Today, ACER publishes its Decision amending the European Resource Adequacy Assessment methodology, following the proposal submitted by the European Network of Transmission System Operators for Electricity (ENTSO-E) in November 2025.

What is the methodology about?

The ERAA, mandated by the Clean Energy Package (2019), is ENTSO-E’s annual assessment of the EU’s electricity supply adequacy for the next decade. Its purpose is to evaluate whether the EU has sufficient electricity resources to meet future demand and to identify potential risks to security of supply. Each year, the assessment is subject to ACER approval.

At national level, Member States define their own reliability standards (based on ACER’s methodology) to set the level of security of electricity supply they require. The ERAA annual assessment provides a consistent, objective tool to evaluate adequacy risks against those standards and whether the introduction of national measures (such as capacity mechanisms) is needed.

Why amend the methodology?

In its streamlining report (March 2025), the European Commission requested ACER to amend the ERAA methodology to streamline the capacity mechanisms’ approval process. ACER subsequently required ENTSO-E to propose the necessary amendments.

In August 2025, the Commission also adopted the Clean Industrial State Aid Framework, which introduces a fast-track process for approving capacity mechanisms. To support this framework, the ERAA methodology needs to define the procedure for calculating, within the ERAA annual process, the parameters necessary for Member States to make use of the fast-track approval process.

What are the main amendments?

The updated ERAA methodology focuses on:

1. Supporting capacity mechanisms approval

• Introducing capacity mechanism-related parameters derived from the ERAA model, which Member States may use to benefit from the fast-track process.

These parameters:

• improve the clarity of ERAA results by quantifying the size of the adequacy concern (adequacy gap and total firm capacity needs) and how different technologies contribute to system adequacy (de-rating-factors);
• can be used by Member States to size their capacity mechanisms (when applying for fast-track approval).

2.  Simplifying the methodology 

• Focusing the model on key target years (instead of explicitly modelling every year of the next decade).
• Introducing simplified approaches for key methodological components (e.g. estimating flexibility resource revenues and developing scenarios that reflect the impact of capacity mechanisms across Europe).
• Streamlining how Member States’ efforts to avoid regulatory distortions or market failures are represented in the ERAA.

3.   Improving adequacy modelling 

• Developing a new Trends and Projections scenario to better reflect the actual pace of the energy transition.
• Improving the modelling of investors’ risk aversions and introducing a more realistic representation of flexible resources’ (e.g. batteries and demand response) business case.

What are the next steps?

ENTSO-E will progressively integrate the amended ERAA methodology into future ERAA reports (starting with the upcoming 2026 edition). As part of this implementation, capacity-mechanism-related parameters will be introduced in the ERAA framework. These parameters will help improve coordination of capacity mechanisms across Europe, increase their efficiency and help reduce costs for consumers.

Based on the ERAA results, Member States may also use these parameters when applying for the fast-track approval process for capacity mechanisms.

The image shows how coordinating capacity mechanisms across EU borders reduces procurement needs and lowers costs for consumers. Source: ACER Monitoring Report on security of EU electricity supply (2025).

ACER kicks off its 2026 Monitoring Report series with key insights into the EU energy markets, highlighting major developments in 2025 and examining the interplay between gas and electricity markets in the energy transition.

What are the key findings?

The report shows solid progress in Europe’s clean energy transition. It also underlines persistent structural challenges (such as price volatility, system flexibility and supply risks) and how to address them.

• Wholesale energy prices continued to decline, but global competitiveness remains a challenge, with both gas and electricity prices structurally higher than in the US.
• Household gas and electricity prices remain high despite falling wholesale prices.
• Renewables lead the power mix, providing 50% of total EU electricity generation. Solar drives the energy transition, with investments in solar generation rising by 41 TWh compared to 2024. 
• Electricity price volatility increased: Daily wholesale power price swings were around five times higher than in 2020, highlighting the growing need for flexibility. 
• Gas provides evening flexibility: As solar generation drops in the evening, gas-fired power plants are increasingly used to meet demand, pushing wholesale prices upward.
• Extreme weather drives price spikes: A heatwave on 1 July 2025 reduced cooling efficiency at thermal and nuclear plants, pushing power prices in Poland to around 470 EUR/MWh. 
• Regional price differences highlight the value of interconnections: Different generation mixes and system flexibility across countries offer opportunities when systems are well interconnected. 
• Gas markets remained stable, with hub spreads generally below 2 EUR/MWh.
• EU slashed its reliance on Russian gas, replacing it with global LNG: Russian pipeline imports to the EU fell by about 162 TWh compared to 2024 and were fully offset by record-high LNG imports.
• Low year-end gas storage: Heavy winter withdrawals left storage levels 10% below 2024.

What are ACER’s recommendations? 

To support global competitiveness and decarbonisation, Europe should step up efforts to expand energy market integration:

• Make energy prices more efficient and transparent: Ensure efficiency across all price components (energy and supply, network charges and taxation) to improve household affordability and industrial competitiveness.
• Harness flexibility: Expand demand response, electric vehicles (EVs) and battery use to balance supply and demand, reduce price swings and strengthen grid resilience.
• Strengthen market integration: Expand interconnections to support cross-border use of renewables, reduce fossil fuel dependence and improve system flexibility and security.
• Diversify gas supply: Higher LNG supplies replaced Russian pipeline gas but increased reliance on US LNG imports. Greater supply diversification, including domestic decarbonised gases, would reduce vulnerability and mitigate the impact of global price volatility.
• Reduce reliance on conventional gas: With gas consumption still well above 2030 targets, further action is needed to cut demand and accelerate the uptake of renewable gases.

Today, ACER issues its Opinion on the EU DSO entity’s draft statutory documents updated to include gas and hydrogen. 

Why update these documents?

The EU DSO entity was created in 2019 by the Clean Energy Package to facilitate cooperation among European electricity distribution system operators (DSOs). The Hydrogen and Decarbonised Gas Market Package (2024) expanded the entity’s scope to include natural gas and hydrogen DSOs, requiring an update and resubmission of its statutes and rules to ensure fair and balanced representation of all operators. The updated documents were submitted to ACER and the European Commission in November 2025.

What’s the role of ACER?

ACER is mandated to provide an Opinion on the EU DSO entity’s updated draft statutory documents.

To inform its assessment, ACER conducted a consultation from 21 November to 19 December 2025, seeking input from organisations representing all stakeholders, in particular distribution system users (including customers).

What’s ACER assessment?

ACER considers the proposed governance amendments a reasonable adaptation to reflect a broader, more diverse membership and expanded tasks.

ACER welcomes steps to broaden DSOs’ participation in the EU DSO entity’s sector-specific activities through the creation of electricity and gas/hydrogen Councils and revised decision-making processes to reduce majority dominance.

However, ACER notes that the new decision-making arrangements may increase the risk of deadlocks and that certain provisions of the updated draft documents do not consistently reflect the rules set out in the Electricity Regulation.

What are the next steps?

This ACER Opinion is addressed to the European Commission, which has three months to provide its final assessment. If favourable, the EU DSO entity then has three months to adopt and publish the updated statutory documents.