ACER has released its Opinion on a recent decision concerning the bi-directional gas flow capacity at the cross-border Interconnection Point (IP) ‘Deutschneudorf EUGAL’ between Germany and the Czech Republic.

What is bi-directional gas flow capacity?

Under the European Security of Gas Supply Regulation, Transmission System Operators (TSOs) must establish permanent physical capacity for gas transport in both directions (bi-directional capacity) at all IPs between Member States. However, temporary exemptions can be granted following a detailed assessment and consultations with stakeholders, other Member States, and the European Commission.

ACER’s assessment

ACER reviewed the decision by Bundesnetzagentur, the German National Regulatory Authority (NRA), which was taken in coordination with the Czech Ministry of Industry and Trade. The decision accepts the German TSO’s proposal, which claims that the obligation for bi-directional capacity at the EUGAL IP has already been fulfilled. It concludes that both countries meet the necessary infrastructure standards for securing gas supply and that there is no need for additional capacities from the Czech Republic to Germany.

While ACER considers that the decision complies with most of the Regulation requirements, it identified two missing elements:

• a feasibility study; and
• a cost-benefit analysis (CBA).

Additionally, the TSO proposal and the decision state that the need for an exemption to maintain bi-directional gas flow capacity at the ‘Deutschneudorf EUGAL’ IP is no longer necessary, as bi-directional gas flow capacity could be ensured during a gas supply crisis scenario. However, ACER notes that no significant investments or capacity upgrades took place at this IP between 2020 and 2024.

What are the next steps?

ACER has submitted its Opinion to the relevant authorities of Germany and the Czech Republic, as well as to the European Commission for further consideration. The Commission may choose to either raise no objections to the decision or request modifications to it.

On 16 August 2024, the National Regulatory Authority (NRA) of the Netherlands asked ACER to decide on how to address the insufficient risk hedging opportunities at the bidding zone border between the Netherlands and Norway.

Why is a decision needed?

The assessments performed by the Dutch and Norwegian NRAs found insufficient hedging opportunities in their respective bidding zones. Sufficient long-term hedging opportunities are important to allow market participants to be protected against price volatility risks and to mitigate uncertainty on future returns on investments.

To improve this, NRAs can:

• Request their Transmission System Operators to issue long-term transmission rights.
• Ensure the availability of other long-term cross-zonal hedging products that can support the wholesale electricity market functioning.

Since the NRAs could not reach an agreement, the decision was referred to ACER and the EFTA Surveillance Authority.

What are the next steps?

To inform its decision-making process, ACER will run a public consultation from today until 22 November and will take a decision on the referral from the Dutch NRA by 17 February 2025.

The EFTA Surveillance Authority will issue a decision for Norway, following the procedure outlined in the EEA Agreement.

Today, ACER releases its third quarterly review of key developments in European gas wholesale markets as part of its 2024 Market Monitoring Report (MMR). The first and second publication were issued respectively in March and July 2024.

The report finds that despite supply uncertainty re-emerging, Europe avoided severe gas price volatility in Q3 2024. What’s novel in this quarterly edition is the new focus on the evolution of cross-border gas transport tariffs, which have been rising in recent years. While transport costs currently have a relatively small impact on price formation, their influence is expected to grow, affecting how the EU gas market operates in the future.

• Gas prices: In Q3 2024, European gas wholesale prices rose but remained less volatile than last year due to increased Norwegian supply, healthy storage levels, and low demand.
• Price integration: Price integration across most EU gas hubs remained consistent, although some divergence occurred due to the rising German storage levy.
• Gas demand: Stagnant household demand and a modest increase in industrial demand were outweighed by a reduced call on gas-fired electricity generation, leaving overall EU gas demand slightly lower than in 2023 and well below pre-crisis levels.
• Renewables continue to displace gas generation: Increased renewables’ output limited the opportunities for conventional power plants (gas and coal) to run profitably. This lowered carbon emissions, loosened the EU gas demand-supply balance and reduced instances of gas setting marginal prices in electricity markets.
• Storage: The EU reached its 90% gas storage target ahead of schedule, despite lower year-on-year injections throughout the quarter.
• Transmission tariffs: Gas transmission tariffs have been rising in some EU countries, with little evidence so far of impacting price convergence. More tariff increases are expected in the near-term, warranting monitoring of the effects of tariff changes on cross-border trade and market integration.

What challenges lie ahead?

• The Russian gas transit agreement through Ukraine expires in 2024, pushing Central Europe to seek alternative supply routes.
• If gas withdrawals this winter significantly exceed the previous years, the EU may face increased competition in LNG markets for 2025, potentially driving up wholesale gas prices.
• Several LNG production projects are under construction, but major new LNG volumes are expected only from 2026 onwards.

ACER will continue to closely monitor trends in the European gas markets that could lead to short-term volatility for European energy markets. The next update on the European gas wholesale markets will be published early in 2025.

Check out our other 2024 MMR publications.

The EU Agency for the Cooperation of Energy Regulators (ACER) concludes that there is no need for developing new voluntary Power Purchase Agreement (PPA) templates in the EU energy market.

What are the PPAs?

PPAs are contractual arrangements between electricity producers (often renewable energy generators) and buyers. By providing renewable electricity at mutually agreed rates, these contracts foster stability for both parties and promote renewable energy sources (RES).

What is the ACER assessment about?

The (2024) Electricity Market Design (EMD) Regulation promotes PPAs as long-term instruments for ensuring price stability. As part of the EMD reforms, ACER was tasked with assessing whether additional voluntary PPA contract templates are needed to foster the transparency, efficiency and integration of the European internal energy market.

In conducting its assessment, ACER engaged with more than a 100 diverse stakeholders including through an expert group and a public consultation over summer 2024.

What are ACER’s conclusions?

ACER’s engagement with stakeholders showed that:

• Existing templates, developed by industry associations and national bodies, are largely sufficient for current market needs.

• These templates help market participants (especially newer or smaller players) reduce legal costs and streamline the initial phases of the contracting process.

• Addressing critical market barriers, such as project development bottlenecks, would have a more meaningful impact on fostering the PPA market.

ACER concludes that there is no need to introduce new voluntary PPA contract templates. Instead, ACER will provide recommendations on how to improve existing ones and advise on how to remove barriers to market integration.

What are the next steps?

ACER will continue to monitor the PPA market as part of its reporting obligations and to support market participants by addressing structural barriers in its recommendations.

Updates will be regularly shared with stakeholders on the ACER’s website and via the newsletter.

The Comisión Nacional de los Mercados y la Competencia (CNMC) has imposed a €1,081,502 fine on Neuro Energía y Gestión for manipulating the Spanish electricity market between 23 August 2022 and 15 March 2023.

This penalty comes under the REMIT Regulation (EU) No 1227/2011, which prohibits market manipulation and seeks to protect the integrity and transparency of the EU’s wholesale energy markets.

In its decision, CNMC found that Neuro Energía y Gestión had breached Article 5 of REMIT, specifically Article 2.2.a.i by:

• Issuing and withdrawing non-genuine orders to be in an advantageous position to execute cross-border sales with France.
• Manipulating the market by providing false or misleading signals as to the supply, demand, and price of wholesale energy products.

The investigation revealed that Neuro Energía y Gestión, in 125 trading sessions, issued and withdrew non-genuine orders using the digital certificates of 34 other market agents. The goal was to control the offer processing queue on the continuous intraday electricity cross-border sales contracts with France.

ACER welcomes this decision by CNMC, which seeks to promote the transparency and integrity of the Spanish electricity market.

Access the Decision and CNMC’s press release (both in Spanish).

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

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

Interested in further information on enforcement decisions under REMIT? Check out ACER’s REMIT Quarterly reports.