Europe’s spot electricity markets have an automatic maximum price limit adjustment mechanism in case of extraordinary high prices. ACER has approved changes in the methodologies for automatically increasing the maximum price limit in case of price spikes. The timely adjustment of those price limits is needed to ensure security of supply this winter through optimal short-term dispatch of generation, efficient use of interconnections and to encourage demand response. The amended methodologies will lead to a more gradual increase of the day ahead and intraday market price limits than with the previous rules.

What are the methodologies about?

With expected high prices on the electricity markets ahead, ACER urged the Nominated Electricity Market Operators (NEMOs) to submit proposals to amend the Capacity Allocation and Congestion Management methodologies related to:

• The Harmonised Maximum and Minimum Clearing Price (HMMCP) methodology for Single Day-Ahead Coupling (SDAC); and
• The Harmonised Maximum and Minimum Clearing Price (HMMCP) methodology for Single Intraday Coupling (SIDC).

These methodologies define Europe’s single day-ahead and intraday electricity markets’ maximum and minimum price limits. Following receipt of the NEMOs’ proposals in September 2022, ACER has reviewed and now approved the amendments to the HMMCP methodologies. ACER considered this review as a high priority and approved the amendments in an expedited manner, issuing the HMMCP SDAC Decision and the HMMCP SIDC Decision two months before the legal deadline.

What are the benefits of the changes?

The methodology amendments update the conditions that will lead to fewer and smaller adjustments of the price limits. This will allow market participants to get used to the new price limits, allowing new generation and demand response to enter.

See examples of the effects of the amendments here.

The combined effect of these amendments will be to more gradually adjust the short-term electricity market price limits, effectively limiting a cascading effect of increases in case of repeated extreme prices resulting from the current methodology, while conserving the benefits of timely adjustments of the price limits on the efficiency of the European spot markets.

Additionally the automatic adjustment mechanism is introduced for intraday markets, triggering price limits adjustments on the intraday auctions, currently planned to be launched in the first months of 2024.

Access the ACER’s HMMCP SDAC Decision and ACER’s HMMCP SIDC Decision.

How else to reduce price spikes in the coming months?

Price spikes can occur more frequently if electricity generation together with cross-border interconnector capacity is not enough to serve demand. Making interconnector capacity available for trade and encouraging demand response is vital to ensure security of supply over the coming winter.

Therefore, and irrespective of the decisions, in the coming months, ACER reiterates its plea for:

• Transmission System Operators (TSOs) to make sufficient cross-zonal interconnector capacity is available for electricity cross-border trade; and
• Market participants to bring significant demand response to the market.

ACER publishes its Single Programming Document 2023-2025 which sets out:

• The 2023 Annual Work Programme;
• ACER’s priorities in upcoming years; and
• New responsibilities allocated to ACER as part of Europe’s energy crisis response.

Priorities

ACER will continue its work on:

• The completion of the Internal Energy Market and monitoring of its functioning;
• Contributing to the infrastructure and security of supply challenges;
• Increasing integrity and transparency of wholesale energy markets; and
• Longer-term regulatory challenges.

Europe’s energy crisis response

A core part of ACER and the national energy regulators’ work in 2023 will continue to be on Europe’s energy crisis response. The Agency takes on tasks allocated to ACER under the emergency Council regulations (such as creating and publishing daily the new LNG price assessment, and the Market Correction Mechanism), as well several new responsibilities, following the entry into force of Regulation (EU) 2022/869 on Guidelines for trans-European energy infrastructure (“new TEN-E Regulation”).

The document was adopted on 15 December 2022 by ACER's Administrative Board, following the favourable opinion of the Agency's Board of Regulators.

Access the ACER Single Programming Document 2023-2025.

Access previous editions here.

Congestion income is the revenue that Transmission System Operators (TSOs) collect in the event of congestion when allocating electricity cross-zonal capacity.

How Member States can use the congestion revenue they collect is specified in the EU law. National Regulatory Authorities (NRAs) must report to ACER (the EU Agency) on the use of electricity congestion income. ACER has updated its recommendation to regulators on how to do so.

Why did ACER update its Recommendation?

• Regulation on an emergency intervention to address high energy prices (October 2022) allows Member States to use the surplus congestion income to also finance measures in support of final electricity customers.

• The Methodology for the use of congestion income will for the first time come into full effect for the NRAs reports to be published in early 2023.

• Gained experience in the first two years of the NRA reporting on the amounts and use of congestion income.

Hence, ACER has updated its original (2020) Recommendations to NRAs.

What’s new in ACER’s recommendation?

• Discontinuity of collecting some project specific data that is already available to ACER (e.g. commissioning date, capital expenditure etc.);

• More options provided for the NRAs to prove the cross-border relevance of projects where congestion income is used;

• The possibility to indicate the support for electricity customers as a use of the collected congestion income is now included; and

• Clarification of certain terms and clearer phrasing.

Access the ACER (2022) Recommendation.

As part of its electricity wholesale market monitoring, ACER conducted a study on the prequalification processes for the provision of balancing services. The ACER study:

• Provides an overview of the different electricity balancing prequalification approaches in Europe;
• Identifies some practices that may be considered by grid operators to remove market entry barriers for new and small market participants, including consumers, in providing balancing services.

Transmission System Operators (TSOs) must keep the electricity system constantly in balance. To maintain system frequency, TSOs procure balancing services from Balancing Service Providers (BSPs).

EU rules (the Electricity Balancing Regulation) require TSOs to develop prequalification processes for potential BSPs. This allows potential BSPs (such as generators or consumers) to provide proof that they fulfil the requirements for rendering one or more types of balancing services necessary to guarantee the grid frequency.

How does this ACER study support EU security of energy supply and consumers?

Demand response programmes allow consumers to adjust their consumption at key times to help grid operators to manage peak electric demand and lower system costs. Currently consumers do not participate to a large extent in electricity markets. However, the flexibility that smaller market participants (including demand response, distributed generation and energy storage solutions) could provide is needed more and more for security of supply. ACER strives to remove barriers that hamper these smaller market participants entering and participating in electricity markets.

For example, some consumers are capable of providing balancing services through bi-directional charging of their electric vehicles (EVs). For the integration of electric vehicles into balancing services, a prequalification process is necessary. This process should prove the technical suitability of the assets for providing the different types of balancing products. In the product prequalification processes for providing balancing services, the TSO verifies the compliance of the assets of the BSP with the technical requirements set by the TSO.

What are ACER’s key findings?

Overall, there is considerable scope for grid operators to reduce market entry barriers to new and small market participants, including small-scale demand response, in providing balancing services.

• Electricity balancing prequalification approaches differ significantly across Member States (MSs) and across balancing products.
• Only a few TSOs apply a simplified approach to product prequalification for some balancing products on a general basis.
• Prequalification of groups of units is still not possible in some MSs. Moreover, where it is possible, some TSOs do not allow generation and consumer/demand units to be aggregated in the same group. This may represent an entry barrier for new market participants that aggregate multiple types of units (e.g. EVs, solar PV panels, household consumers, etc.).
• In the first-time prequalification of groups comprising small units (e.g. EVs, solar PV panels, household consumers, etc.), a few TSOs still require each individual unit to prequalify separately. On the contrary, some TSOs make simplifications or exceptions to simplify and speed-up the prequalification of these groups.
• There is considerable room for TSOs to simplify the re-prequalification of groups when they are subject to changes in units such as add-ons and removals. Some TSOs limit the need for this re-prequalification to only significant changes.

The ACER study showcases some practices that could be considered by TSOs to improve and simplify the product prequalification process for new and small market participants, including demand response:

• Setting a product prequalification for groups aggregating any type of technology;
• Setting a threshold for re-prequalification only after significant changes in prequalified units or groups;
• Using type-approval for small units;
• Verifying the compliance of assets to technical requirements during the service delivery rather than before.

Access the ACER Study.

Check out the interactive charts (filter by country or balancing service).

ACER was mandated by the European Commission to draft a framework guideline on demand response.

Many consumers want to actively participate in energy markets. 'Demand response' essentially means a change in electricity consumption as customers (individually or collectively) respond to some market signal such as a change in electricity prices or some financial incentive to increase/decrease/shift the timing of their electricity consumption. In the context of this framework guideline only active participation of demand response in electricity markets is covered.

ACER’s framework guideline sets out the main principles for the development of a binding EU-wide rules on demand response. The new rules aim at facilitating the participation of more demand response including consumers’ electricity demand, storage and distributed generation (e.g. rooftop solar panels, electric vehicles) in the wholesale electricity markets, as well at facilitating the market based procurement of balancing, congestion management and voltage control services needed by grid operators. The following areas are covered:

• General requirements for market access to be specified at European level to ensure a level playing field for the participation of all the resources in the electricity wholesale markets;
• Principles for ‘prequalification’ aiming at simplifying the process and removing entry barriers for everyone (such as consumers with solar panels or electric vehicles or small storage facilities such as batteries) in different services to system operators. Prequalification processes allow potential providers (such as generators or consumers) to give proof to the grid operators that they fulfil the requirements for rendering one or more types of services (such as balancing, congestion management and voltage control) necessary to guarantee the secure operation of the system;
• Principles for the coordination of market-based procurement of congestion management, voltage control and balancing services with other wholesale markets and between (distribution and transmission) system operators ensuring coherence in interaction across different markets and timeframes; and
• Requirements for market-based procurement of products used for electricity congestion management and voltage control.

ACER thanks stakeholders for their input to the public consultation in summer 2022. See ACER’s Evaluation of the responses received.

ACER submitted the framework guideline to the European Commission on 20 December 2022.

What are the next steps?

Once ACER’s framework guideline is cleared by the European Commission, ENTSO-E and the EU DSO Entity will be asked by the Commission to draft (within 12 months) the proposal for the new binding EU rules. A drafting committee including ACER and some stakeholders, to support them in this work will be established. ACER will consult and review the proposed new EU rules before submitting them to the European Commission.

Access the Framework Guideline on Demand Response.

On 30 December 2022, Council Regulation (EU) 2022/2576 “Enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders” has entered into force.

The Regulation tasks ACER with producing and publishing a new daily Liquefied Natural Gas (LNG) price assessment starting no later than 13 January 2023, and grants ACER the powers to collect LNG market data.

LNG market data collection

As of today, 20 December 2022, LNG market participants who need to comply with their reporting obligation under the Regulation will be able to register and submit their LNG market data to ACER via a dedicated data collection platform, called TERMINAL.

ACER provides step by step guidance to LNG market participants on how to register.

To collect the LNG market data in accordance with the Regulation, ACER has:

• Set up a dedicated webpage on LNG price assessment;

• Created a data collection system for reporting LNG market data (TERMINAL); and

• Prepared guidance for LNG market participants to fulfil their reporting obligations (List of Documents).

Registration of LNG market participants

To submit their data, LNG market participants must register and create a user account at TERMINAL. Since LNG market participants should be subject to the obligations and prohibitions that apply to market participants according REMIT, LNG market participants shall also be registered in the Centralised European Register of Energy Market Participants (CEREMP). LNG market participants not registered in CEREMP are advised to register with their relevant EU National Regulatory Authority (NRA) as soon as possible.

Detailed information on the registration process of LNG market participants in CEREMP and TERMINAL is available here.

Read more on LNG Price Assessment here.

ACER publishes today its Report on the implementation of the Inter-Transmission System Operator Compensation mechanism (ITC) covering the year 2021.

ACER issues these yearly monitoring reports since 2012, as required by the European Commission Regulation no. 838/2010.

What is the ITC Fund?

The ITC fund compensates transmission system operators (TSOs) for the costs incurred on national power systems for hosting cross-border flows of electricity (transits). The ITC fund seeks to cover the costs of:

• The incurred transmission losses;
• Making infrastructure available.

What did the 2021 ITC monitoring report find?

• The ITC fund in 2021 amounted to €364.5 million, reaching its highest-ever value for the third year in a row. For 2021, this is explained by an almost 20% rise in the volume of transmission losses due to transits.
• There is a decrease in the value of losses for the vast majority of the ITC Parties (TSOs or groups of TSOs participating in the ITC mechanism) in 2021 compared to 2020.
• The losses values of individual ITC Parties that are rather volatile from year to year plus the changing volumes of losses due to transits significantly affect the net ITC compensation of several ITC Parties. The volatility occurs mainly because:
  • Power exchange prices are most frequently used as a basis to value the losses;
  • ITC Parties determine ex ante the value of losses for the ITC mechanism on a yearly basis.
• In 2021, the ITC Parties contributed 96.6% to the ITC fund, while the contribution of the Perimeter countries (non-participating countries connected to the ITC Parties’ networks) remained around 3%. The reasons for the significant decrease of Perimeter countries’ compared to the 2011-2019 period are:
  • Decrease of the volume of the scheduled flows between the Perimeter countries and the ITC Parties;
  • Decreased Perimeter countries’ fee; and
  • Increased overall amount of the ITC fund.

What are ACER’s next steps?

ACER considers that in light of extreme price volatility and in line with the general tarification principle of cost reflectivity introduced by the Regulation on the internal market for electricity, there may be room for improvements on how, when and/or how often the values of losses are determined for the purpose of the ITC mechanism.

Access the Report.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes an Opinion assessing the consistency of the most recently published national gas and hydrogen network development plans (NDPs) with the EU-wide Ten-Year Network Development Plan (EU TYNDP).

The comprehensive review is carried out biannually and is based on the information provided by national regulatory authorities (NRAs).

ACER analyses the regulatory aspects and key features of the gas NDPs, as well as the inputs, the methodology used and the resulting outputs, focusing on changes observed during the last two years.

The review also analyses whether the gas NDPs cover energy transition aspects, such as the hydrogen and biomethane developments, the blending of hydrogen and biomethane in gas transmission networks, the existence of hydrogen blending targets, hydrogen strategies and plans for dedicated hydrogen networks.

Project-consistency of national and European gas network plans

ACER is concerned by a continuous falling level of project consistency between gas NDPs and the draft EU TYNDP 2022, compared to previous editions of the EU TYNDP. This is largely explained by the inclusion of hydrogen and biomethane projects in the draft EU TYNDP 2022 which, however, are often not part of the most recent gas NDPs.

ACER Recommendations

ACERs recommendations aim to improve the consistency of national and European plans and to align network plans with decarbonisation efforts.

NDPs should:

• Focus on investments allowing low-carbon and renewable gases to be injected into the networks;
• Consider possible future needs to decommission gas infrastructure;
• Be better coordinated with neighbouring Member States for cross-border issues;
• Include project cost data;
• Include soon-to-be-operational infrastructure aimed to phase out Russian gas;
• Build on compatible scenarios aligned with targets of decarbonisation and phase out dependency on Russian gas.

The EU TYNDP should:

• Reconcile the large number of investment projects with the projected downward gas demand;
• Make gas decarbonisation a main driver of network development;
• Include project costs and monetised benefits data (as it is already the case in the electricity TYNDP);
• Be primarily based on NDPs;
• Include suitable areas for location of power-to-gas assets, in coordination with electricity TYNDP assessments;
• Synchronise expectations of uptick of supply and demand of renewable hydrogen and biomethane with a prudent assessment of need of transportation services.

Key findings on aligning national and EU network plans with decarbonisation targets:

• NRAs would support an EU-wide approach to hydrogen blending limits;
• Hydrogen blending is likely to be a temporary or transitional solution towards decarbonisation;
• Essential network adaptations are required to allow for hydrogen injection in the transmission network;
• The number of Member States with hydrogen strategies doubled in the last two years. However, limited progress is observed regarding the readiness of gas transmission networks and national legislations for accommodating hydrogen.

Access the ACER Opinion and its Annexes I and II and Annex III, which provide comprehensive information on the most recent gas and hydrogen plans. Slides summarise selective findings of this ACER assessment of the gas TYNDP.