their electricity consumption during peak demand periods in exchange for compensation.

Under the 2024 Electricity Market Design (EMD) Regulation, the Council can declare a regional or EU-wide electricity crisis if wholesale prices become excessively high. In such cases, Member States can instruct system operators to use peak-shaving products to reduce power demand, helping to stabilise the grid and lower prices.

ACER assessment

The EMD Regulation mandates ACER to assess the potential impact of developing peak-shaving products on the EU’s electricity market under normal market conditions. This assessment should also evaluate whether these products can be introduced without disrupting the functioning of electricity markets or redirecting demand response services towards peak-shaving products.

In February 2025, ACER established an Expert Group to provide guidance on the topic. To further strengthen this assessment, ACER will gather inputs from stakeholders through a public consultation from 20 March 2025 until 17 April 2025. 

Next steps

Based on the findings of ACER’s assessment (expected in summer 2025), the European Commission may propose amendments to the Electricity Regulation to introduce peak-shaving products beyond electricity price crisis situations. 

On 31 January 2025, ACER received a proposal from the Nominated Electricity Market Operators (NEMOs) for the Market Coupling Operation (MCO) integration plan.

What is the MCO integration plan?

The MCO integration plan aims to integrate NEMOs from Energy Community countries into the EU’s electricity day-ahead and intraday market coupling system. To achieve this, the plan should include:

• a detailed explanation of how the integration will work;
• a proposed timeline for implementation; and
• an assessment of how the integration may impact MCO functions.

The plan should also align with the existing MCO framework, which defines how EU NEMOs collaborate to establish and perform MCO functions (e.g. market coupling operations, algorithm management, capacity data processing), needed to ensure that electricity markets across countries operate efficiently.

Why is a decision needed?

The Capacity Allocation and Congestion Management Regulation, as adapted and adopted for the Energy Community, requires all NEMOs to submit a proposal for the MCO integration plan to ACER, regulatory authorities and the Energy Community Regulatory Board.

ACER is responsible for reviewing and approving the plan, ensuring it aligns with the EU electricity market framework.

What are the next steps?

ACER expects to decide on the MCO integration plan by July 2025.

Contact information 

Interested parties may contact ACER on this matter at ACER-ELE-2025-001@acer.europa.eu by 31 March 2025 at the latest.

Relevant documents

All NEMOs' proposal for the MCO integration plan.

Explanatory note.

Today, ACER releases its Opinion on the National Resource Adequacy Assessment of Poland. This is the second ACER Opinion on a National Resource Adequacy Assessment (NRAA).

What is a resource adequacy assessment?

The European Resource Adequacy Assessment (ERAA) evaluates electricity resource adequacy across the EU and provides an objective framework to assess the need for additional national measures to ensure security of supply. ERAA is carried out annually by the European Network of Transmission System Operators for Electricity (ENTSO-E) and reviewed by ACER.

Member States can complement the European analysis with their own national assessments (NRAAs). While the latter follow the ERAA methodology, they may capture new developments or national specificities that have not been reflected in the latest ERAA.

When a national assessment identifies new adequacy concerns, and the Member State informs ACER, ACER must issue an Opinion on the differences between the national and European assessments.

What are ACER’s findings?

In its Opinion, ACER identified three main differences between the Polish NRAA and ERAA.

ACER finds that Poland’s assessment:

• Updates assumptions on capacity resources, for example, by using revised estimates for nuclear and renewable energy capacity.
• Introduces additional modelling elements, e.g. thoroughly assessing the economics of capacity resources by analysing their revenues and costs. However, it does not fully account for the development of demand response and battery storage in the Polish market.
• Does not adequately consider the interconnected nature of Europe’s electricity market, as:
  • the country’s maximum import capacity indicated in the NRAA is more constrained than in practice (as shown in the figure below); and
  • exports are not considered.

This simplification does not highlight the benefits of cross-border electricity exchanges, which help reduce overall system costs and improve adequacy.

The figure compares the import (1.8 GW) and export (0 GW) limits in the Polish NRAA (yellow) with Poland's actual net import in 2023 (blue, where a positive value indicates net import).

ACER also notes that some issues (and their potential effects) identified in Poland’s NRAA were already observed in other monitoring activities:

• The Polish Transmission System Operator (TSO) applies “allocation constraints” (i.e. temporary measures foreseen by the regulation). In its report on cross-zonal capacities (July 2024), ACER found that these constraints occasionally limit electricity exports from Poland, even when its neighbours are in need. This has a stronger impact during Dunkelflaute events, i.e. when renewable energy production is reduced due to weather conditions. As a result, Poland’s electricity prices do not reflect regional shortages effectively, limiting earnings for local generators and demand response providers (see figure below).
• In its report on barriers to demand-side flexibility (December 2023), ACER found several barriers to demand response and other distributed resources in Poland. Addressing these barriers would facilitate the uptake of these resources, helping to alleviate concerns that might otherwise justify extending the existing capacity mechanism.

During a dunkelflaute event on 12 December 2024 at 16:00-17:00, the electricity price in Poland (165 euros/MWh) was several times lower than in its neighbouring countries. Source: ACER based on ENTSO-E Transparency Platform.

What are the next steps?

ACER recommends that the Polish Ministry of Climate and Environment and the Polish TSO take these findings into account and, if necessary, revise the NRAA.

This would improve the robustness of the Polish assessment and provide a more accurate picture of the country’s electricity adequacy. 

On 16 August 2024, the National Regulatory Authority (NRA) of the Netherlands asked ACER to decide on how to address insufficient risk hedging opportunities at the bidding zone border between the Netherlands and Norway (NL-NO2).

After consulting with stakeholders in autumn 2024 and assessing the potential impact of long-term transmission rights (LTTRs) on the NL-NO2 bidding zone border, ACER has now issued its Decision 02-2025.

Why was a decision needed?

The assessments performed by the Dutch and Norwegian NRAs found insufficient opportunities to hedge electricity prices in their respective bidding zones. Sufficient long-term hedging opportunities are important for market participants to hedge against price volatility and to mitigate uncertainty on future investment returns.

To address this issue, national regulators can request their Transmission System Operators (TSOs) to:

• Issue long-term transmission rights (LTTRs); or
• Ensure the availability of other long-term cross-zonal hedging products that can support the functioning of the wholesale electricity market.

Since the Dutch and Norwegian regulators could not reach an agreement, the decision was referred to ACER and the EFTA Surveillance Authority.

What are long-term transmission rights?

Long-term transmission rights are cross-border hedging tools provided by TSOs, enabling market players to manage price differences between bidding zones and reduce financial risks.

What did ACER decide?

ACER decided against the introduction of long-term transmission rights on the NL-NO2 bidding zone border. ACER’s assessment showed that:

• LTTRs would offer limited improvements to hedging opportunities in the Dutch and NO2 bidding zones;
• Financial LTTRs on this border would likely be undervalued, resulting in higher costs for consumers.

For this reason, ACER has asked the Dutch TSO to explore alternative measures to address insufficient hedging opportunities in these bidding zones.

The EFTA Surveillance Authority will issue a decision for Norway, following the procedure outlined in the EEA Agreement.

What are the next steps?

The Dutch TSO has six months to submit an alternative proposal to its NRA, outlining arrangements to improve hedging opportunities in these bidding zones.