ACER publishes its Opinion on the European Network of Transmission System Operators for Gas (ENTSOG) draft Ten-Year Network Development Plan (TYNDP) 2022 for gas and hydrogen sectors.

What is the TYNDP?

Every two years, ENTSOG publishes a TYNDP to assess and identify the need of new infrastructure projects to ensure an adequate level of security of gas supply, market integration and competition. ACER monitors the development and execution of the TYNDP process and issues an opinion on ENTSOG’s draft TYNDP 2022.

This TYNDP 2022 for the first time covers hydrogen projects. The estimated investment costs of all projects included in the TYNDP is unprecedentedly high (at €110 billion), and furthermore it still lacks cost information for a significant number of projects.

The TYNDP projects are submitted by project promoters to ENTSOG and are not the result of the modelling exercise that ENTSOG performs to identify investment needs. Hence, some of the TYNDP projects may not match any apparent infrastructure need.

What’s in the ACER Opinion on ENTSOG’s TYNDP for 2022?

ACER welcomes the increased focus of the TYNDP on the energy transition, the dual gas system modelling approach that considers both hydrogen and conventional natural gas networks simultaneously, and for the first time the TYNDP covering hydrogen projects.

Natural gas (methane) projects:

In ACER’s view,

• The TYNDP includes a large portfolio of conventional gas infrastructure projects which is likely to exceed reasonable needs for such infrastructure, considering the expected reduction in gas demand in Europe from 2030;
• The natural gas network in Europe is well developed and resilient;
• Some infrastructure investment gaps will be closed soon with on-going projects, further reducing the dependency on Russian gas supply.

Hydrogen:

In ACER’s view,

• The lack of a complete (European and national) legal framework for hydrogen regulation hinders the assessment of hydrogen infrastructure projects by some regulatory authorities;
• Future TYNDPs should evolve once market signals and final regulations for hydrogen are defined;
• ENTSOG should improve its analysis of market players' interest in developing transportation capacities, as it is one of key drivers of hydrogen infrastructure projects.

Investment costs:

In ACER’s view,

• Investment costs for all projects in TYNDP 2022 are unprecedentedly high (€110 billion) and incomplete due to declared confidentiality of project costs by some promoters;
• Hydrogen projects (at €77.5 billion), primarily in early stages, account for almost 70% of these costs;
• Consistency between the European TYNDP and national Network Development Plans (NDP) projects has decreased compared to previous TYNDPs. This is mainly due to the inclusion of hydrogen and other new project types in the TYNDP, which are not yet included in most NDPs.

What does ACER recommend to ENTSOG to improve its TYNDP?

ACER recommends to ENTSOG for the final TYNDP 2022 to:

• Consider National Regulatory Authorities (NRAs) comments on TYNDP 2022 projects;
• Enhance the comprehensiveness of Annex D (methodology);
• Demonstrate the consideration of feedback from stakeholders and ACER Opinion;
• Publish project-specific Cost-Benefit Analysis (CBA) assessments results, including economic performance indicators.

For ENTSOG’s TYNDP 2024 and beyond, ACER suggests improvements in the following areas (further explained in the Opinion):

• Scenarios, planning and consultation of stakeholders;
• Submission of TYNDP projects;
• Implementation of CBA and cost transparency;
• Identification of infra needs and modelling;
• Interlinked assessments.

Access the ACER Opinion 06/2023 on the ENTSOG draft Ten-Year Network Development Plan 2022.

ACER publishes its Opinion on the 2023 Summer Supply Outlook of the European Network of Transmission System Operators for Gas (ENTSOG). ACER welcomes ENTSOG’s Outlook but recommends some targeted improvements to it.

ENTSOG’s Summer Outlook 2023 assesses the resilience of the European gas network for the summer of 2023 by examining the potential evolution of gas demand and supply. In particular, it analyses the likelihood of gas storage sites being filled to 90% of their capacity by 30 September 2023 (in line with Europe’s minimum gas storage filling obligations), considering the existing gas supply risks and the current dependence of the EU on Russian gas. With EU gas storage above 75% in early July 2023, Europe is on track to meeting the 90% target if current gas storage injection levels continue.

Highlights of ENTSOG’s Summer Supply Outlook

ENTSOG’s Summer Supply Outlook 2023 presents two scenarios:

• Minimised Russian gas imports; and
• Complete disruption of Russian pipeline supply.

Its main findings include:

• Reaching 90% storage filling levels by end of this summer is possible in both scenarios, if there is cooperation among EU countries.
• The existing gas infrastructure, including recently commissioned projects, can effectively reduce the dependency on Russian gas supply.
• In a 'cold winter' with full Russian pipeline disruptions (which is the harshest scenario), additional gas supplies and demand reduction would be required.
• Additional measures to improve the security of gas supply include:
  • Increased liquified natural gas (LNG) imports (beyond historically observed import levels);
  • Enhanced capacities provided by transmission system operators (TSOs), leading to shift in gas flow (from West to East); and
  • Implementation of the existing target to reduce gas demand by 15%.

What is in the ACER Opinion?

• ACER appreciates that ENTSOG’s Outlook reflects already reduced gas flows from Russia and has a scenario of complete disruption of Russian gas.
• ACER welcomes that the recently commissioned infrastructure has added significant cross-border capacities and more than 30 bcm of LNG import capacities, improving the resilience of the EU gas system to import gas from sources other than Russia.
• ACER agrees with ENTSOG that additional LNG imports, enhanced transmission capacities and the implementation of a 15% gas demand reduction target may be needed to secure adequate levels of gas storage at the margins of 2023/24 winter season.
• ACER also stresses that continued vigilance regarding gas supplies and monitoring of storage filling trajectories are crucial because of the persistent risks of a significant reduction in Russian gas supply.

ACER’s main recommendations to ENTSOG for improving Outlook’s methodology and results:

• Use a complementary scenario based on expected gas supply and booked capacities;
• Estimate the effects of high gas prices on gas demand;
• Where relevant, adapt gas supply assumptions to potential events impacting the gas supply import capabilities, going beyond assumptions based on historic values;
• Use gas demand projections which are fully consistent with the European targets on gas demand reduction and phase-out of Russian gas; and
• Increase the level of granularity of the simulation results, the network topology, and its visualisation.

ACER highlights the importance of a close cooperation between ENTSOG and the European Network of Transmission System Operators for Electricity (ENTSO-E) to ensure consistent assumptions and results in their respective seasonal outlooks.

Access the ACER’s Opinion on ENTSOG’s Gas Summer Supply Outlook 2023.

Also see the recent ACER communication on ENTSO-E’s Summer Outlook 2023.

In response to the energy crisis, every EU Member State introduced emergency measures to support their citizens and economy, and to mitigate security of energy supply risks. In March, ACER published an inventory of 400+ measures adopted by Member States.

As part of its series of 2023 Market Monitoring reports, ACER publishes today its assessment of emergency measures in electricity markets.

What is it about?

More than 400 measures were adopted by Member States in response to the energy crisis. Member States had to swiftly respond to complex issues during the crisis, sometimes lacking a comprehensive overview of potential short- and long-term implications of choices made. This report’s objective is not to assign blame but rather to assist decision-makers in making informed choices in similar situations in the future.

The ACER Assessment focuses on lessons learned. This ACER report assesses drawbacks and merits of types of emergency measures against the achievement of 5 regulatory goals, namely how the measures;

1. Help consumers in terms of electricity affordability;
2. Contribute to security of supply;
3. Support energy transition and investment signals;
4. Promote energy efficiency and demand response; and
5. Contribute to efficient cross-border trading and market integration to benefit European consumers. Market integration allows for the mitigation of price shocks and increases security of supply.

ACER’s assessment of emergency measures is timely:

• As energy and fiscal policy makers consider next steps now to cope with persistent short-term energy challenges;
• With Member States starting to re-evaluate their energy emergency support measures in the context of falling energy prices;
• Given recent calls (by certain EU bodies) for fiscal policy (in the current high inflation environment) to be targeted, tailored and temporary.

Lessons from 2022 can help Member States determine where and when to direct any future energy support measures, to those in need.

What’s next?

Save the date – 6 September 2023 – when ACER will present and discuss the conclusions of the report.

ACER welcomes feedback ahead of the webinar, to be sent to 2023_emergency_measures(at)acer.europa.eu.

Access:

• ACER Assessment of emergency measures in electricity markets – 2023 Market Monitoring Report.
• ACER emergency measures infographic.
• ACER interactive inventory of 439 energy crisis measures adopted by Member States (you can filter by country, type of emergency measure).

ACER, in collaboration with PwC consultants, publishes its second report on unit investment costs indicators. In addition, ACER publishes an energy infrastructure unit investment cost calculator, in Excel format, to facilitate future estimations of unit investment costs.

The 2023 report presents:

• the analytical methodology employed;
• the consultation process with stakeholders;
• the statistics for the collected data;
• reference unit investment costs values for most common energy infrastructure;
• projected reference cost values for different emerging energy infrastructure assets such as  large-scale electrolysers, electric batteries, hydrogen pipelines, and carbon dioxide pipelines; and
• a comparison with 2015 unit investment costs figures.

What are the key findings?

ACER collected information on costs and technical details from recently commissioned energy infrastructure projects.  

ACER finds an increase in unit investment costs for most existing energy infrastructure assets when compared to the results from the 2015 UIC report. This edition of the report also provides predicted unit costs for emerging infrastructure categories’ costs like electrolysers, batteries, hydrogen and CO2 pipelines.

What are the next steps?

To present the outcome of the report, ACER will organise a workshop on 20 July 2023.

Access the 2023 UIC Report.

Access the Unit investment costs indicators for energy infrastructure categories.

Access the excel calculator.

Read more on UIC.

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) issued a decision on 2 June 2023, wherein it found that Prvo Plinarsko Društvo d.o.o. (PPD) has engaged in market manipulation on the natural gas market during one of the rolling monthly capacity auctions, breaching Article 5 of the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT). MEKH has fined PPD HUF 500,000,000 (approximately EUR 1.4 million).

MEKH's investigation revealed that PPD, in an “ascending clock auction”, manipulated the natural gas market during the rolling monthly capacity auction, held from 17 to 26 January 2022 on the capacity product for the Austria to Hungary interconnection point for February 2022.

According to MEKH’s decision, PPD’s bidding behaviour was manipulative by maintaining its bids for almost the whole amount of the offered capacity for thirty-six bidding rounds of the auction and then leaving the auction without capacity booking, raising the clearing price for the other market participants in the auction up to four and a half times of the reserve price. PPD’s bidding behaviour gave misleading signals to the market as to the demand of the wholesale energy product in question and secured the price of the implicated wholesale energy product at an artificial level.

On 5 July 2023, PPD submitted a claim for administrative action against the decision of MEKH. The judicial review will be carried out by the administrative court.

ACER welcomes MEKH initiative to pursue this wholesale energy market manipulation behaviour.

Access the full text of MEKH’s decision and MEKH’s press release (in HU).

See the latest table of REMIT breach sanction decisions adopted by national regulatory authorities. 

This latest fine (approx. EUR 1.4 million) is the biggest imposed by MEKH to date.

Check the ACER’s Guidance on REMIT (6th edition) for more information on the types of trading practices which could constitute market manipulation under REMIT.

Additional material on enforcement decisions under REMIT is accessible in the REMIT Quarterly reports that ACER publishes each quarter.

ACER publishes today its Consolidated Annual Activity Report (CAAR) for 2022. It describes the regulatory activities performed by the Agency related to:

• Electricity and gas markets;
• Regulation on wholesale energy market integrity and transparency (REMIT).

The CAAR also assesses the extent to which the Agency achieved its objectives outlined in its Work Programme of 2022, and describes the administrative aspects related to the management and governance of the Agency.

The document was adopted on 21 June 2023 by ACER's Administrative Board, following the favourable opinion of the ACER's Board of Regulators.

Access the Consolidated Annual Activity Report 2022. 

Access previous editions.

Seasonal outlooks of the European Network of Transmission System Operators for Electricity (ENTSO-E) provide observations and foresight for challenges associated with the security of electricity supply for winter and summer. They help Member States and transmission system operators to make informed decisions related to future risks of power shortages.

The importance of these European wide seasonal assessments is heightened in the context of gas supply uncertainties, changing weather patterns and generation outages.

Highlights of ENTSO-E’s Summer Outlook (2023)

ENTSO-E’s Summer Outlook 2023 identified no electricity security of supply concerns for EU consumers. Nevertheless, close monitoring is suggested for Cyprus, Crete, Malta and Ireland.

Adequacy risks flagged for island Member States (and Crete) show the importance of interconnections in ensuring security of supply. With limited interconnections, the islands cannot benefit from the resilience the meshed network of the continental Europe offers, which allows for enhanced sharing of resources.

Source: ACER based on Summer Outlook 2023 - Figure 13: Adequacy risk overview - considering non-market resources

ENTSO-E’s report also points to comfortable gas storage levels by the end of summer and highlights the need to resort to any gas withdrawals with prudence over the summer period.

What does ACER say about ENTSO-E’s Summer Outlook?

• ACER appreciates ENTSO-E’s commitment to adapting its seasonal outlooks to the prevailing circumstances, such as developments in the gas system situation.
• ACER also stresses the importance of considering interconnection capacity when assessing the adequacy of electricity supply.
• ACER highlights, as in its past opinions, that ENTSO-E’s Summer Outlook assessment lacks flow-based modelling to optimise cross-zonal exchanges in line with the current market design.

For the next seasonal assessment (the Winter Outlook), ACER suggests that ENTSO-E addresses the following considerations to support management of security of electricity supply over the coming winter:

• Analyse the consequences of alternative scenarios including sensitivity to factors such as the impact of low precipitation (prolonged droughts) over the year.
• Assess the potential rebound of demand in case energy-saving measures introduced last year (2022) are not in effect and demand side response to prices is less pronounced.