Today, ACER releases its second quarterly review of key developments in European gas wholesale markets as part of its 2024 Market Monitoring Report (MMR). The first publication was issued in March 2024.

This report highlights the main trends in Europe’s gas markets in the first half of 2024 and identifies upcoming challenges for Europe arising from global developments (flows via Ukraine, global LNG markets etc.).

What gas market trends did ACER monitoring find?

The report finds volatile prices and supply changes in European gas markets in the first half of 2024:

• Gas prices: at the end of Q1, European gas wholesale prices fell to levels not seen since before the energy crisis but increased in Q2 as markets re-focused on supply risks, including a tighter global Liquefied Natural Gas (LNG) market.
• Price integration has not yet returned to pre-crisis levels, in part due to increased transportation costs. No critical network congestion in Europe’s gas market in the first half of 2024.
• Pipeline and LNG supply: gas pipeline supply to the EU was stable. LNG remained key for EU supply.
• Gas demand fell: in the first half of 2024, gas-fired power generation in the EU decreased by 16% compared to the same period last year.
• Gas storage: In Q2 2024, the EU injected 41 TWh less gas into storage compared to Q2 2023. Despite the slower rate, storages are on course to reach the mandated filling level of 90% by 1 November. The storage level reached in Q2 2024 is one of the highest in the past five summers.

What challenges lie ahead?

• The transportation agreement for Russian gas through Ukraine expires by the end of 2024, and its renewal is unlikely. Landlocked Central European countries will need alternative supply routes, making cross-border trade essential for affordable gas.
• Hurricane season in the Atlantic (from June to October) could affect LNG production and transportation in the Gulf of Mexico, reducing global LNG supply and tightening European gas balances.
• Any delays in concluding the scheduled maintenance of Norwegian upstream gas assets in September could trigger price volatility.
• If gas withdrawals significantly exceed those of the past two winters, EU buyers may need to increase their competitiveness in the LNG markets to replenish stocks in 2025, potentially impacting wholesale prices. Weather conditions will play a key role in exposing or mitigating these risks.
• Several LNG production projects are nearing completion, with first cargoes expected in 2025, which could help stabilise gas prices. Significant additional LNG volumes are anticipated from 2026 onwards, as several large projects are scheduled to come online.

ACER will continue to closely monitor trends in the European gas markets that could lead to short-term volatility for European energy markets. The next update on the European gas wholesale markets will be published in October 2024.

Check out our other 2024 MMR publications.

Following a blackout in the south-eastern part of Continental Europe on 21 June, ENTSO-E has set up an Expert Panel and has invited ACER and relevant regulators in the region to join it. Today, ENTSO-E, ACER and the regulators in the region convened in the first meeting of this Expert Panel.

The investigation of the Expert Panel will be based on the data collected and analysed by ENTSO-E experts. The investigation of the Expert Panel will be finalised with a final report to be published on ENTSO-E website.   

On 21 June 2024 at 12:24 CET, due to a major incident in the Continental Europe power system region, a large part of the transmission systems of Albania, Montenegro, Bosnia and Herzegovina as well as Croatia suffered a voltage collapse followed by a total blackout in this area. The figure shows (in black) the geographic area affected by the incident of 21 June 2024 (in black). The rest of the Continental Europe power system was not significantly affected by the incident. Furthermore, thanks to the coordinated efforts of the affected TSOs the voltage on the 400 kV grid was restored within a few hours.

ACER and ENTSO-E will continue to provide timely information about the incident.

For latest updates on this incident and the next steps, check out the respective websites of ENTSO-E and of ACER.

ENTSO-E news:

• 15 July 2024: Grid incident in south-eastern part of the Continental Europe power system - update
• 21 June 2024: Grid incident report South-Eastern part of the Continental Europe power system

ACER publishes today its feedback on ENTSOG’s “Implementation Guidelines and other complementary guidance documents” for the Ten-Year Network Development Plan (TYNDP) 2024. ACER welcomes the publication of these guidance documents for the first time, as recommended in ACER’s position paper on Cost-Benefit Analysis (CBA) consistency (March 2023), but calls for some further improvements.

What is the TYNDP?

Every two years, the European Network of Transmission System Operators for Gas (ENTSOG) publishes a non-binding TYNDP which looks forward over a ten-year horizon to identify infrastructure needs, assess projects’ benefits and provide an overview of supply adequacy across Europe. ACER monitors the development and execution of ENTSOG's plan and issues an Opinion on the draft TYNDP, evaluating its alignment with regulatory requirements.

The TEN-E Regulation 2022/869 mandates ENTSOG to consult with all relevant stakeholders and consider their input as part of this process.

What are ENTSOG’s guidance documents about?

From 19 June to 9 July 2024, ENTSOG conducted a public consultation on its guidance documents for the TYNDP 2024 including on the:

• elements required to perform project-specific cost-benefit analyses (CBAs) for the TYNDP 2024,
• methodology for assessing hydrogen and natural gas system needs for the TYNDP 2024, and
• methodology for identifying hydrogen infrastructure gaps for the Infrastructure Gaps Report 2024.

What are ACER’s key findings?

ACER recommends further improvements in ENTSOG’s guidance documents, including to:

• Revise the Infrastructure Gaps Identification (IGI) methodology by taking into account current uncertainties in hydrogen system development and align the methodology with ENTSO-E’s approach, specifying infrastructure needs in terms of required capacities per border.
• Improve clarity on the use of assumptions throughout different stages of the TYNDP process.
• Use more realistic infrastructure levels in line with expected developments in natural gas and hydrogen infrastructure.
• Enhance stakeholder engagement by collaborating with industry stakeholders to develop joint methodologies for defining relevant assumptions and parameters.
• Define and consult on a methodology to introduce a sensitivity analysis on the costs of hydrogen disruption, which significantly affect the benefits of infrastructure projects.
• Limit the security of supply assessment outlined in Annex D3 of the draft TYNDP to natural gas infrastructures only.

What are the next steps?

In line with the TEN-E Regulation 2022/869, ACER will issue an Opinion on the ENTSOG’s Infrastructure Gaps Identification (IGI) as well as on its draft TYNDP 2024 at a later stage. ACER emphasizes the importance of receiving all relevant materials promptly to ensure they align seamlessly with the 2025 Projects of Common Interest (PCI) selection process.

Access ACER’s feedback.

Today’s ACER-CEER position paper on the challenges of the future electricity system calls on the European Commission, Council and Parliament to prioritise five key electricity and infrastructure challenges throughout the legislative process in their upcoming mandate(s).

In short, the paper highlights the urgent need for Europe to facilitate the deployment of more intermittent renewables and to unlock a resilient, flexible and cost-effective electricity sector by

1. Having an integrated pan-EU approach to electricity security of supply, with flexibility at its centre.
2. Enhancing electricity distribution networks and empowering consumers in decarbonised markets.
3. Moving quicker towards electricity transmission infrastructure development with an improved assessment at pan-European level, recognising and sharing the costs and benefits.
4. Applying the ‘Efficiency First’ principle also to existing grids and generation, enhancing the capacity of what we already have.
5. Recognising that independent regulators can help address these challenges comprehensively and strengthen Member States’ trust in the EU electricity market.

EU energy regulators are proposing a set of recommendations and commitments that will allow the EU as a whole and Member States to actively steer and harness the power of a new, rapidly emerging energy system that supports the clean energy transition. This includes:

• Providing Member States with the tools to support each other in safeguarding security of supply and reducing local flexibility needs, by reaping the lessons of the recent energy crisis.
• Exposing renewables producers and flexible resources (such as demand-response and storage) to market signals both at the investment stage and in daily operation, to moderate the costs of the energy transition.
• Applying ‘Efficiency First’ principles also to existing and soon-to-be-built grids (e.g. via innovative grid technologies to significantly increase the capacity of the grid). Furthermore, taking a more coordinated approach to grid development and usage moderates the needs and costs of additional network investment ahead.
• Being aware that integrated markets are a key tool to achieve competitive EU electricity prices and to unlock innovation, EU institutions should focus on improving the:
  • electricity forward market (to support efficient investments);
  • the day-ahead and intraday markets (for efficient operation of generation and flexible resources); and
  • retail markets (for delivering the necessary flexibility and providing consumers with choices fitting their preferences).
• Unlocking distributed flexibility to reduce costs, by ensuring a fully neutral role of Distribution System Operators (DSOs) and that a range of pricing schemes (from dynamic to variable to fixed price contracts) is available to consumers.
• Anchoring the benefits of a truly European electricity market through Member State commitment and trust that electricity will flow smoothly across borders, making cross-border capacities fully available for trade, and empowering independent public authorities (including regulators) to safeguard open borders and energy security of supply to the benefit of all EU citizens and businesses.

Today, ACER issued two decisions that amend the EU electricity balancing rules including the implementation framework for the PICASSO platform and the balancing pricing methodology on all EU balancing platforms.

Balancing the supply and demand for electricity is key for the stability of the power system. To help maintain grid balance, Transmission System Operators (TSOs) activate balancing energy from parties like generators, storage providers or others who can quickly adjust the electricity they feed into or withdraw from the grid.

Sharing balancing energy between countries builds electricity resilience in Europe and saves money. The Electricity Balancing Regulation was introduced in 2017 to regulate the smooth exchange of balancing energy across borders.

Balancing platforms

Since then, TSOs, the national regulators and ACER have done much work to progress towards a pan-European electricity balancing market that would make the activation of balancing services cheaper for the European consumers. PICASSO, MARI and TERRE are the TSOs’ projects establishing the three European electricity balancing platforms.

The PICASSO platform was launched in June 2022 for the exchange of the automatic frequency restoration reserve (aFRR). Currently, the platform is used by the TSOs of Germany, Austria and Czech Republic. The end of the legal derogations for European TSOs to connect to this balancing platform is July 2024.

Since the PICASSO platform started operating, some inefficiencies have been observed. To address them, in February 2024 TSOs proposed changes to the rules governing how:

• TSOs reflect their demand in the PICASSO platform;
• prices are set in the platform.

ACER believes that making the PICASSO platform operate efficiently is important to build trust in the market and secure the timely connection of more TSOs which, in turn, will bring more liquidity ensuring a better coordination across Europe and cheaper costs for consumers.

The end of the legal derogations for European TSOs to connect to this balancing platform is July 2024.

What are the main amendments?

With its Decisions 08/2024 and 09/2024 released today, ACER has revised the TSOs’ proposals, and amended the following rules:

• The pricing methodology which establishes a harmonised approach for calculating prices across the EU balancing platforms, including the PICASSO platform. ACER has made changes to the way the cross-border marginal price is computed and to the technical price limits.
• The implementation framework which describes the design of the PICASSO platform. ACER has introduced the possibility for TSOs to use an elastic demand, so that they can efficiently reflect the trade-off between extra costs and better frequency quality.

To inform its decision-making process, ACER engaged with stakeholders via a public consultation (March-April 2024) and a webinar (held in April 2024).

What’s next?

European TSOs have one month after the adoption of ACER’s decisions to implement the required changes in the electricity balancing platforms.

Today, ACER releases its report on the Swedish gas transmission tariffs, directed at the Swedish Energy Markets Inspectorate (EI), the National Regulatory Authority (NRA), and Swedegas, the Transmission System Operator (TSO) of Sweden.

The report evaluates the compliance of the proposed methodology with the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR).

What are the key findings?

After analysing the proposed methodology, ACER concludes that:

• The methodology used to determine the actual reference prices for the Swedish transmission network (referred to as the “applied methodology”) differs from the one presented in the public consultation.
• The consultation does not include the information requested in Article 26(1) of the NC TAR, as the details provided do not refer to the methodology applied to derive the reference prices.
• The TSO's continual revenue under-recovery questions whether its costs correspond to those of an efficient and structurally comparable network operator.
• There is no information on the applied methodology to conclude whether it complies with the NC TAR (Article 7) and satisfy the conditions for accessing gas transmission networks (Article 13 of Regulation (EC) No 715/2009).

What does ACER recommend?

ACER recommends that the NRA (or the TSO, as decided by the NRA) conduct a consultation on the applied methodology in the Swedish transmission network, following the requirements of the NC TAR.

ACER invites the NRA to repeat the consultation next year, considering that the NC TAR prescribes tariffs to be set at least every five years. This threshold has already passed at the time of this report’s publication.

Access all ACER reports on national tariff consultation documents.

Today, ACER publishes its 2024 Market Monitoring Report on capacities for cross-zonal trade of electricity (including the progress in reaching the so-called ‘70% requirement’) and congestion management.

ACER highlights the urgency for Transmission System Operators (TSOs) to meet their obligation of making 70% of transmission capacity available for cross-border electricity trading by the end of 2025.

What are ACER’s key findings?

Already in April 2024, ACER alerted the European Parliament and Commission that there is much at stake in not meeting the minimum 70% requirement by the end of 2025 and that there are still significant challenges ahead to do so.

Today’s report by ACER finds that:

• The EU power grid is increasingly congested (remedial actions like redispatching rose by 14.5% in 2023). The cost of managing this congestion in 2023 was EUR 4 billion.
• Some TSOs in highly meshed areas of the EU power grid made available, on average, between 30% and 50% of the physical capacity of certain network elements in 2023, thus far from reaching 70%.
• There are still significant benefits from improving how cross-zonal capacity is calculated in the EU, as demonstrated by the introduction of flow-based market coupling in the Core region.

Furthermore, the recent report by the European Commission’s Joint Research Centre forecasts that power grid congestion will significantly worsen in the coming years, even in an optimistic grid development scenario.

How to meet the 70% minimum requirement by the end of 2025?

Meeting the 70% requirement needs a unified approach – each Member State’s actions (or inactions) impact others and ultimately EU consumers. ACER calls for the swift implementation by Member States and TSOs of the 3 tools foreseen by EU rules to reach the 70% minimum requirement:

• TSOs to swiftly implement coordinated processes to first calculate capacity and then manage congestion. Moving toward a more regional approach will ensure that the Member States causing loop flows will bear their cost, allowing for more capacity to be made available.
• TSOs to undertake targeted grid developments, focusing on most congested areas of the grid.
• Improve the bidding zones configuration: if consistently unable to meet the 70% requirement, better align the bidding zone borders with where the structural grid congestion occurs.

What’s next?

10 July 2024: ACER-JRC webinar. Register (for free) to learn more about the topic.

Read more about the report.