The EU Agency for Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators (CEER) have published their views and recommendations on the European Commission's legislative proposals on Hydrogen and Decarbonised Gas Markets.

The energy regulators appreciate the ambition of the proposals to establish a comprehensive system design with a clear target model for the hydrogen and decarbonised gas market(s), to reinforce measures on integrated network development and focus on consumer protection issues.

They also see scope to enhance certain elements of the proposals, with a focus on:

• comprehensive system design;

• integrated network development; and

• inclusive consumer protection.

Read the ACER-CEER Reaction.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its 9th Report on the Contractual Congestion in the EU gas markets. The report found that contractual congestion in the EU gas transmission networks in 2021 remained low, but that competition for transmission capacity increased in the fourth quarter of the year.

Why contractual congestions should be monitored?

Contractual congestions are relevant as they signal a reduction in market efficiency: while some network users are not able to obtain the transmission capacity product of their choice (and need to rely on congestion-mitigating measures to access the gas market), others who contracted capacity may not use it.

What are the Report’s main findings?

• In 2021, congestion remained low, as observed in 2020. 18 exit and entry points were congested in the EU gas networks - around 5% of all Interconnection Points (IPs) in the EU - compared to 19 in 2020. Half of the reported congestion in 2021 is due to auction premia (where the market clearing price exceeds the regulated capacity tariff), which occurred in the auctions of yearly, quarterly and monthly capacity products. The other half is caused by the lack of offer of any yearly, quarterly and monthly capacity products.

• In the fourth quarter of 2021, competition for transmission capacity increased as manifested through the rising number of auctions clearing with a premium. This applied to several products, from quarterly to within-day capacity products. Rising spreads between markets as of September 2021 could have increased competition for cross-border capacity. If the same level of competition persists in 2022, a rise of contractual congestion may be observed.

Without pre-empting the full analysis of capacity auctions during 2022 (which will be covered in the next edition), ACER observes that multiple auctions in the first and second quarters of 2022 have closed with premia.

Moreover, in a dozen of cases, auctions were terminated without any allocation of capacity because the allocation mechanism has not been flexible enough to accommodate the prevailing market conditions (with high and volatile market spreads). As such, the respective auctions had not been cleared before the capacity product would become active.

Has progress been registered?

While the number of congested IP is low, local contractual congestion can be severe and reduce market efficiency. Around 85% of the congested IPs in 2021 were also congested in the past. On the other hand, three of the congested IPs concerned (German domestic IP sides) have disappeared due to the German market merger. Competition for capacity may shift to other points bordering the German market area.

How can congestion be addressed?

Gas Transmission System Operators (TSOs) can apply several congestion management procedures (CMPs) to ensure users can access the network even when they cannot obtain a specific capacity product in the primary capacity auctions. The oversubscription mechanism (where more capacity is marketed than is technically available) remains the most applied CMP in 2021 despite its usage has further decreased. This decrease is partly compensated by a quadruplicated usage of the surrender mechanism (where a network user returns unused capacity to the TSO who can reallocate it to other parties).

More than half of the congested IPs are already covered by the firm day-ahead use-it-or-lose-it mechanism (FDA UIOLI), while the respective National Regulatory Authorities (NRAs) need to take action for the remaining ones, which shall be in line with the European Commission’s rules on contractual congestion.

What are ACER’s recommendations and policy reflections?

• ACER recommends the European Network of Transmission System Operators for Gas (ENTSOG) and TSOs to continue improving data reliability to ensure the accuracy of information available at the ENTSOG Transparency Platform.

• ACER welcomes the proposal of the European Commission’s ‘Hydrogen and Decarbonised Gas Market’ Package for revising the CMP guidelines. The proposal addresses several long-standing issues raised by ACER.

Access the 9th Congestion Report and its Technical Annex.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its second report on the implementation of the European Union Network Code on Harmonised Transmission Tariff Structures for Gas (NC TAR) for the Austrian transmission system.

The report focuses on the introduction of a commodity tariff, which aims at allocating the costs resulting from the recent increase in energy prices taking place in 2021-22 and forecasted for 2023-24. Transmission system operators’ (TSOs) networks require energy to run compressor stations, and the prices of both electricity and gas have increased, compared to the initial estimates made by the national regulatory authority (NRA) in 2020. As a consequence, the Austrian NRA, E-Control, is consulting on the possibility to introduce a commodity charge by 1 June 2022.

What are ACER’s recommendations?

ACER recommends to E-Control to further justify why the proposed commodity tariffs should be applied before the end of the on-going tariff period, which concludes in 2024. Such changes should take place only exceptionally.

In particular, the NRA should:

• provide additional information on how the increases in energy prices affect TSOs’ capacity to continue operating the network;

• further justify the entry into force date of the proposed commodity tariffs based on the TSOs’ capacity to continue operating the network;

• increase the transparency of TSOs’ tenders for purchasing energy, and ensure that these procedures have taken place in a transparent, competitive and non-discriminatory manner.

ACER further notes that, according to the NC TAR, the same flow-based charge should be set at all entry and/or at all exit points. The proposed flow-based charge is not applied at entry points from storage.

Finally, ACER recommends to the NRA to publish the decisions on the TSOs’ allowed revenue, including the initial decision applicable to the current tariff period and the recently adopted amendments to allocate the increase in energy prices. These decisions contain key information for the calculation of the proposed flow-based charge.

E-Control shall adopt a motivated decision on the application of the proposed commodity tariffs by 14 July 2022, although its publication will most likely happen earlier, given the urgency.

Read more on the report.

Access all ACER reports on national tariff consultation documents.

In the current geopolitical context, Europe’s energy regulators welcome the European Commission’s initiative to bolster the Union’s security of gas supply, and have identified some practical reflections to reach the objective of filling EU gas storage facilities more effectively, whilst protecting the consumer interest.

Under normal operating circumstances, gas suppliers would generally fill storage facilities to a very high level. The EU Agency for the Cooperation of Energy Regulators (ACER) and the Council for European Energy Regulators (CEER) therefore underline that the proposed measures must be considered exceptional, temporary and specifically targeted to the current circumstances, where high wholesale prices, negative seasonal spreads and risks on the availability of import gas volumes prevent market players from storing gas.

The present proposals from ACER and CEER aim at responding to the emergency with simple rules and allocation keys and, looking at the longer term, elaborating on methods to better address rights and duties of Member States and gas suppliers. Regulators’ key reflections can be summarised as follows:

Methods:

• Measures must be exceptional, temporary and specifically targeted to the current circumstances

• Intervention should be proportionate to the goals and should avoid distorting the market where it is able to fulfil adequate levels of gas storage

• The EU institutions should find an appropriate balance between top-down and bottom-up approaches

General principles:

• Filling targets should apply a demand-based rather than capacity-based rationale, combining European and national levels

• Apply simple but realistic measures during the course of this year (2022), taking into account national specific characteristics and constraints

• For the future (2023 and beyond): better estimate storage needs on the basis of several parameters (LNG tanks, diversity of supply, demand seasonality, interconnection capacities, dependence on Russian supplies)

• Risk mitigation measures should minimise the use of public funding 

• Implement an EU wide monitoring of storage filling levels and of prices paid for that fill.

Would you like to find out more?

Read the ACER-CEER paper.

Join the ACER-CEER Webinar on Gas Storage Regulation and Security of Supply (17 May, 10-11.30 CET). Registration is open!

ACER’s report on national gas storage regulations provides an overview of the current national gas storage regulations. This report is relevant in the context of the current discussions on new policies for filling storages next winter.

The importance of gas storage

The European Commission’s REPowerEU communication (March 2022) highlights the need to be prepared for a possible interruption of gas supply. Gas storage plays an important role for ensuring continuity of gas supply. More recently, the Commission has tabled a legislative proposal introducing a minimum of 80% gas storage level obligation by 1 November for next winter, rising to 90% for the following years. EU leaders are expected to discuss and decide soon on the approach to refill Europe’s storage facilities.

The ACER report sets out the current storage situation across the EU and is based on information provided by its members, the national regulatory authorities (NRAs).

What are the main findings of the ACER gas storage report?

1. Facts on storage: the EU-27 storage capacity represents around 27% of the annual gas consumption of the European Union. 18 Member States have gas storage facilities. The remaining 9 Member States without storage represent less than 5% of the European annual gas consumption. More than 80% of the EU storage capacity consists of aquifers and depleted fields, which are primarily used for seasonal gas storage. The number and capacity of storage sites as well as the number of storage operators varies across the countries.

Type of storage regulation varies across Member States. 11 Member States have opted for regulated third-party access rules and regulated tariffs, while in 7 Member States, access to storage is negotiated between users and operators according to transparent and non-discriminatory rules. Slightly more than half of the gas storage capacity falls under a negotiated regime while the remaining falls under a regulated regime. NRAs have provided a description of national storage regulation, focusing on key regulatory aspects, roles and responsibilities.

2. Book and usage of storage: On 1st October 2021, the booked storage capacity in Austria, Germany, the Netherlands and Slovakia was significantly above actual used capacity due to low filling levels of storages used or controlled by Gazprom. Some Member States apply use-it-or-lose-it (UIOLI) rules to release booked but not used storage capacity; a measure that could be applied in all Member States.

3. Gas in storage obligations: 11 Member States have some type of storage obligations, including: capacity booking obligations, filling obligations for gas suppliers, strategic storage and regulatory limitations in the usage of storage under some conditions. In 7 Member States, there are no storage obligations at all.

4. Monitoring and compliance with storage obligations. Storage operators regularly monitor storage filling levels. For all regulated storages and most of non-regulated storages, monitoring data is regularly reported to authorities (Ministries, NRAs) and in some instances to oil and gas national stockpiling associations. When storage obligations are applicable, there are different models to address non-compliance: use-it-or-loose-it (UIOLI) regime whereby booked but not used storage capacity is offered on the secondary market, fines or a possibility to suspend licenses and contracts.

5. Different storage tariffs and capacity products. Different tariff and access to storage regimes coexist (11 Member States have regulated tariffs, 7 negotiated).  The same applies to the availability of storage capacity products, which can range from a single standard bundled product to up to six different products. Ten Member States offer three or more types of capacity products. Storage tariffs are public in most of the cases.

6. Assessment of storage and national plans to establish storage obligations. NRAs have increased the vigilance over gas storage this past winter. The main current concern is the filling of gas storages for the upcoming winter. Member States with a regulated regime for storage (e.g. Belgium, France, Italy, Poland and Spain) have a positive assessment of their national systems and note an adequate storage filling level at the start of past winter season. Austria, the Netherlands and Germany have announced plans to consider establishing some type of storage obligations. The war in Ukraine has accelerated the discussions on revising or introducing strengthened gas storage regulations.

7. Validation of data provided by storage operators to ENTSOG and GIE AGSI+ Platform. Most NRAs report no or minor differences on the data provided by storage operators. As data is not always final and complete in the AGSI+ platform, it is recommendable to establish a more rapid process for validating the final storage values as well as an obligation of storage operators to report to AGSI+.

Would you like to find out more? Detailed country information is available in the report.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today an overview of European Gas Wholesale Markets trends in 2021, as an early publication of its annual Market Monitoring Report (MMR).

The MMR presents the results of monitoring the European internal electricity and gas markets and recommends further actions to foster their integration, as well as providing guidance and evidence on how energy markets can perform more efficiently.

In 2022, the MMR will comprise two volumes: one analysing the Gas Wholesale Markets, and the other analysing the Energy Retail Markets and Consumer Protection with expected publications dates of Q3 (July) and Q4 (September) respectively.

What are the main monitoring trends in wholesale gas markets in 2021?

• EU gas demand increased, primarily driven by the economic recovery. However, the record-high gas prices led to some gas-to-coal switching for power generation resulting in a drop in gas consumption for power generation.

Explore the evolution of total gas demand and the link with demand for power generation in individual Member States over the last few years in the interactive gas markets dashboard.

• Meanwhile, gas supply did not keep pace with the increase in demand. Domestic gas production in the EU and United Kingdom continued to decline and European liquefied natural gas (LNG) imports dropped, with modest pipeline supply. In the years to come, LNG will likely play an increasingly relevant role in the European gas supply portfolio.

Investigate the evolution of gas supply per origin and the evolution of European LNG imports over the last few years.

• Limited gas supply led to a higher reliance on underground storage stocks, which reached historically low levels because of higher withdrawals and lower injections.

You can compare underground storage levels over the last few years in our interactive dashboard.

• Wholesale gas prices rose sharply in all countries, but to different degrees. Nevertheless, the strong hub price convergence that was already achieved was not overturned.

Track the development of spot gas prices and price convergence over the last few years.

For the full overview, access the analysis on key Gas Wholesale Markets developments.

What were the main monitoring trends in the Electricity Wholesale Markets in 2021? Find out more.

Deepen your insights (e.g. by country and/or time frame) by exploring our interactive dashboard of dynamic charts of market and trading data.

ACER publishes today its second report on the implementation of the European Union Network Code on Harmonised Transmission Tariff Structures for Gas (NC TAR) for the Danish transmission system.

ACER concludes that the Danish transmission system operator (TSO), Energinet, does not sufficiently demonstrate the compliance of the proposed reference price methodology (RPM) with the requirements of the NC TAR.

What are ACER’s recommendations?

ACER recommends the national regulatory authority (NRA) to further assess the compliance of the proposed RPM with the NC TAR requirements on cost-reflectivity and cross-subsidisation.

The NRA should additionally provide further transparency on a proposed non-transmission emergency supply service and should revise the compliance of the proposed discount to capacity contracted on long-term basis.

ACER also provides additional guidelines on the on-going discussion to merge an upstream pipeline with the Danish transmission network.

In particular, the Report refers to the revenue regulation applicable to transmission assets and to the NC TAR requirements to allocate these costs to the transmission network’s users. 

The Danish NRA shall take a motivated decision on the RPM by 14 May 2022.

Access the report and find out more on the other national tariff consultation documents.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today two Opinions related to the review of exemptions from the obligation of enabling bi-directional capacity in gas pipelines at two interconnection points (IPs).

In particular, ACER provides an assessment on the Decisions taken by the national regulatory authorities of:

• Austria and Hungary at the Mosonmagyaróvár IP: accepting the transmission system operators (TSOs)’ proposal (Gas Connect Austria and FGSZ) and considering the obligation of enabling bi-directional capacity as already fulfilled,

• Austria and Slovenia at the Murfeld/Ceršak IP: accepting the TSOs’ (Gas Connect Austria and Plinovodi) proposal and prolonging the exemption from the obligation of enabling bi-directional capacity.

What is the role of ACER?

After being notified by the Competent Authorities (i.e. the relevant NRAs) that the Decisions have been taken, ACER shall issue Opinions on the elements of the coordinated Decisions according to the requirements of the Security of Gas Supply (SoS) Regulation.

ACER’s Opinions are then submitted to the Competent Authorities and the European Commission, for possible consequential actions.

What is ACER’s assessment?

1. Interconnection point "Mosonmagyaróvár" (Hungary to Austria)

ACER believes the TSOs’ proposal was prepared and consulted in compliance with the SoS Regulation.

The Austrian and Hungarian energy regulatory authorities, E-Control and MEKH, timely decided on the proposal in a coordinated way. The TSOs proposal and the Decisions sustain there is already permanent bi-directional capacity at the Mosonmagyaróvár IP, under certain conditions related to:

• gas demand and temperature in Hungary,

• a request of application of solidarity from the Republic of Austria.

However, ACER notes the proposal does not include a feasibility study for a reverse flow project enabling permanent marketable capacities and a cost-benefit analysis based on the requirements of the TEN-E regulation.

The Decisions note that the main infrastructure standard indicator of the SoS Regulation (the so-called N-1 indicator) is already at an adequate level in Austria.

ACER agrees that there is no need to increase the capacity from Hungary to Austria at the Mosonmagyaróvár IP under the current circumstances. The investment costs of having significant marketable firm reverse flow capacity at this IP would significantly outweigh the very limited prospective benefits in terms of security of gas supply.

However, ACER is not convinced that the cumulative conditions indicated in the TSOs’ proposal could qualify as permanent physical bi-directional capacity. ACER believes that the agreed crisis scenarios, including any conditionalities to the physical flow capability, must be relevant and meaningful to offer gas flows from Hungary to Austria in a supply crisis.

Alternatively, a request for exemption should be submitted or a physical reverse flow project offering marketable capacity should be developed.

Read more on the ACER Opinion (Hungary - Austria).

2. Interconnection point "Murfeld/Ceršak" (Slovenia to Austria)

ACER believes the TSOs’ proposal was prepared and consulted in compliance with the SoS Regulation.

The Austrian and Slovenian energy regulatory authorities, E-Control and the Slovenian Energy Agency, timely decided on the proposal in a coordinated way.

ACER confirms the Decision fulfils the requirements of the SoS Regulation. However, the request for an exemption does not include a complete feasibility study for the project and a cost benefit analysis as required by the TEN-E regulation.

The Decisions note that the main infrastructure standard indicator of the SoS Regulation (the so-called N-1 indicator) is already at an adequate level in Austria.

ACER confirms there is no need to establish bi-directional capacity from Slovenia to Austria at the Murfeld/Ceršak interconnection point under the current circumstances.

The establishment of the capacity from Slovenia to Austria in the short - to medium - term, when not supported by the market, may result in inefficient investments. The investment costs of having permanent bi-directional reverse flow capacity at this interconnection point would significantly outweigh the very limited prospective benefits in terms of security of gas supply.

Find out more on ACER’s Opinion (Slovenia - Austria).

ACER publishes today its second series of reports on the implementation of the European Union Network Code on Harmonised Transmission Tariff Structures for Gas for both transmission systems in Poland: the national transmission system and the SGT pipeline. The latter refers to the Polish section of the Yamal transit pipeline, running from Russia through Belarus and Poland to Western Europe.

Regarding the national transmission system, ACER recommends that the Polish national regulatory authority for energy (URE), further justifies the reference price methodology (RPM) with the requirements of the Tariff Network Code, providing additional transparency regarding the expected use of the network. The Agency also recommends that the NRA provides additional transparency on investment projects. The NRA should also set a fixed entry-exit split or should provide due justification on the conditions that would trigger a change of the split.

Regarding the section of the SGT pipeline within Poland, the Agency recommends that URE further justifies the RPM, including additional clarity on the contracted capacity forecast, the detailed calculation steps of the methodology, and the calculation of the cost allocation assessment.

The Polish NRA shall take both motivated decisions by 31 March 2022.

Find out more and access all ACER reports on national tariff consultation documents.

ACER and Europe’s energy regulators welcome the European Commission’s hydrogen and decarbonised gas market legislative package.  In their joint Position Paper on Key Regulatory Requirements to Achieve Gas Decarbonisation, ACER and CEER provide recommendations in three areas:

• Enabling gradual and flexible regulation for hydrogen.

• Ensuring a level playing field in a decarbonised and integrated energy system.

• Empowering and protecting consumers for the energy transition.

It is clear that a successful energy transition must not only meet decarbonisation targets but also must meet consumers’ legitimate expectations of having reliable and affordable energy services. ACER and CEER set out nine key recommendations to carry out a successful energy transition:

1. Adopt a gradual and flexible regulatory approach to facilitate the emergence of competitive hydrogen markets, by defining core market and regulatory principles, guaranteeing a level playing field, ownership unbundling, third-party access, transparency and regulatory oversight;

2. Monitor hydrogen markets periodically to identify their development and whether more regulation is needed;

3. Apply cost reflectivity and beneficiary-pays principles to hydrogen networks, avoiding cross-subsidies between energy carriers;

4. Ensure an integrated, liquid and interoperable EU internal gas market, including by foreseeing a more flexible approach to the application of relevant network codes with respect to specific cross-border charges;

5. Adopt a more integrated approach to infrastructure development, both in relation to different levels of the supply chain (vertical), and to the various energy carriers (horizontal), consistent with the revised TEN-E Regulation;

6. Guarantee consumer rights regardless of energy carrier;

7. Embed robust consumer protection, future innovation, technology developments and new market trends in decarbonisation policies, recognising the specificities of gas markets;

8. Ensure cost efficiency and affordability to safeguard inclusiveness and a just transition, including by promoting and facilitating energy efficiency measures and information; and

9. Provide consumers with clear and reliable information and support, as well as ensure effective enforcement of their rights and consumer-centric digitalisation rules to enhance their empowerment and trust in the energy transition.

ACER and CEER stand ready to provide advice and they continue to work towards putting the consumer at the centre of the energy transition by promoting consumer awareness and protection.