Compensation for cross-border power losses fell in 2024 after the 2023 peak
What is it about?
ACER published its report on the implementation of the inter-transmission system operators compensation mechanism (ITC) for 2024.
ACER issues these yearly monitoring reports since 2012, as mandated by the Commission’s Regulation.
What is the ITC mechanism?
The inter-transmission system operators compensation (ITC) mechanism, managed by the European Network of Transmission System Operators for Electricity (ENTSO-E), compensates transmission system operators (TSOs) for the costs of hosting cross-border flows on their networks (including costs from power losses and infrastructure investments).
The mechanism works through the ITC fund: participating TSOs both contribute and receive money from it, depending on how much electricity they import, export and transmit across their national borders. The aim of the mechanism is to ensure that costs and benefits are fairly shared among the TSOs.
The ITC mechanism currently includes 36 TSOs from across the EU and neighbouring countries, including the Ukrainian TSO Ukrenergo, who officially joined the ITC agreement in July 2024.
What are the key findings for 2024?
- After increasing significantly in 2022 and 2023, the ITC fund fell from €1.14 billion in 2023 to €879.9 million in 2024, mostly due to a decrease in electricity wholesale prices (although these remain well above pre-crisis levels).
- As a result of lower wholesale prices, most TSOs (28 out of 36) saw lower loss costs compared to 2023. On average, weighted loss costs fell 28% to 145.97 €/MWh.
- As in previous years, the cost of losses varied widely among EU ITC parties, ranging from 63 to 259 €/MWh. Actual electricity losses also differed significantly across countries.
- ACER finds that the ITC mechanism in 2024 generally complies with EU legal requirements. However, it recommends further methodological improvements, in line with its Recommendation on the treatment of losses (2023), including calculating loss volumes in more detail and using actual loss costs.
What are the next steps?
ACER is currently reviewing existing EU mechanisms for sharing the costs and benefits of electricity network infrastructure arising from cross-border trade, including the ITC mechanism. The aim is to better reflect the EU-wide benefits of the grid and to facilitate infrastructure investments that extend beyond national interests and needs. The findings of this exercise will feed into an ACER policy paper in 2026.