The Agency for the Cooperation of Energy Regulators (ACER) publishes today a Study on the Future Regulatory Decisions on Natural Gas: Repurposing, Decommissioning and Reinvestments. ACER commissioned DNV as a consultant to carry out the study.

Europe’s ambitious energy transition and decarbonisation goals by 2050 point to a changing role for natural gas. Demand for natural gas is expected to decline over time as the decarbonisation goals lead to a substitution of natural gas with other energy vectors. Therefore national regulatory authorities (NRAs) will need to take regulatory decisions on a wide range of issues such as:

• The repurposing of natural gas assets for their use as part of hydrogen networks;
• The potential decommissioning of natural gas assets that become stranded; and
• The reinvestment of assets that reach the end of their regulatory lives and become fully depreciated.

What is in the Study?

The DNV Study provides an overview of current practices in Member States in addition to identifying challenges and offering possible solutions to future challenges that NRAs and the natural gas transmission system operators (TSOs) face with respect to the changing role of natural gas.

The analysis touches upon issues that are part of the European Commission’s Hydrogen and Decarbonised Gas Market Package of legislative proposals, such as the setting of the transfer value for repurposing assets, the forecasting of future transmission tariffs and the benchmarking of TSO costs. The report includes data collected from NRAs on the TSOs’ regulatory asset base, which helps increase understanding of how current TSOs’ costs are foreseen to evolve over time.

The DNV Study also identifies future challenges and suggests future possible legislative steps to be taken at the EU level on natural gas transmission and on hydrogen networks.

The information and the views set out in this study are those of the author (DNV) only and may not, in any circumstances, be regarded as stating ACER’s official position, opinion, or recommendation. ACER does not guarantee the accuracy of the data and the statements contained therein.

Access the Study on the Future Regulatory Decisions on Natural Gas: Repurposing, Decommissioning and Reinvestments

The EU Agency for the Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators (CEER) publish today the 2021 Decarbonised Gases Volume of the Market Monitoring Report (MMR).

What is the Volume about?

This new Decarbonised Gases Volume describes the current state of EU decarbonised gases and hydrogen, and it examines the regulatory provisions and market context that may drive their evolution in the mid-term.

In particular, it looks at:

• Renewable and low carbon gases production, consumption and price levels, as well as their prospects from now until 2050;
• Key regulatory provisions governing the access of decarbonised gases to the market; and
• Infrastructure expansion required to facilitate the use of biomethane and hydrogen.

What are the main findings?

• Current production of renewable and low carbon gases is modest relative to future policy expectations;
• Production goals have been accelerated as a result of the supply diversification efforts due to the Russian invasion of Ukraine in 2022;
• Numerous challenges are being identified that may hinder the expansion of decarbonised gases and hydrogen production, including the need for:
  • improving infrastructure interconnections,
  • developing greater end-use demand,
  • new infrastructure investments; and
• Energy regulators see the need to clarify the regulatory, financial and technical aspects in time to ensure gas sector decarbonisation and clean hydrogen sector development.

Key recommendations

The Report includes a set of recommendations on how to facilitate the access of decarbonised gases to the market and how to strike a balance between enabling a decarbonised gases market and ensuring regulatory certainty. 

The main regulatory recommendations can be grouped into six areas:

• Technical rules – quality of gas must be defined;
• Market rules – access to networks should be facilitated;
• Access conditions – appropriate tariffing arrangements needed;
• Participation – identification of the appropriate bodies to undertake new roles needed;
• New investments – frameworks must be defined;
• Support – early phase technologies need to be identified.

Access the 2021 Decarbonised Gases Volume.

Explore the rest of the MMR publications.

High prices and high volatility on the wholesale energy markets has led the EU Agency for the Cooperation of Energy Regulators (ACER) and National Regulatory Authorities (NRAs) to reinforce their scrutiny (under REMIT) to detect and sanction possible instances of market abuse.

REMIT is the EU-wide framework for detecting market abuse established under the Regulation on Wholesale Energy Market Integrity and Transparency (EU No 1227/2011).

In the current crisis and exceptional market circumstances (characterised by scarce electricity and gas supplies, unprecedentedly high prices and price volatility), vigilance in detecting market manipulation and insider trading is more important than ever to ensure confidence in the integrity of the EU wholesale energy markets.

Formation of a cross-border investigatory group

ACER and the NRAs across Europe are actively analysing the behaviour of market participants, including non-EU companies, on the wholesale energy markets to:

• detect market manipulation that may have contributed to the current market situation and manipulative behaviours that may have emerged since the beginning of the energy crisis (due to the high price volatility);
• identify potential situations of inaccurate or misleading information provided to the market and/or insider trading.

ACER and the energy regulatory authorities of Austria, Germany and the Netherlands have established a cross-border investigatory group on the oversight of the gas markets. The aim of a cross-border investigatory group is to coordinate and strengthen the efforts on fact-finding and evidence gathering. The investigatory group will be closed when sufficient evidence is gathered to pursue a case or if NRAs conclude on the absence of a REMIT breach.

Neither ACER nor the NRAs are in a position to further comment on specific ongoing investigations, which can span over several years.

Background on role of ACER and NRAs under REMIT:

ACER’s activities

Under the REMIT framework, ACER is mandated to carry out data collection and the monitoring of wholesale energy markets at a Union-wide level. Further, ACER issues guidance and coordinates the activities of the NRAs to ensure a coherent application of REMIT and an effective approach to tackling market abuse. ACER has no direct role in investigation and enforcement.

What is the role of the NRAs under REMIT?

NRAs investigate potential insider trading and market manipulation cases and enforce REMIT through a range of remedies and sanctions determined by the national law of the respective Member States.

See the new table of REMIT breach sanction decisions adopted by NRAs. 

The EU Agency for the Cooperation of Energy Regulators (ACER) is running a public consultation on the Transmission System Operators’ (TSOs’) proposal to include Norway in the capacity calculation regions (CCRs).

What are the capacity calculation regions and why are they important?

CCRs define the geographic areas (i.e. by listing bidding zone borders) across the EU in which the task of capacity calculation and other processes are coordinated by TSOs (i.e. subject to regional methodologies).

There are 8 CCRs in Europe: Nordic, Hansa, Core, Italy North, Greece-Italy (GRIT), South-west Europe (SWE), Baltic and South-east Europe (SEE).

In 2021, the CACM Regulation has also become binding for Norway. The TSOs’ amendment proposes to add the Norwegian bidding zone borders into the Hansa and Nordic CCRs.

Forming CCRs benefit European consumers, as:

• Dividing Europe into different CCRs allows TSOs to run regional processes related to capacity calculation, re-dispatch & countertrading more effectively;
• Having an efficient determination of CCRs facilitates the optimal provision of cross-zonal capacity, which allows more cross-zonal trade while remaining security of supply; and
• The addition of the Norwegian bidding zone borders further facilitates welfare increases by integrating these bidding zone borders in European and regional processes.

What is the process to amend the current bidding zones?

Any amendments proposed by TSOs to the definition of CCRs are subject to the approval of ACER.

ACER has six months (until 13 April 2023) to decide on the TSOs’ proposal.

Next steps

ACER will assess whether the TSOs’ proposals contribute to market integration, non-discrimination, effective competition and the proper functioning of the EU electricity market.

To collect views of the stakeholders, a public consultation on the TSOs proposed amendments runs from 28 October to 25 November 2022.

Access the Public Consultation.

Access the Public Notice.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes its report on Denmark’s proposed tariffs applicable for filling gas storages and for the emergency gas supply to non-protected consumers.

What is in the report?

ACER assesses the proposed tariffs, which have two components:

• A postage stamp ex-ante tariff used to store gas in Danish storages for non-protected consumers; and
• An ex-post tariff used to charge non-protected consumers for the gas supplied in case of an emergency event.

What are ACER’s main findings?

ACER considers that the proposed tariffs are compliant with the EU Network Code on Gas Transmission Tariffs.

ACER recommends the Danish National Regulatory Authority (NRA), Forsyningstilsynet, to provide greater transparency on the proposed tariffs by describing with greater detail the ex-ante and ex-post components.

Background

ACER provided its preliminary conclusions to the NRA on 28 September 2022. The NRA published its final decision on the proposed tariffs on 30 September 2022. The report published today is the result of complete analysis performed on the compliance of the proposed tariffs.

Access the report on the Danish gas tariffs.

Access all ACER reports on national tariff consultation documents.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today the 30th edition of its REMIT Quarterly, covering the third quarter of 2022.

REMIT (Regulation on Wholesale Energy Market Integrity and Transparency) sets the ground for increased market transparency and integrity of the energy markets to ensure trust in the functioning of these markets and fosters market integration. It also deters market participants from manipulating the market. Thus it has an important role in protecting the interests of companies and consumers.

What is the REMIT Quarterly?

The REMIT Quarterly is ACER’s main channel of communication with stakeholders on REMIT-related matters, and provides updates on ACER’s REMIT activities.

The new edition features:

• An article on a REMIT breach in the Netherlands which resulted in a fine imposed on a Dutch company for failure to publish inside information;
• The statistics on registered reporting mechanisms’ (RRM) contingency reports;
• The recent updates of the REMIT documentation; and
• An updated overview of the sanction decisions for the last four quarters.

Read more. 

The EU Agency for the Cooperation of Energy Regulators (ACER) has decided not to grant the Swedish Transmission System Operator (TSO) a derogation from the requirement to provide minimally 70% of the transmission capacity for cross-zonal trade (‘70% requirement’).

What is the decision about?

The 70% requirement is one of the cornerstones of the internal market for electricity. However, the relevant  Regulation 2019/943 on the internal market for electricity (Regulation) allows a temporary derogation for the TSOs who cannot comply with this requirement. The derogation may be granted under strict conditions and is subject to the agreement between the concerned National Regulatory Authorities (NRAs) or, in case of their disagreement, the decision on granting such a derogation is submitted to ACER.

Background

On 6 October 2021, the Swedish NRA (Energy Markets Inspectorate, Ei) received the request from the Swedish TSO (Svenska kraftnät, Svk) for a derogation from the 70% requirement for multiple electricity interconnections for the year 2022.

Ei decided that Svk should be granted the derogation for the interconnectors between the bidding zones Finland – Sweden 3 (FI-SE3) and Sweden 3 - Denmark 1 (SE3-DK1). However, the Finnish NRA (EV) and the Danish NRA (DUR) opposed granting the derogations to Svk due to various reasons. Among others, EV and DUR highlighted that the Svk’s request for derogation is incomplete and that Svk does not provide sufficient efforts to ensure required level of redispatching and countertrading to support the 70% requirement. The question of derogation was therefore submitted to ACER.

In its decision of 26 October 2022, ACER concluded that the derogation from the 70% requirement should not be granted to Svk.

How did ACER contribute?

ACER has thoroughly assessed Svk’s derogation request against the relevant requirements specified in the Article 16(9) of the Regulation, and analysed the Svk’s application of the 70% requirement in the previous years.

The assessment confirmed that:

• The derogation was not necessary for maintaining operational security;
• The derogation request did not provide the minimum capacity targets,
• The derogation request did not provide the methodology on how to avoid the discrimination between internal and cross-zonal exchanges.

Based on the above, ACER has concluded the derogation should not be granted.

Access the Decision 17-2022.

Europe’s long-term electricity market relies on so-called long-term transmission rights (LTTRs), which allow market participants to hedge their exposure across bidding zones. The allocation of those LTTRs is currently not coordinated across different borders, which leads to inefficiencies in some capacity calculation regions (CCRs).

To enable the implementation of the long-term flow-based allocation in the Core and Nordic CCRs, and following the all Transmission System Operators’ (TSOs’) proposals, the EU Agency for the Cooperation of Energy Regulators (ACER) is reviewing three proposals for amendments of forward capacity allocation methodologies related to:

• Single allocation platform, including the methodology for sharing costs for its establishment, development and operation;
• Congestion income distribution; and
• Sharing costs incurred to ensure firmness and remuneration of LTTRs.

As part of its review, ACER seeks stakeholder input via:

• Public Consultation, which runs from 26 October to 23 November 2022;
• Public Workshop on 17 November 2022.

Why change the rules?

Cross-zonal capacity is currently allocated at the long-term electricity market with no coordination between different borders (i.e. using a flow-based allocation approach), which leads to inefficiencies in some CCRs. The proposed amendments include requirements for flow-based allocation of LTTRs, aiming to make the long-term market more efficient and align it with the day-ahead market design.

In particular, this revision is needed to enable the implementation of two ongoing projects for long-term flow-based capacity calculation and allocation in the Core and the Nordic CCRs.

How does ACER contribute?

ACER will assess the amendments proposed by all TSOs and revise them where necessary in order to ensure their contribution to market integration, non-discrimination, effective competition, proper functioning of the market, and their compliance with the Regulation on the internal market for electricity and the Forward capacity allocation guideline.

What are the next steps?

ACER has six months (until 28 March 2023) to decide on the TSOs’ proposals.

To collect the views of the stakeholders, ACER’s Public Consultation on the TSOs’ proposed amendments runs from 26 October to 23 November 2022.

ACER invites interested stakeholders to register for a Public Workshop, which will take place on 17 November 2022.

Access the Public Notice.