The EU Agency for the Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators (CEER) announce a public consultation to collect inputs on their draft policy paper on how to address key challenges in the EU electricity forward market.

In this consultation paper, ACER and CEER have identified the main problems experienced in the EU’s electricity forward market, as well as possible solutions for policy makers. The paper includes a qualitative analysis and proposes some preliminary conclusions on the preferred policy options.

Among several other elements, stakeholders are invited to share their views on the:

• problems identified (e.g. low liquidity, inadequate maturities, barrier to reconfiguration of bidding zones)

• set of possible policy options and solutions to the challenges

• the analysis and preliminary conclusions.

Target audience: Market participants interested to hedge (producers, consumers, traders).

The public consultation runs from Wednesday 1 June until Friday 29 July 2022.

ACER and CEER will also hold a public workshop on Wednesday 6 July 2022, from 9.00 to 12.00 CET, to present the consultation paper and gather first reflections from stakeholders.

What are the next steps?

ACER and CEER will further analyse and evaluate the policy options, taking into consideration the outcome of the consultation. As a next step, ACER and CEER may recommend amendments on the legal framework to accommodate one or several policy options.

Read more on the Public Consultation and share your inputs!

Register to the ACER-CEER event.

On 17 May 2022, the National Regulatory Authorities (NRAs) of the Continental Europe Synchronous Area requested the EU Agency for the Cooperation of Energy Regulators (ACER) an extension of six months to decide on the Transmission System Operators’ (TSOs') proposal on the minimum activation period to be ensured by Frequency Containment Reserve (FCR) providers.

What does frequency containment reserve (FCR) mean?

FCRs (also known as primary control reserves) help maintain the power balance across the EU electricity grid. FCRs are one of the balancing services to level out frequency deviations in the power grid. The FCR is the first response to frequency disturbances (e.g. following a planned/unplanned power plant outage). The minimum activation period must be ensured by the FCR providers. If the frequency deviation persists, the Frequency Restoration Reserves (FRR) subsequently replace the primary control reserve.

What are the next steps?

ACER intends to decide promptly on this request.

Access the Public Notice.

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its 9th Report on the Contractual Congestion in the EU gas markets. The report found that contractual congestion in the EU gas transmission networks in 2021 remained low, but that competition for transmission capacity increased in the fourth quarter of the year.

Why contractual congestions should be monitored?

Contractual congestions are relevant as they signal a reduction in market efficiency: while some network users are not able to obtain the transmission capacity product of their choice (and need to rely on congestion-mitigating measures to access the gas market), others who contracted capacity may not use it.

What are the Report’s main findings?

• In 2021, congestion remained low, as observed in 2020. 18 exit and entry points were congested in the EU gas networks - around 5% of all Interconnection Points (IPs) in the EU - compared to 19 in 2020. Half of the reported congestion in 2021 is due to auction premia (where the market clearing price exceeds the regulated capacity tariff), which occurred in the auctions of yearly, quarterly and monthly capacity products. The other half is caused by the lack of offer of any yearly, quarterly and monthly capacity products.

• In the fourth quarter of 2021, competition for transmission capacity increased as manifested through the rising number of auctions clearing with a premium. This applied to several products, from quarterly to within-day capacity products. Rising spreads between markets as of September 2021 could have increased competition for cross-border capacity. If the same level of competition persists in 2022, a rise of contractual congestion may be observed.

Without pre-empting the full analysis of capacity auctions during 2022 (which will be covered in the next edition), ACER observes that multiple auctions in the first and second quarters of 2022 have closed with premia.

Moreover, in a dozen of cases, auctions were terminated without any allocation of capacity because the allocation mechanism has not been flexible enough to accommodate the prevailing market conditions (with high and volatile market spreads). As such, the respective auctions had not been cleared before the capacity product would become active.

Has progress been registered?

While the number of congested IP is low, local contractual congestion can be severe and reduce market efficiency. Around 85% of the congested IPs in 2021 were also congested in the past. On the other hand, three of the congested IPs concerned (German domestic IP sides) have disappeared due to the German market merger. Competition for capacity may shift to other points bordering the German market area.

How can congestion be addressed?

Gas Transmission System Operators (TSOs) can apply several congestion management procedures (CMPs) to ensure users can access the network even when they cannot obtain a specific capacity product in the primary capacity auctions. The oversubscription mechanism (where more capacity is marketed than is technically available) remains the most applied CMP in 2021 despite its usage has further decreased. This decrease is partly compensated by a quadruplicated usage of the surrender mechanism (where a network user returns unused capacity to the TSO who can reallocate it to other parties).

More than half of the congested IPs are already covered by the firm day-ahead use-it-or-lose-it mechanism (FDA UIOLI), while the respective National Regulatory Authorities (NRAs) need to take action for the remaining ones, which shall be in line with the European Commission’s rules on contractual congestion.

What are ACER’s recommendations and policy reflections?

• ACER recommends the European Network of Transmission System Operators for Gas (ENTSOG) and TSOs to continue improving data reliability to ensure the accuracy of information available at the ENTSOG Transparency Platform.

• ACER welcomes the proposal of the European Commission’s ‘Hydrogen and Decarbonised Gas Market’ Package for revising the CMP guidelines. The proposal addresses several long-standing issues raised by ACER.

Access the 9th Congestion Report and its Technical Annex.

The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on the methodology for training and certification of staff working for Regional Coordination Centres (RCCs).

What are the Regional Coordination Centres (RCCs)?

The Regional Coordination Centres (RCCs) are established by the Electricity Regulation and replace the regional security coordinators (RSCs) foreseen by the System Operation Guideline. RCCs cover the tasks carried out by RSCs as well as additional system operation, market related and risk preparedness tasks.

Their tasks include: 

• supporting the consistency assessment of transmission system operators' defence and restoration plans,

• carrying out regional outage planning coordination,

• carrying out post-operation and post-disturbances analysis, and

• training and certification of staff working for RCCs.

In performing their tasks, RCCs contribute to the achievement of the 2030 and 2050 objectives set by the climate and energy policy frameworks (particularly in relation to fostering security of supply and efficiency, as well as increasing the electrification of the energy sector).

Given the entering into operation of RCCs this year, ACER needs to adopt various methodologies related to their different tasks.

What is the methodology about?

In particular, the Regional Coordination Centre training and certification of staff methodology was adopted by ACER following the assessment of the proposal submitted by the European Network of Transmission System Operators for Electricity (ENTSO-E) to ACER in February 2022.

This methodology prescribes the process to prepare and carry out mandatory training and certification programmes for all RCC Operators, including:

• explaining the roles and responsibilities of the RCC training coordinator,

• setting the key aspects to be covered by the RCC training programme, RCC joint training modules and joint training programmes, and

• defining the organisation, structure and requirements for the certification of staff.

How did ACER contribute?

ACER reviewed ENTSO-E’s proposal and ensured the methodology is in line with the objectives of the Electricity Regulation and fulfils its legal obligations.

Access ACER’s Decision 07-2022.

The Swedish regulatory authority (Ei) received an application from the Swedish Transmission System Operator (TSO) Svenska kraftnät (SvK) for a derogation from the minimum capacity available for cross-zonal trade (‘70% requirement’) for multiple electricity interconnections for the year 2022.

Ei decided to reject the part of SvK's derogation request concerning the interconnectors between the bidding zones: Denmark 2 – Sweden 4, Germany & Luxembourg – Sweden 4, Poland – Sweden 4 and Lithuania - Sweden 4, as well as for the internal Swedish bidding zone borders SE3-SE4 and SE2-SE3.

Ei decided that SvK should be granted a derogation for the interconnectors between the bidding zones Finland – Sweden 3 (FI - SE3) and Denmark 1 – Sweden 3 (DK1 - SE3) bidding zones for the year 2022.

The Finnish Energy Regulatory Authority (EV) and the Danish Energy Regulatory Authority (DUR) opposed granting the derogations to SvK.

The question of derogation must therefore, in accordance with Article 16 (9) of the Electricity Market Regulation, be submitted to ACER.

What are the next steps?

ACER invites interested stakeholders to submit their views by 30 June 2022 to the email: ACER-ELE-2022-010(at)acer.europa.eu.

Link to: SvK derogation request (EN)

Link to: Ei decision (SE)

Link to: Ei decision (unofficial English translation)

ACER expects to reach its decision by 27 October 2022.

What role has ACER?

ACER’s decision will provide clarity on the application of the Electricity Regulation with regard to the minimum capacity available for cross-zonal trade based on its Article 16(8) and possible derogations pursuant to its Article 16(9). ACER’s decision will impact the effectiveness and integration of the Nordic electricity markets.