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.

On 26 April 2024, ACER received a proposal from all Nominated Electricity Market Operators (NEMOs) to amend the single day-ahead coupling products methodology.

What is the methodology about?

The single day-ahead coupling (SDAC) products methodology is defined by the Capacity Allocation and Congestion Management (CACM) Regulation. The methodology lists all products that are eligible for inclusion within the EU single day-ahead coupling.

Why amend the methodology?

Every two years, all NEMOs are required to consult market participants, as well as all Transmission System Operators (TSOs) and regulatory authorities to ensure that the current SDAC products available in the market:

• reflect the real needs of market participants;
• take due account of operational security; and
• comply with the objectives of the CACM Regulation.

If the consultation highlights the need to amend the list of products, NEMOs shall submit an amendment proposal to ACER, specifying which products should be included in the SDAC.

At the beginning of 2023, NEMOs initiated a new public consultation to assess the need to amend the latest version of the SDAC products methodology (approved by ACER in December 2020).

Following this process, NEMOs are now proposing an amendment of the SDAC products methodology to enable the implementation of the 15-minute Market Time Unit (MTU) products into the single day-ahead coupling, which is expected in January 2025. The amendment is deemed necessary to comply with the provisions of the EU Electricity Regulation, and to remove entry barriers for market participants trading 15-minute products. This will allow them to buy and sell electricity for each 15 minutes during the day, enhancing market flexibility.

What are the next steps?

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

Access the related ACER public notice initiating the procedure.

Contact information

Interested parties may contact ACER on this matter at ACER-ELE-2024-006@acer.europa.eu by 4 June 2024 at the latest.

Relevant documents

All NEMOs’ proposal to amend the SDAC products methodology.

All NEMOs’ proposal to amend the SDAC products methodology (in track changes).

Explanatory note.

On 18 February 2024, the Dutch National Regulatory Authority (NRA), Autoriteit Consument & Markt (ACM), requested a six-month extension from ACER to adopt coordinated decisions with the Norwegian NRA (NVE-RME) on electricity cross-zonal risk hedging opportunities.

ACER has now granted the requested six-month extension to ACM. The EFTA Surveillance Authority (ESA) will decide on the extension request for NVE-RME, based on a draft from ACER, following the procedure of the Third Energy Package as outlined in the EEA Agreement.

What are the coordinated decisions about?

The Regulation on forward capacity allocation requires the Dutch and Norwegian NRAs to assess whether the electricity forward market in their respective bidding zone provides sufficient hedging opportunities. If these opportunities prove insufficient, the NRAs must take coordinated decisions to either:

• introduce long-term transmission rights or

• task Transmission System Operators (TSOs) with implementing alternative measures to improve cross-zonal hedging opportunities.

Adopting coordinated decisions is important to ensure that the electricity forward market provides adequate hedging opportunities to market participants, which contributes to stabilising electricity prices.

What are the next steps?

ACM has until 19 August 2024 to take coordinated decisions with NVE-RME on cross-zonal risk hedging opportunities. 

In November 2023, ACER received a proposal from Nominated Electricity Market Operators (NEMOs) for amending the ACER’s 2020 methodology for the price coupling algorithm and the continuous trading matching algorithm.

The methodology sets the regulatory framework for:

• the algorithms used for matching bids from market participants; and
• allocating cross-zonal capacities in the European day-ahead and intraday electricity markets.

Thanks to a coordinated calculation of prices and flows, which is referred to as market coupling, available cross-zonal capacity is used more efficiently and price differences are reduced.

Amending the methodology, in particular the day-ahead coupling algorithm, is needed to enable a co-optimised allocation of cross-zonal capacity for the exchange of balancing capacity or sharing of reserves. This would facilitate the integration of the balancing capacity markets and allow for a more efficient use of cross-zonal capacity.

Where does ACER stand in the process?

Following the receipt of the NEMOs’ proposal in November 2023, ACER initiated a procedure to decide on the proposed amendments within six months. To collect inputs from relevant stakeholders and inform its decision-making process, ACER ran a public consultation and hosted a workshop in early 2024.

In October 2023, ACER commissioned a consultancy study to assess the expected benefits of implementing co-optimisation in the day-ahead coupling algorithm as compared to the current market design. The study includes insights on the design of bids that would allow to best capture the interactions between day-ahead and balancing capacity markets, while maximising the expected benefits of co-optimisation. The study could not be completed in time to be part of ACER’s public consultation in early 2024.

For this reason, and based on stakeholders’ input collected so far, ACER will conduct a second public consultation (from 27 May to 19 June 2024). This consultation aims to gather stakeholders’ perspectives on the study’s findings and identify further research and development necessary for implementing co-optimisation.

Interested in the study? Register for our webinar (10 June 2024) to explore the study’s key findings, discuss opportunities and challenges of implementing co-optimisation, and engage with experts.

ACER will consider the consultation and webinar outcomes when drafting the proposed amendments to the methodology.

What are the key dates?

• Publication of the consultancy study: 27 May 2024.
• ACER public consultation: 27 May - 19 June 2024.
• ACER webinar: 10 June 2024.

ACER expects to decide on the amended methodology for the price coupling algorithm and the continuous trading matching algorithm by early autumn 2024.

Update as of 24 September: with its Decision 11-2024, ACER adopted the amended methodology.