Significant enhancement in electricity grid capacity is needed to realise Europe’s decarbonisation objectives and ensure a high level of security of supply. 

In the context of the European Commission’s EU Action Plan for Grids, ACER is looking at best practices to promote smart grids and network efficiency technologies through tariff design.

ACER has thus commissioned the Florence School of Regulation (FSR) to conduct a study on existing regulatory frameworks and how regulators could incentivise a more efficient use of existing and future electricity grids.

What is in the consultant’s report?

Building on the previous research conducted by FSR on behalf of ACER, this new report by FSR presents:

• An overview of regulatory practices in Europe, the United States and Australia that promote innovation and efficiency in electricity transmission investments.
• A new regulatory scheme which focuses on the value projects bring (i.e. benefit) and not on their costs. By sharing this benefit between the grid user and grid operator, a stronger incentive for technology-neutral solutions is created while mitigating the tariff increase (in comparison to the business as usual, e.g. investing into infrastructure alone).

Access the presentation from today’s launch event.

On 22 May 2024, the National Regulatory Authorities (NRAs) of the Continental Europe Synchronous Area (CE) requested from ACER a six-months 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.

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.

What are the next steps?

ACER intends to act promptly on this request, aiming to issue a decision by the end of July 2024.

If ACER decides to grant this extension, 11 January 2025 would be the new deadline for CE NRAs to reach an agreement on the TSOs’ proposal.

On 24 May 2024, the European National Regulatory Authorities (NRAs) referred to ACER a joint proposal from all Transmission System Operators (TSOs) to amend the methodology for calculating scheduled exchanges resulting from single day-ahead coupling (SDAC).

What is the methodology about?

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. Scheduled exchanges are electricity transfers scheduled between geographic areas for each market time unit and for a given direction.

Why amend the methodology?

The methodology was previously amended in May 2023 to improve how scheduled exchanges between NEMOs’ trading hubs are calculated.

In the new proposal, TSOs deem it necessary to further improve the SDAC algorithm to enable the effective implementation of the 15-minute Market Time Unit (MTU) in the SDAC (expected for January 2025). The robustness of the algorithm needs to be enhanced to handle the increased volume of data within the limited calculation timeframe. To achieve this, TSOs propose introducing a back-up functionality for the calculation of the scheduled exchanges between bidding zones.

What are the next steps?

ACER expects to decide on the amended methodology by September 2024.

Contact Information

Interested parties may contact ACER on this matter at ACER-ELE-2024-009@acer.europa.eu by 28 June 2024 at the latest.

Relevant documents

All TSOs’ proposal to amend the day-ahead scheduled exchanges methodology.

All TSOs’ proposal to amend the day-ahead scheduled exchanges methodology (in track changes).

Explanatory note.

On 8 May 2024, ACER received electricity system operators’ proposal for an EU-wide network code on demand response. The proposal was drafted by the EU Distribution System Operators Entity (EU DSO Entity) and the European Network of Transmission System Operators (ENTSO-E). Their proposal also includes amendments to the three related electricity network codes: balancing, system operation, and demand connection.

After reviewing and where necessary revising the system operators’ proposal, ACER will consult on its revised draft in autumn 2024 before submitting it to the European Commission by March 2025.

Why is this network code relevant?

The network code on demand response will:

• Establish harmonised rules to facilitate market access for demand response, including load, storage and distributed generation (aggregated or not).
• Enable market-based procurement of services by Distribution System Operators (DSOs) and Transmission System operators (TSOs).
• Be applicable in all EU Member States.

Demand response is key for integrating the growing share of renewable energy and new electricity loads (e.g. resulting from heat pumps and electric vehicles) in a cost-efficient way.

In developing this draft network code, ACER is contributing to a more cost-efficient and clean energy transition by facilitating access to EU wholesale electricity markets for smaller actors, including consumers.

Have your say!

ACER is running a public consultation from 5 September to 31 October 2024 on what will be ACER-revised draft proposal. ACER will run a  webinar during the consultation period, on 1 October 2024.

Background

In June 2022, ACER was mandated by the European Commission to draft a framework guideline on demand response which serves as guidance for the system operators to then draft the EU network code. After engaging stakeholders via a public consultation and a workshop during the summer of 2022, ACER submitted the framework guideline to the European Commission in December 2022. The European Commission cleared ACER’s framework guideline in March 2023, and asked the DSO Entity and ENTSO-E to draft the proposal for the new binding EU rules.

What are the next steps?

• ACER public consultation: 5 September - 31 October 2024.
• ACER webinar: 1 October 2024, 14:00-16:00 (CET).

ACER will submit the revised network code proposal to the European Commission by March 2025.

In the context of the ongoing revisions of the European grid connection network codes, ACER will consult with stakeholders (during summer 2024) to collect views on ACER’s concrete amendment proposals to the network code on grid connection requirements for high voltage direct current systems and related power park modules (NC HVDC).

What are the electricity grid connection network codes?

Network codes are binding rules governing connection requirements to the electricity networks in an effective and transparent manner. The codes are key for ensuring the safety of system operation and the efficiency of the EU's power grid. ​

There are three electricity grid connection network codes:

• The network code on requirements for grid connection of generators (RfG Regulation) establishes common standards for generators to connect to the grid.
• The network code on demand connection (DCC Regulation) sets up harmonised requirements for demand facilities to connect to the grid.
• The network code on requirements for grid connection of high voltage direct current systems (HVDC Regulation) covers the definition of harmonised standards for direct current (DC) connections.​​​​

Why change the rules?

The electricity grid connection codes were established in 2009, with the HVDC Regulation entering into force in 2016. Important developments to decarbonise the European energy and transport sectors happened since then:

• September 2022: ACER initiated the amendment process of the existing European grid connection network codes, as requested by the European Commission.
• December 2023: after consulting with stakeholders, ACER submitted to the European Commission its Recommendation 03-2023 proposing amendments to two grid connection network codes (on requirements for grid connection of generators and on demand connection).
• December 2023: the final report of the Grid Connection European Stakeholder Committee’s Expert Group on Connection Requirements for Offshore Systems was released (proposing amendments to the NC HVDC).
• End of 2024: ACER will submit to the European Commission its recommendation on proposed amendments to the third grid connection network code (the NC HVDC).

The revisions to the NC HVDC aim to:

• Enhance the existing grid connection regulatory framework.
• Align the code with the network codes on requirements for grid connection of generators and on demand connection.
• Ensure the interconnected system is adapted to emerging trends, such as the increasing generation capacity of offshore networks (AC hubs) and the connection of new system users (storage, demand facilities).

Have your say!

To inform its drafting of the amendment proposal to the NC HVDC, ACER will:

• run a public consultation from 17 June until 8 September 2024;
• hold a webinar on 24 June 2024 (09:30 – 11:00 CET).

On 13 May 2024, with its Decision No 07/2024, ACER amended the methodology for Coordinating Operational Security Analysis (CSAM).

The amendment proposal was submitted to ACER in November 2023 by the European Network of Transmission System Operators for Electricity (ENTSO-E), on behalf of Transmission System Operators (TSOs).

What is the role of the methodology?

CSAM supports the EU’s operational security by outlining the TSOs' requirements to ensure:

• the electricity transmission system is operated in a coordinated manner;
• an effective system operational planning;
• transparency and reliability of information on transmission system operation.

The methodology was first approved by ACER in 2019 under the Guideline on Electricity Transmission System Operation (SOGL) and amended in 2021.

What are the main improvements in the methodology?

The amendments relate to the implementation of the observability area (i.e., where TSOs implement real-time monitoring and modelling of their systems to maintain operational security), following the recommendations of the Incident Classification Expert Panel’s final report on Continental Europe Synchronous Area Separation on 8 January 2021.

The main changes include:

• Aligning the observability area reassessment period with that of the external contingency list (i.e., the list of contingencies to be simulated to test the compliance with the operational security limits). This alignment is important to ensure that the operational security analysis is carried out accurately across all timeframes.
• The inclusion of busbar couplers in the contingency lists and in the TSOs’ Individual Grid Models (IGMs), along with a defined timeline for implementation by the TSOs. This update ensures that the power flows are kept within the operational security limits after a contingency has occurred.

What are the next steps?

Within a year after the adoption of the new CSAM (by 13 May 2025), TSOs are required to update their ordinary contingency lists. These updates must specifically include the loss of a single busbar coupler, whether protected by an overcurrent protection device or by an over-/under-voltage protection device.

ACER approves the European Network of Transmission System Operators for Electricity’s (ENTSO-E’s) European Resource Adequacy Assessment for 2023 (ERAA 2023). However, ACER also calls for further enhancements in the next annual assessment (ERAA 2024).

ENTSO-E is required to assess, annually, the risks to EU security of supply in its ERAA. This assessment aims to provide an up-to-date outlook for 10 years ahead, helping policy makers to make timely security of supply decisions. The next edition, ERAA 2024, is due in November 2024.

What does ACER expect in the ERAA? 

ACER considers that a robust ERAA must:

• Forecast the level of EU security of electricity supply and identify concerns about potential scarcity of supply, basing this analysis on consistent assumptions and modelling approaches.
• Provide visibility on the electricity interdependencies of EU Member States by showing clearly how changes in one country’s demand and/or supply affect the electricity security of supply of another country.
• Show how Member States can rely on each other during times of power system stress.
• Provide an objective basis for assessing additional national measures (including State Aid) to improve the European security of electricity supply.

What does ACER say about ERAA 2023 and what improvements are needed for 2024?

ACER approves the European Resource Adequacy Assessment, marking a milestone for the security of electricity supply across the EU and acknowledging interdependencies among Member States. It is the first time in three years of ENTSO-E’s assessment that ACER has approved it (see ACER’s communications on ERAA 2022 and on ERAA 2021).

Considering that ERAA 2023 is the last assessment to be undertaken within the 3-year implementation period for complying with the ERAA methodology and the improvements made by ENTSO-E, ACER finds that ERAA 2023 is sufficient. In particular, ACER acknowledges the improvements made in:

• Increasing consistency of the assumptions used when modelling adequacy risks and investment behaviours.
• Analysing how the European network infrastructure evolved and expanded over time.
• Aligning more closely with the EU greenhouse gas emissions target for 2030.

However, for ERAA to fully comply with the methodology and be a reliable tool for policymakers, ACER considers that ENTSO-E must strengthen ERAA 2024 as follows:

• Adopt more robust modelling approaches.
• Estimate cross-zonal capacities by applying the flow-based capacity calculation method (as per current rules), rather than using Net Transfer Capacities (NTCs).
• Ensure greater consistency with market rules and improve the modelling of investment behaviour.

Failing to implement these improvements may compromise the robustness of the assessment. For example, without changing the modelling approaches, ERAA will be prone to inconsistencies between market entry and exit decisions and the estimated adequacy risks. Ultimately, the absence of improvements to ERAA would impede the adoption of robust security of supply decisions by Member States.

What are the next steps?

As ENTSO-E’s proposal for 2024 is expected by November 2024, ACER continues its engagement with ENTSO-E and others (e.g. Member States, the European Commission, the Joint Research Centre) so that the ERAA continues to improve.

• First, ACER's reply to ENTSO-E's public consultation (on preliminary input data), calls for ENTSO-E to increase the level of transparency concerning three main sets of assumptions: cross-zonal trading capacities, demand response and demand projections.
• Second, to facilitate timely implementation of ACER’s recommendations (which are included in the ACER Decision published today), ACER communicated these priority areas (and suggestions on how to address them) in a letter addressed to ENTSO-E already in March 2024. As stated above, the three priority areas that need to be strengthened concern robust modelling approaches, consistency of cross-zonal capacities and strengthening the consistency of market rules and investment behaviour.

ACER considers having a solid ERAA in place in 2024 important because:

• ERAA is relevant to the European Commission’s upcoming (2024) proposals to streamline the procedures concerning the application of capacity mechanisms.
• It links to the upcoming (2025) ACER methodology for the flexibility needs assessment performed by all Member States (which will complement the ERAA).

Would you like to dive into the topic?

Access ACER Decision 06/2024 and its annexes.

Access the consolidated version of the approved ERAA 2023 as provided by ENTSO-E: executive report and annexes.

ACER’s new dynamic dashboard allows stakeholders to explore the data categories used in ERAA’s different editions, including those proposed for ERAA 2024.