The EU Agency for the Cooperation of Energy Regulators (ACER) found improvements in the selection of projects of common interest (PCIs) for trans-European energy infrastructure such as a list of gas projects where sustainability criteria has been considered and a more objective process for selecting electricity projects. However, in both ACER Opinions on the matter published today, one on gas projects and another one on electricity's ones, ACER also notes shortcomings including lack of transparency in the assessment methodologies.

The opinions also include the view of National Regulatory Authorities on specific candidate projects and provide further recommendations for future PCI selection processes.

ACER acknowledges the efforts by the European Commission to enable a smooth selection process, despite the pandemic-related difficulties prevailing at the time of the PCI selection.

Selection of gas projects resulted in shorter PCI list

The path towards decarbonisation shows in the selection of a shorter list of projects in the field of gas, where sustainability criteria has been considered.

In its opinion, ACER also highlights positively the fact the consultation period for PCI candidates was extended and that the indicators used in the infrastructure needs' methodology were simplified and aligned with the projects assessment's methodology. Furthermore, consistency was improved by applying the same threshold value across Regional Groups for project selection.

More objective selection process for electricity projects

In the field of electricity, ACER welcomes the European Commission’s steps towards a more objective selection process. This has been achieved by reducing the number of potentially subjective benefits established by project promoters and by eliminating the enhanced socio-economic welfare approach used in the previous PCI selection round.

Shortcomings for an in-depth analysis

Due to a lack of transparency in the assessment methodologies, ACER was not able to assess fully the consistency of the application of the criteria and the cost-benefit analysis in accordance to the EU Regulation for Trans-European Energy Infrastructure. In addition, while the regulation requires the consideration of multiple scenarios when selecting electricity projects, only one scenario was used.

ACER calls on the Regional Groups, responsible for proposing and reviewing projects of common interest, to continue their work on further improving the transparency of the process and the methodologies for assessing the candidate PCI projects taking into account ACER’s recommendations included in its Opinions.

Access the electricity PCI Opinion (its Annex) and the gas PCI Opinion.

On 24 July 2021 at 16:36 CET, due to a major incident in France, the transmission systems of Portugal and Spain, together with a small part of the French transmission system, were disconnected from the synchronous area Continental Europe for just over 30 minutes.

Based on preliminary data of transmission system operators (TSOs), the system separation is classified as a scale 2 or “extensive” incident as per ENTSO-E’s Incident Classification Scale (ICS).

According to the ICS Methodology, for scale 2 incidents, a final report shall be prepared by an Expert Panel, where relevant National Regulatory Authorities (NRAs) and the European Agency for the Cooperation of Energy Regulators (ACER) may be involved upon their request.

ENTSO-E has therefore set up an Expert Panel and has invited ACER and relevant NRAs to join it. The Expert Panel will first meet today, on 22 October.

The investigation of the Expert Panel will be based on the Interim Report that ENTSO-E is currently finalizing.  This Interim Report, which will be published on 12 November 2021, will contain the data, initial findings on the sequence of events and timeframes related to the incident. 

Expert Panel’s Final Report will have recommendations

The Expert Panel will prepare a Final Report, which shall describe the sequence of events and details of the transmission outages. It will also explain the causes and contain recommendations to prevent such incidents in the future.  The Expert Panel’s Final Report shall be published in first quarter of 2022.

ACER and ENTSO-E are committed to fulfilling their legal obligations specified in the System Operations Guideline and ICS Methodology. In line with the provisions of those documents, the Expert Panel will be chaired by a representative of a TSO not affected by the incident whilst all the members will contribute to the deliverables assigned on equal basis in order to ensure high quality and consistency of the final report.

ACER and ENTSO-E will continue together to provide timely information about the incident.

Access ACER-ENTSO-E Press Release.

Energy commodity prices have reached unprecedented high levels across Europe. Gas prices in October 2021 are 400% more expensive than in April 2021. Power prices have increased by 200% (driven mainly by the increase in gas prices). Governments are interested in identifying the key drivers and in determining if it is a temporary shock or a permanent shift. The answers to these issues will help inform their policy response.

Today, the EU Agency for the Cooperation of Energy Regulators (ACER) publishes a note providing data and insights on the recent high energy prices in Europe. ACER’s note on high energy prices:

• identifies the drivers and the impact on price levels across Europe;
• provides the dominant market outlook of how long it is likely to last;
• looks at certain market behaviours; and
• touches on some important policy considerations (both short term and longer term).

Why are energy prices so high and how long will it last?

While various factors have contributed to the high energy prices in Europe, the main driver is the surge in the price of natural gas, caused mainly by a tight global LNG market. Forward markets expect a significant drop in wholesale prices for gas and electricity in spring 2022. A key variable in the very near term is the upcoming winter and its implications for gas demand.

Policy considerations – short term and longer term

The European Commission’s is preparing  a “toolbox” of measures that national governments could use to respond to price hikes without endangering the functioning of EU wholesale markets. This note by ACER touches on a few select policy considerations related to this response, namely:

• disproportionate effects of high prices on vulnerable consumers and the possibility for Member States to mitigate this in the short term without unduly distorting fundamental market signals;
• the functioning and rationale of the current EU electricity market design vis-à-vis the current high prices;
• certain issues related to gas supply going forward such as possible joint purchasing of strategic gas reserves as well as possible obligations for gas storage; and
• longer term transition trajectories and the link to holistic policy.

Today’s energy price squeeze is a reminder of Europe’s still high-dependency on imported fossil gas and the inherent volatility of global commodity markets. It is also a reminder that a well-designed energy transition pathway going forward will rely on holistic policy that targets demand just as much as supply, focusing on both the short-term and the long-term. As such, Europe’s transition pathway will likely need to be a more “managed transition” in the years ahead with both government and regulatory monitoring playing a significant role.

See also the ACER Director’s presentation on Europe’s energy prices to Finance Ministers at the 4th October Eurogroup meeting.

ACER is gathering views and information regarding the proposal for the amendment of the methodology for pricing balancing energy and cross-border capacity used for the exchange of balancing energy or operating the imbalance netting process, which was submitted to ACER on 26 August 2021.

A public webinar will be held on 27  October 2021 on the same matter to present and discuss with stakeholders the proposal. 

The consultation will run until 10 November 2021, 23:59 hrs (CET).​

Access the Consultation.

Background

On 26 August 2021, all Transmission System Operators’ (TSOs) submitted to the European Union Agency for the Cooperation of Energy Regulators (ACER) their proposal for the amendment of the methodology for pricing balancing energy and cross-zonal capacity used for the exchange of balancing energy or operating the imbalance netting process in accordance with the EU Regulation establishing a guideline on electricity balancing .

Next steps

Having provided further amendments to the TSOs proposal, ACER is collecting comments from stakeholders in order to take an informed decision.

Top of the agenda of today’s Eurogroup meeting (4th October 2021) is the macro-economic situation in the euro area, including inflation and energy price developments. 

The Eurogroup is an informal body in which the Finance Ministers from the Eurozone discuss various euro-related matters concerning their countries' common responsibilities. Its main task is to ensure close coordination of economic policies among the euro area’s member states and promote conditions for stronger economic growth.

Mr Cristian Zinglersen, Director of the EU Agency for the Cooperation of Energy Regulators (ACER), was invited as a guest speaker today to update the Eurogroup on recent energy price developments. 

Among various topics, Mr Zinglersen addressed:

• the drivers of the energy price developments and impacts across Europe

• the outlook for the next six months, and

• policy considerations (short term, market design and broader energy transition pathways).

He explained that global gas (LNG) supply/demand dynamics play a key factor impacting energy prices, that the tight market conditions are expected to relax in Spring 2022, and that the policy implications are significant.

Register to ACER newsletter not to miss any updates on this topic.

In the meantime, check out the ACER Director’s slides.

The EU Agency for the Cooperation of Energy Regulators (ACER) has received on 26 August 2021 all transmission system operators (TSOs)’ proposal to amend the common methodology for harmonising the pricing balancing energy and cross-border capacity across the European electricity markets. The methodology is used for operating the exchange of balancing energy in the EU platforms or the imbalance netting process. The amendment proposes a reduction of the technical price limits of the integrated balancing energy markets. 

What are the next steps?

ACER will reach a decision on the proposal by 26 February 2022.

To take an informed decision, ACER will collect inputs by discussing with TSOs and National Regulatory Authorities (NRAs) in the course of the decision making process.

To collect inputs from all interested stakeholders, ACER will:

• open a public consultation from early October until early November 2021

• hold a public workshop (mid-October 2021)

What is the benefit of having a common pricing methodology for Europe?

The common pricing methodology for balancing energy and cross-border capacity provides the rules for the efficient and harmonised pricing of the balancing energy at European level, resulting from:

• bids activation

• cross-border capacity used for the exchange of balancing energy.

How does ACER contribute?

ACER ensures the decision on all-TSOs’ proposal is in line with the objectives of the Electricity Balancing Regulation and fulfils the legal obligations set out by its Article 30(2), as well as with those of the Regulation on the internal market for electricity.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today a methodological study to measure barriers to efficient price formation and easy market entry and participation for new and small players in the EU electricity wholesale markets. The study proposes a set of indicators and a methodology that will enable ACER to fulfil more effectively its new monitoring responsibilities set by the Clean Energy Package.

In particular, the study defines more than 70 indicators to be progressively included in future editions of the yearly ACER Market Monitoring Report (MMR) - Electricity Wholesale Market Volume. This will provide a comprehensive picture of the relative performance of the EU Member States in terms of efficient price formation and easy market entry and participation for new entrants and small actors.

The report describes:

• ​13 barriers to efficient price formation and nine barriers to easy market entry and participation for new entrants and small actors.

• More than 70 qualitative and quantitative indicators to measure these barriers.

• The methodology to combine these indicators and create two composite indicators:

  • ACER index on efficient price formation

  • ACER index on easy market entry for new players and small actors

• A pilot study conducted to test the data collection process, as well as the robustness of the composite indicators´ calculation tool.

The study has been conducted with the support of the consultancy DNV. Relevant inputs have also been collected from the National Regulatory Authorities (NRAs) and a wide range of stakeholders through a public consultation and a set of interviews.

ACER aims to enhance this methodology over the years by adapting some barriers and indicators proposed in the study and including new ones, as the market develops.

Access the study and read more about its main findings.

Background information

Following the adoption of the Clean Energy Package, ACER has expanded the scope of its monitoring activities. Among the others, ACER is required to monitor state interventions preventing prices from reflecting actual scarcity and regulatory barriers for new market entrants and smaller actors.

Furthermore, ACER is legally required to identify and report any barriers to the completion of the internal markets for electricity and natural gas. In order to fulfil this requirement, ACER produces an annual Market Monitoring Report. Its objective is to assess the functioning of the Internal Energy Market and to show how energy markets can work more efficiently.

The Market Monitoring Report comprises of three different volumes on the Electricity Wholesale Market, the Gas Wholesale Market, and the Retail Markets & Consumer Protection.​

Save the Date: The 2020 edition of the Electricity Wholesale Market and Retail Markets & Consumer Protection Volumes are upcoming in November 2021. Sign up to our Infoflash newsletter not to miss them.

The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on the proposals for market-based cross-border capacity allocation processes in the Baltic and Core regions.

These processes aim to maximise the welfare generated by the provision of cross-border capacities to the day ahead energy and balancing capacity markets.

In February 2021, the national regulatory authorities for energy from both regions have asked ACER to decide on the respective methodologies.

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

The Baltic region comprises of 6 countries: Estonia, Finland, Latvia, Lithuania, Poland and Sweden.

Two further proposals (submitted on a voluntary basis), respectively on the market-based cross-border capacity allocation process in the Hansa capacity calculation region (CCR) and on the regional cross-border capacity allocation process based on economic efficiency in the Core CCR, were withdrawn from the respective transmission system operators (TSOs).

Therefore, ACER will not take any decision on these two methodologies.

How did ACER contribute?

ACER revised both methodologies to improve the efficiency, transparency and non-discrimination of these capacity allocation processes for the exchange of balancing capacity or sharing of reserves.

Both ACER Decisions contribute to the integration of the balancing capacity markets by establishing the rules for allocating the cross-border capacity needed to facilitate the balancing capacity procurement at regional level.

Read more about ACER Decision 10-2021 on the Baltic CCR methodology and its Annexes.

Access ACER Decision 11-2021 on the Core CCR methodology and its Annexes.