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

What is a resource adequacy assessment?

The European Resource Adequacy Assessment (ERAA) identifies potential concerns about electricity resource adequacy across the EU and provides an objective framework for assessing the need for additional national measures to ensure security of electricity supply. ERAA is carried out on an annual basis by the European Network of Transmission System Operators for Electricity (ENTSO-E) and reviewed by ACER. In May 2024, ACER approved ERAA for the first time.

Member States can complement the European analysis with their own national assessment (NRAA). While national assessments follow the ERAA methodology, they may introduce changes in terms of, for example:

• new information as it becomes available since the latest ERAA;
• national specificities that are not reflected in ERAA.

Why an ACER Opinion?

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.

In some cases, ACER’s opinion can play a role in the capacity mechanism application process. This process includes:

• identifying the necessity for the State aid measure;
• drafting the market reform plan;
• designing the eventual State aid measure.

Once all steps are finalised, the Member State may offer additional remuneration to resources through the capacity mechanism to close the forecasted adequacy gap.

What are ACER findings?

• The Estonian NRAA includes elements that represent a positive benchmark for future national assessments by:
  • Modelling the relevant neighbouring countries (and ensuring the interconnected market is taken into account).
  • Using ERAA 2023 as a starting point to ensure consistency and comparability between the two assessments.
• The differences with some of the ERAA 2023 assumptions are justified, as the Estonian NRAA:
  • Incorporates new information about interconnector commissioning and renewable energy development.
  • Better reflects regional specificities concerning balancing reserves.
  • Includes a sensitivity analysis to illustrate the role of oil shale-based generation at national level.
• However, the application of the updated assumptions is inconsistent throughout the assessment. While they have been used to recalculate the resource adequacy risk, their impact on the market (e.g. whether investments in new resources can mitigate the adequacy risk) has not been evaluated.

What are the next steps?

Considering these findings, ACER recommends the Estonian Transmission System Operator to assess how the new assumptions may impact the market and, if necessary, to amend the NRAA. This will improve the consistency of the Estonian adequacy assessment and the robustness of its results.  

ACER approves Transmission System Operators’ (TSOs’) proposal to amend the methodology for calculating scheduled exchanges resulting from single day-ahead coupling (SDAC). The amendment, proposed by TSOs on 21 March 2024, was referred to ACER by the European National Regulatory Authorities (NRAs) on 24 May 2024.

The methodology describes how the scheduled exchanges between bidding zones, scheduling areas, and Nominated Electricity Market Operators’ (NEMOs’) trading hubs are calculated in the SDAC.

What are the amendments about?

TSOs deemed it necessary to improve the SDAC algorithm to enable the effective implementation of the 15-minute Market Time Unit (MTU) in the SDAC (required for January 2025).

The amendments will allow handling an increased volume of data within the limited calculation timeframe. To do so, a back-up functionality for the calculation of the scheduled exchanges between bidding zones was introduced.

To foster the implementation of the 15-minute MTU, ACER has also amended the single day-ahead coupling products methodology.

What are the next steps?

TSOs shall implement the amendments by the time the 15-minute MTU becomes operational in the SDAC (required in January 2025).

ACER approves Nominated Electricity Market Operators’ (NEMOs’) proposal to amend the single day-ahead coupling (SDAC) products methodology.

The methodology lists all products that are eligible for inclusion within the EU single day-ahead coupling.

What are the amendments about?

NEMOs deemed it necessary to amend the SDAC products methodology to:

• enable the implementation of the 15-minute Market Time Unit (MTU) products into the SDAC;
• remove entry barriers for those market participants trading 15-minute MTU products; and
• allow them to buy and sell electricity for each 15 minutes during the day, enhancing market flexibility.

In its Decision 13-2024, ACER has revised NEMOs’ proposal and agreed to introduce a clear division between product categories, as well as to improve the overall structure and clarity of the document.

To foster the implementation of the 15-minute MTU, ACER has also amended the methodology for calculating scheduled exchanges resulting from single day-ahead electricity market coupling.

What are the next steps?

NEMOs shall implement the amendments by the time the 15-minute MTU becomes operational in the SDAC (required by January 2025).

In November 2023, ACER received a proposal from Nominated Electricity Market Operators (NEMOs) for amending the ACER’s 2020 methodology for the price coupling algorithm and the continuous trading matching algorithm.

The methodology sets the regulatory framework for:

• the algorithms used for matching orders; and
• allocating cross-zonal capacities in the European day-ahead and intraday electricity markets.

After consulting with stakeholders (in winter and spring) and hosting two webinars (in February and June), ACER made revisions to the NEMOs’ initial proposal. Today, with its Decision 11-2024, ACER has adopted the amended methodology.

What’s new?

The updated methodology, in particular the day-ahead coupling algorithm, enables the investigation of a co-optimised allocation of cross-zonal capacity (‘co-optimisation’). This approach would allow the efficient sharing of the available cross-zonal capacity between energy trading and exchanges linked to balancing services, facilitating the integration of balancing capacity markets.

Research will identify the best co-optimisation approach

ACER’s Decision requires NEMOs, in collaboration with Transmission System Operators (TSOs), to conduct the necessary research and development (R&D) activities to fully understand the technical feasibility, impacts, and implications of integrating co-optimisation into the price coupling algorithm. This R&D work will be structured around four milestones and is expected to finish in November 2026.

ACER expects the R&D outcomes to provide sufficient information to determine the best approach for implementing co-optimisation and estimate a realistic timeline for its introduction in the day-ahead electricity market.

What are the next steps?

After the required R&D activities are finalised, ACER will analyse the findings and discuss their implications with NEMOs and TSOs. Based on these discussions and if required, ACER may request further amendments to the algorithm methodology and related Terms, Conditions and Methodologies (TCMs).

On 31 July 2024, ACER received a proposal from Transmission System Operators (TSOs) to amend the harmonised methodology for cross-zonal capacity allocation for the exchange of balancing capacity or sharing of reserves.

What is the methodology about?

This methodology provides a harmonised approach for effective allocation of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves. Having an optimised allocation of cross-zonal capacity is important to:

• Foster the integration of balancing capacity markets.
• Lower the costs of procuring balancing capacity (hence the costs for tariff payers).
• Ensure the security of electricity supply.

The methodology harmonises the processes (i.e. market-based and co-optimisation) that compare the market value of cross-zonal capacity between balancing capacity and day-ahead electricity markets. These processes then allocate the available cross-zonal capacity to each market in a way that maximises overall welfare.

Why amend the methodology?

The current methodology was approved by ACER in July 2023.

Amending the methodology is necessary to clarify the governance of the market-based process, covering both its implementation and operation. This aims to ensure the process runs efficiently and encourage more TSOs to apply it.

Additionally, TSOs proposed to:

• Establish a process and governance framework to set different maximum limits for exchanging balancing capacity or sharing reserves.
• Amend the provisions to distribute congestion income among TSOs.
• Allow the possibility of delaying the implementation of the harmonised market-based process beyond 31 July 2026.

What are the next steps?

ACER expects to:

• Run a public consultation from 16 September to 14 October 2024 to collect views from stakeholders and inform its decision-making process.
• Reach a decision by 31 January 2025.

Update as of 30 January 2025: with its Decision 01-2025, ACER adopted the amended methodology.

Today, ACER releases its first interactive dashboard on monitoring the implementation of the Imbalance Settlement Harmonisation (ISH) methodology.

What is the ISH methodology?

The ISH methodology, introduced in 2017 by the Electricity Balancing (EB) Regulation and approved by ACER in 2020, aims at harmonising the main features of electricity imbalance settlement across the EU.

Each Transmission System Operator (TSO) calculates the difference between the forecasted and actual electricity consumption or production for each Balance Responsible Party (BRP) in its area. By identifying these imbalances, BRPs can take actions to support the power grid’s balance, helping to maintain or restore the balance between electricity supply and demand.

With the implementation of the ISH methodology, the TSOs were required to harmonise the main features of the imbalance settlement:

• Imbalance calculation, including its position, actual allocated volume, and imbalance adjustment.
• Main components for calculating the imbalance price. Additional components such as scarcity, incentivising, and connecting TSOs’ financial neutrality may also be used if approved by the NRA.
• Use of single or dual imbalance pricing:
  • Single (EU’s target model): imbalances are settled at a single price, regardless of whether they result from excess supply or excess demand. This pricing incentivises BRPs to help restore the system’s balance.
  • Dual: different prices apply for positive (excess supply) or negative (excess demand) imbalances. This pricing incentivises BRPs to maintain their own balance.

Why is the harmonisation of ISH aspects important for the electricity market?

Harmonising these aspects across EU Member States creates a more integrated and efficient electricity market. It ensures that imbalance prices accurately reflect real-time energy values, provides consistent incentives for market participants, and enhances the transparency and efficiency of balancing markets. This, in turn, supports the stability and reliability of the electricity grid, key for meeting the EU's energy goals and transitioning to a sustainable energy future.

What did ACER monitoring find?

ACER’s 2024 monitoring exercise evaluated the implementation degree of each ISH methodology feature by each TSO. The analysis is based on the data received from the TSOs of 23* EU Member States (the methodology is not applicable in Malta and Cyprus, while Austria* and Bulgaria did not submit their data).
*Update of 19 August 2024: The analysis is now updated with the data received from 24 Member States (after Austria submitted their data on 30 July 2024).

The ACER monitoring found:

• The ISH methodology has been fully or largely implemented in nearly all observed Member States (22).
• 5 TSOs do not use any additional components, 19 TSOs (from 16 Member States) are using one or more additional components, and 2 TSOs are in the process of implementing the use of additional component/s.
• 20 TSOs (from 17 Member States) use single imbalance pricing, 5 TSOs use dual pricing while 1 TSO is in the process of implementing the use of dual pricing.

What are the next steps?

In the coming months, ACER will continue to check the implementation status of Terms, Conditions and Methodologies (TCMs) of the:

• Electricity Balancing (EB);
• Capacity Allocation and Congestion Management (CACM);
• Forward Capacity Allocation (FCA); and
• System Operation (SO).

The information collected will be the foundation of ACER’s implementation monitoring dashboards (the next expected in 2025). Relevant stakeholders will be notified in due time about when and how to submit their data.

What else is new?

Have you checked ACER’s updated Electricity Balancing TCMs monitoring webpage? It offers a clear, colour-coded overview of each TCMs’ implementation status, complete with useful links and key dates.

On 22 May 2024, the National Regulatory Authorities (NRAs) of the Continental Europe Synchronous Area requested from ACER a six-month extension to decide on the Transmission System Operators’ (TSOs') proposal to introduce a probabilistic dimensioning approach of Frequency Containment Reserves (FCRs). This new approach aims to improve how FCRs are calculated to stabilise the power grid’s frequency during supply and demand imbalances.

On 23 July 2024, with its Decision 10/2024, ACER has granted the extension requested by the NRAs, who now have until 17 January 2025 to reach an agreement on the TSOs’ proposal for probabilistic dimensioning.

The countries of the Continental Europe Synchronous Area are Austria, Belgium, Bulgaria, Croatia, Czechia, Denmark, France, Germany, Greece, Hungary, Italy, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, and Spain.

What does Frequency Containment Reserve (FCR) mean?

Under the EU Network Code on System Operation, FCRs (also known as primary control reserves) are active power reserves used as a first response to stabilise the power grid’s frequency after an imbalance between supply and demand.

In the event of a frequency deviation (e.g. following a planned or unplanned power plant outage), their power output can be quickly adjusted to restore grid stability.

Why consider probabilistic dimensioning for FCR?

Historically, TSOs in this region have used a ‘deterministic’ criterion for FCR dimensioning, ensuring that the FCR can handle frequency deviations resulting from the worst-case system outages, typically set at 3000 MW.

In November 2023, TSOs proposed a ‘probabilistic’ dimensioning for FCRs, which considers load and generation patterns, as well as inertia factors (such as synthetic and real-time minimum inertia). This approach aims to enhance the power system’s resilience by reducing the probability of insufficient FCR capacity to once every 20 years or less.

Following a blackout in the south-eastern part of Continental Europe on 21 June, ENTSO-E has set up an Expert Panel and has invited ACER and relevant regulators in the region to join it. Today, ENTSO-E, ACER and the regulators in the region convened in the first meeting of this Expert Panel.

The investigation of the Expert Panel will be based on the data collected and analysed by ENTSO-E experts. The investigation of the Expert Panel will be finalised with a final report to be published on ENTSO-E website.   

On 21 June 2024 at 12:24 CET, due to a major incident in the Continental Europe power system region, a large part of the transmission systems of Albania, Montenegro, Bosnia and Herzegovina as well as Croatia suffered a voltage collapse followed by a total blackout in this area. The figure shows (in black) the geographic area affected by the incident of 21 June 2024 (in black). The rest of the Continental Europe power system was not significantly affected by the incident. Furthermore, thanks to the coordinated efforts of the affected TSOs the voltage on the 400 kV grid was restored within a few hours.

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

For latest updates on this incident and the next steps, check out the respective websites of ENTSO-E and of ACER.

ENTSO-E news:

• 15 July 2024: Grid incident in south-eastern part of the Continental Europe power system - update
• 21 June 2024: Grid incident report South-Eastern part of the Continental Europe power system