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.

ACER has updated its data dashboard, which tracks monthly changes in household energy prices across EU Member States and Norway from January 2019 to December 2024.

The dashboard provides valuable insights for policymakers, consumer protection groups, and EU citizens by highlighting trends in end-user electricity and gas prices, supporting informed decisions on energy affordability and system costs.

What are the key findings?

Electricity prices: In 2024, household electricity prices decreased by 5% compared to 2023. This was mainly due to a 17% fall in the energy component of prices. However, this decline was partially offset by higher network costs and the phasing out of certain subsidies. In Q4, prices and their composition remained steady, showing no significant changes compared to the previous quarter.

Gas prices: Similarly, household gas prices fell by an average of 7% in 2024, driven by the 20% drop in the energy component. Removal of subsidies contributed to a rise in the tax component, partially offsetting the decrease. In the last quarter, the average end-user gas prices slightly increased.

What lies ahead?

The drop in energy costs reflects the impact of Europe's growing use of renewable energy. However, as renewable energy generation expands, there will be a need for substantial investment in energy infrastructure, which could lead to higher network costs in the future.

The European Commission’s upcoming Action Plan on Energy Affordability will be key in addressing these challenges. The current trends highlight the importance of looking at the overall costs of the energy system (including network and infrastructure expenses), rather than focusing solely on commodity costs.

ACER will continue updating the dashboard quarterly to monitor the developments in energy affordability for European consumers.

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

After consulting with stakeholders in the autumn of 2024, ACER revised the TSOs’ proposal. Today, with its Decision 01-2025, ACER has adopted the amended methodology.

The methodology (approved by ACER in 2023) 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 rely on an algorithm that optimises the allocation of available cross-zonal capacity in a way that maximises overall market welfare.

Why did ACER amend the methodology and what’s new?

The updated methodology:

• clarifies the governance of the market-based process to ensure its efficient implementation and operation;
• allows to establish rules for distributing congestion income resulting from cross-zonal capacity allocation among TSOs.

ACER’s Decision also grants TSOs more time to develop the harmonised market-based software and offers flexibility to those already operating regional market-based processes to adapt to the methodology’s new requirements.

What are the next steps?

TSOs are required to develop the harmonised market-based software by June 2026.

Full implementation of the harmonised market-based allocation process is not expected before September 2027, pending approval from the relevant National Regulatory Authorities (NRAs).

ACER is establishing an Expert Group to assess flexibility needs in the EU electricity system. We are looking for professionals with expertise in power market modelling, energy markets, energy systems, energy economics, energy policy and energy regulations.

What will be the Expert Group’s focus?

Due to the massive ramp up of renewable energy, the EU’s power system flexibility needs are expected to double by 2030. The recently adopted Electricity Market Design (EMD) Regulation (2024) mandates ACER to conduct a pan-European flexibility needs assessment. The assessment, expected to be published in July 2027, will be based on the methodology currently being developed by the European Network of Transmission System Operators for Electricity (ENTSO-E) and DSO Entity.

Through this assessment, ACER will evaluate how well the EU’s electricity system can adapt to fluctuating demand and generation patterns to cost-effectively integrate increasing shares of variable renewables while ensuring security of supply. It will also evaluate the potential impact of introducing new measures to unlock flexibility on the European electricity markets.

This harmonised assessment will further provide the European Commission and other stakeholders with essential data and insights to inform policy decisions aimed at enhancing the resilience, stability, and efficiency of the EU's electricity market.

The Expert Group will support ACER in the development of a robust analytical tool to complete this assessment.

Experts will provide valuable insights and recommendations on:

• modelling techniques and their implementation;
• solutions to simulate and quantify the flexibility needs of the system; and
• other key topics related to improving system flexibility. 

The group will operate for two years, i.e. until April 2027, with the possibility of extension if further engagement is needed.

How to apply?

Follow the instructions in the Open Letter, ensuring that you fulfil all the criteria. The deadline for applications is 10 February 2025.

Today, ACER has submitted to the European Commission its Recommendation to amend the HVDC Network Code, which sets binding rules for connecting high-voltage direct current (HVDC) systems and direct current (DC) connected ‘power park modules’ to the grid. 

Why amend the rules? 

These amendments aim to safeguard future energy system needs in the EU. Substantial growth in generation capacity of isolated offshore Alternating Current (AC) networks (or AC hubs) is expected. 

This ACER Recommendation aims to address the changes in the electricity sector, focusing on the growing role of offshore power park modules, demand facilities, power-to-gas units (e.g., electrolysers for renewable hydrogen), electricity storage, and HVDC systems connecting isolated (AC) networks.  

Key terms explained:  

• Power park modules refer to offshore generators, comprising a single or a set of generating units connected to the offshore AC network (e.g., wind, solar, wave, etc.). 

• AC hubs will connect large-scale (tens of GW) offshore power generation and large-scale industrial demand (electrolysers) along with storage and other demand. 

• Demand refers to system users that are consuming electricity from the network (e.g., power-to-gas units, industrial consumers, etc). 

What is this ACER Recommendation about? 

In December 2023, ACER recommended amending the Network Codes on requirements for grid connection of generators and demand connection. To ensure consistency in grid connection rules and address new system needs (e.g., offshore networks and new system users like storage and demand facilities), ACER initiated the amendment process of the HVDC Regulation. 

ACER proposes: 

• Expanding the Network Code’s scope to include new offshore demand facilities, power-to-gas facilities (mainly electrolysers), offshore electricity storage, and HVDC systems connecting isolated AC networks. 

• Introducing technical requirements for new offshore demand facilities, power-to-gas facilities (mainly electrolysers), and offshore electricity storage to support both interconnected and offshore systems. 

Process and next steps 

This ACER Recommendation is the result of extensive engagement including: 

• Public consultation (June-September 2024).   

• Webinar (June 2024).

ACER reviewed the stakeholders’ feedback and consulted the European Network of Transmission System Operators for Electricity (ENTSO-E) and other stakeholders to finalise the Recommendation.  

The next step is for the European Commission to adopt the Network Code in line with the Electricity Regulation.  

ACER is forming a new Expert Group to provide advice on peak-shaving products. We are looking for experts (e.g. engineers and/or economists) with relevant expertise in electricity markets.

What are peak-shaving products?

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 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 direct system operators to use peak-shaving products to reduce power demand, helping to stabilise the grid and lower prices.

The EMD Regulation also mandates ACER to assess the potential impact of developing peak-shaving products on Europe’s electricity market under normal market conditions. To this end, ACER will launch a public consultation in spring 2025.

What will the Expert Group do?

The Expert Group will advise ACER on how developing peak-shaving products (i.e., products aiming to reduce electricity consumption during peak hours) might affect the EU electricity market. Experts will explore the products’ feasibility, main benefits, and potential drawbacks. They will also advise ACER in assessing whether these products can be introduced without disrupting the functioning of electricity markets or redirecting existing demand response services towards peak-shaving products.

The group will operate until summer 2025, with the possibility of extending throughout the year for further analysis.

How to apply?

Follow the instructions in the Open Letter, ensuring that you fulfill all the criteria. The deadline for application is Monday, 20 January 2025.

Read more about the Expert Group.

Today, ACER publishes its Monitoring Reports on electricity infrastructure, and security of electricity supply respectively.

ACER’s first electricity infrastructure Monitoring Report:

• Assesses the cost impacts of investing in electricity transmission and distribution networks to keep pace with the energy transition.

• Analyses how cross-border electricity network planning aligns with grid capacity needs.

ACER’s annual Monitoring Report on security of EU electricity supply:

• Examines implementation by Member States and the European Network of Transmission System Operators for Electricity (ENTSO-E) of the resource adequacy framework to safeguard Europe’s security of electricity supply.

• Provides new information on measures aimed at securing electricity supplies (i.e. national capacity mechanisms) and supporting non-fossil flexibility.

• Assesses whether national capacity mechanisms align with the European goals of decarbonisation and affordability.

What are ACER’s key findings?

• The stakes are high for the clean energy transition. Failing to address power grid capacity needs and the persistent support of fossil-fuel generators by capacity mechanisms risks delaying the energy transition. Europe has a unique opportunity. Speeding up grid development and increasing the capacity of existing grids play a big role in enabling decarbonisation.

• Containing system costs (one of the main drivers of electricity costs) is key for EU competitiveness: System costs refer to the expenses incurred beyond the cost of energy. These include grid-related costs, expenses associated with support schemes such as national capacity mechanisms, and other related expenditures which together add up significantly. ACER points to the need to contain the rise in costs: in 2023 the costs of capacity mechanisms increased by 40%. ACER’s monitoring forecasts network cost increase of 20-40% by 2030, and possibly up to 100% by 2050; if so, possibly endangering the overall affordability of electricity bills.  ACER points out that in many cases, increasing the capacity of existing electricity grids could be a less expensive alternative to new lines build-out.

• Implementation of the infrastructure planning and resource adequacy frameworks has advanced, but much more is needed promptly. For example, there is still no joined up (electricity and gas) infrastructure planning by the European gas and electricity transmission system operator bodies.

What are ACER’s recommendations?

• Prioritise efficiency:
  • Make better use of existing grids to increase grid capacity before building new ones.  
  • Ensure that any national capacity mechanism is firstly needed, well-designed, open to cross-border participation, and coordinated with any support schemes for flexibility to control costs.

• Further implement and improve the security of supply and infrastructure planning frameworks.

• Foster a more coordinated approach between Member States to lower security of supply costs and accelerate cost-efficient investments in regional infrastructure.

• Carefully monitor investments across all grid levels to track how grid developments align with the energy transition.

Would you like to find out more?

Dive into the reports and infographics:

Electricity infrastructure Monitoring Report.

Security of EU electricity supply Monitoring Report.