The annual ACER report on EU electricity wholesale market integration:
- Evaluates progress in EU electricity market integration across all market time periods (forward, day-ahead, intraday).
- Highlights challenges in integrating balancing markets, developing forward markets, and the slow progress in implementing methodologies that define operations in day-ahead and intraday markets.
- Outlines ACER's recommendations and ongoing efforts to improve electricity market efficiency, infrastructure investment and usage, and enhance flexibility through demand response.
Check out ACER’s new interactive electricity dashboards
For the first time, this annual monitoring report is accompanied by three separate dashboards on key market indicators such as prices and churn rates (a liquidity metric), balancing data (e.g., volumes, prices and cross border exchanges of balancing services) and data on long-term transmission rights (including risk premia).
What are the key findings?
In March 2024, ACER reported frequent occurrences of negative electricity prices in the EU. In June 2024, the Agency warned of rising congestion management costs in the EU power grid, which reached €4 billion in 2023. ACER emphasised the importance of increased cross-zonal trading capacity.
Today’s report by ACER finds that:
- With the expansion of renewable energy, the role of fossil fuels in electricity systems is diminishing. The new generation mix is marked by a 10% rise in hours of mostly non-responsive generation (generation that does not adapt to short-term changes in demand) in 2023. ACER stresses the need to enhance power system flexibility for an efficient energy transition.
- However, delays in implementing market design changes hinder flexibility. 27% of market design rules (methodologies, terms, and conditions) are delayed in terms of implementation.
- Balancing market integration remains limited in 2023. The Transmission System Operators (TSOs) of only four Member States have joined the balancing platforms which went live in 2022. ACER encourages more TSOs to join the balancing energy platforms, highlighting that increased participation can expand cross-zonal exchanges and reduce occurrences of high electricity balancing prices.
- Current electricity forward markets offer investors visibility on future electricity prices for only up to one year. ACER has identified shortcomings in regulatory measures aimed at addressing this challenge and proposed improvements.
What are ACER’s recommendations?
The report contains a suite of recommendations. In short, ACER:
- Recommends taking a proactive approach to further integrate power markets and strengthen connections.
- Recommends an efficiency-first approach for both power infrastructure investments and usage, ensuring that every installed megawatt is fully used.
- Stresses that improving long-term investment structures and ensuring better market integration will drive Europe's energy transition and economic growth.
What’s next?
ACER will:
- Publish a new report on power infrastructure investment in December 2024.
- Review the rules (terms, conditions and methodologies) that define market operations starting in 2025.
- Propose a network code on demand-side flexibility to the European Commission by March 2025.
- Continue to monitor power TSOs' involvement in balancing platforms.
These steps aim to enhance market efficiency and contribute to a resilient, flexible electricity infrastructure that can support Europe’s energy transition and long-term economic stability.
