ACER-CEER: Challenges of the Future Electricity System

Regulators call on the new European Parliament, Commission and Council to focus on key electricity and infrastructure challenges to deliver a decarbonised, consumer-centric and competitive electricity system in 2030 and beyond.

ACER-CEER document calls on the European Commission, Council and Parliament to prioritise five key electricity and infrastructure challenges throughout the legislative process in their upcoming mandate(s).

In short, the paper highlights the urgent need for Europe to facilitate the deployment of more intermittent renewables and to unlock a resilient, flexible and cost-effective electricity sector by:

1. Having an integrated pan-EU approach to electricity security of supply, with flexibility at its centre
2. Enhancing electricity distribution networks and empowering consumers in decarbonised markets
3. Moving quicker towards electricity transmission infrastructure development with an improved assessment at pan-European level, recognising and sharing the costs and benefits
4. Applying the ‘Efficiency First’ principle also to existing grids and generation, enhancing the capacity of what we already have
5. Recognising that independent regulators can help address these challenges comprehensively and strengthen Member States’ trust in the EU electricity market.

EU energy regulators are proposing a set of recommendations and commitments that will allow the EU as a whole and Member States to actively steer and harness the power of a new, rapidly emerging energy system that supports the clean energy transition. This includes:

• Providing Member States with the tools to support each other in safeguarding security of supply and reducing local flexibility needs, by reaping the lessons of the recent energy crisis
• Exposing renewables producers and flexible resources (such as demand-response and storage) to market signals both at the investment stage and in daily operation, to moderate the costs of the energy transition
• Applying ‘Efficiency First’ principles also to existing and soon-to-be-built grids (e.g. via innovative grid technologies to significantly increase the capacity of the grid). Furthermore, taking a more coordinated approach to grid development and usage moderates the needs and costs of additional network investment ahead
• Being aware that integrated markets are a key tool to achieve competitive EU electricity prices and to unlock innovation, EU institutions should focus on improving the:

– electricity forward market (to support efficient investments)

– the day-ahead and intraday markets (for efficient operation of generation and flexible resources); and

– retail markets (for delivering the necessary flexibility and providing consumers with choices fitting their preferences).

• Unlocking distributed flexibility to reduce costs, by ensuring a fully neutral role of Distribution System Operators (DSOs) and that a range of pricing schemes (from dynamic to variable to fixed price contracts) is available to consumers
• Anchoring the benefits of a truly European electricity market through Member State commitment and trust that electricity will flow smoothly across borders, making cross-border capacities fully available for trade, and empowering independent public authorities (including regulators) to safeguard open borders and energy security of supply to the benefit of all EU citizens and businesses
• Developing best practices on the design of CfDs, flexibility support schemes and capacity mechanisms to minimise the market distortions.