Today, ACER and the Council of European Energy Regulators (CEER) publish the second part of a two-fold consultancy study on the impact of the EU and national gas storage regulations.

What is the role of gas storage?

Gas storage is vital for supplying 25-30% of the EU’s winter gas demand and plays a key role in the security of gas supply. The increasing importance of well-filled gas storage facilities was highlighted by the recent energy crisis, helping to mitigate potential gas supply disruptions and strengthen Europe’s resilience.

The EU gas storage Regulation (2022) introduces storage filling targets and burden sharing mechanisms. From 2023, it requires underground storage facilities to be filled to 90% before starting the winter period.

What is the study about?

The aim of the study was to analyse the measures adopted by Member States to strengthen the use of underground storage facilities in the EU and their contribution to the objectives of the EU gas storage regulation.

ACER and CEER commissioned VIS Economic & Energy Consultants to conduct a two-part study on this topic. The first part (published in October 2023) focused on collecting and assessing storage measures recently applied by EU Member States. This second part assesses storage arrangements in Member States without gas storage facilities, identifies lessons learnt and makes recommendations for better use and implementation of storage measures

• Support schemes for storage: They have motivated market participants to use storage, especially when contracting capacity is linked with filling targets. Support mechanisms should complement storage users’ obligations.
• Storage filling of last resort: The efficiency of this measure could be enhanced by facilitating access to futures markets for price hedging and with implementing a strategy for releasing gas stocks back to market.
• Cross-border impacts and cost recovery:  The release of gas stocks should not oblige entities to reserve excess capacity at cross-border interconnection points (IPs). Cost recovery mechanisms should not include charges and levies imposed at IPs.
• Use-it-or-lose-it mechanism of storage capacity: A congestion management mechanism including a streamlined process for capacity release at specific milestones is useful for efficient use of storage capacity.
• Contracts for differences (CfDs): They should be defined and offered well in advance of the injection period. Direct subsidies should be provided as a last resort only if the interest in CfDs is limited.

Want to know more?

On 12 March 2024, ACER and CEER are hosting a webinar to:

• present the consultancy study’s finding on the impact of the EU and national gas storage regulations;
• offer insights into the ongoing implementation of the EU gas storage regulation;
• discuss the important role of storage with stakeholders through polls & Q&A session.

Register to the ACER-CEER webinar (12 March).

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.

By February 2024, in accordance with the Regulation on forward capacity allocation, the Dutch and Norwegian NRAs were required 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.

What are the next steps?

ACER intends to act promptly on the ACM request, aiming to reach a decision in April 2024.

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.  

On 7 February 2024, ACER has received the transmission system operators’ (TSOs’) proposal to amend:

• the common methodology for harmonising the pricing balancing energy and cross-border capacity; and

• the implementation framework for a European platform for the exchange of balancing energy from frequency restoration reserves with automatic activation (aFRR).

The pricing methodology establishes a harmonised approach for calculating prices across the different EU balancing platforms and increases the efficiency of the balancing energy markets.

The aFRR implementation framework describes the design of the platform for the international coordination of automated frequency restoration and stable system operation (PICASSO), which is a key element in the European balancing markets integration.

What are the amendments about?

In relation to the pricing methodology, the TSOs are proposing to:

• Reduce the technical price limits of the integrated balancing energy markets from 99,999 to 15,000 EUR/MWh. This implies that balance service providers will not be allowed to bid below -15,000 EUR/MWh or above 15,000 EUR/MWh, after July 2026.

• Lower the transitional price limit (valid until July 2026) to 10,000 EUR/MWh. Similarly, during this transitional period, balance service providers will only be allowed to bid between the price range from -10,000 to 10,000 EUR/MWh.

• Use an alternative way to compute the prices from the PICASSO platform to better reflect the bids activated by the TSOs.

In terms of the aFRR implementation framework, the TSOs propose introducing the possibility of using an elastic demand. This would allow them to price a segment of their demand and therefore establish a threshold beyond which they are unwilling to activate balancing energy. This would improve the TSOs' ability to manage the balance between cost efficiency and the need for maintaining high-quality frequency.

How does ACER contribute?

ACER will review the TSOs’ proposals to ensure they align with the Regulation on electricity balancing and fulfil the obligations set out by the Regulation on the internal market for electricity.

What are the next steps?

To gather inputs from stakeholders and inform its decision-making process, ACER will:

• run a public consultation from 26 March to 23 April 2024;

• hold a webinar on 8 April 2024 to present and discuss the main elements of ACER’s public consultation.

ACER will reach a decision by 7 August 2024.