Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design
Date: 2023-03-14
Institutions: Directorate-General for Energy, European Commission
Subjects: consumer protection, electricity supply, energy cooperation, energy efficiency, market stabilisation, market supervision, price of energy, renewable energy, security of supply, single market

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   EUROPEAN COMMISSION  Strasbourg, 14.3.2023  COM(2023) 148 final 2023/0077 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design   (Text with EEA relevance) {SWD(2023) 58 final}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

1.1. 

Policy context 

Energy  prices  significantly  increased  throughout  2021  and  2022.  This  resulted  from 

reductions in  gas supply, particularly after the start of Russia’s war against Ukraine and the 

weaponisation  of  energy  as  well  as  from  domestic  shortfalls  in  hydropower  and  nuclear 

power.  The  price  rises  also  resulted  from  increased  energy  demand,  as  the  global  economy 

picked up after the COVID-19 pandemic. These price rises were rapidly felt by households, 

industry and businesses across the EU, and governments immediately took steps to mitigate 

them.  At  the  European  level,  the  EU  swiftly  provided  an  energy  prices  toolbox1  with 

measures  to  address  high  prices,  in  particular  for  the  most  vulnerable  consumers  (including 

income  support,  tax  breaks,  gas  saving  and  storage  measures),  as  well  as  the  REPowerEU 

plan2 with further measures and funding to boost energy efficiency and renewable energy in 

order  to  reduce  dependence  on  Russian  fossil  fuels.  This  was  followed  by  the  creation  of  a 

temporary State Aid regime3 to allow certain measures to soften the impact of high prices, a 

strong  gas  storage  regime4,  effective  demand  reduction  measures  for  gas5  and  electricity6, 

faster  renewable  energy  and  grid  permitting  processes7,  and  price  limiting  regimes  to  avoid 

windfall profits in both the gas and electricity markets8.  

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Communication from the Commission to the European Parliament, the European Council, the Council, 
the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  Tackling  rising 
energy prices: a toolbox for action and support, COM(2021) 660 final. 
Communication from the Commission to the European Parliament, the European Council, the Council, 
the European Economic and Social Committee and the Committee of the Regions  - REPowerEU Plan, 
COM(2022)230. 
Communication from the Commission Temporary Crisis Framework for State Aid measures to support 
the economy following the aggression against Ukraine by Russia C 131 I/01, C/2022/1890. 
Regulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending 
Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage, OJ L 173, 10.6.2022, p. 
17. 
Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for 
gas, OJ L 206, 8.8.2022, p. 1. 
Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high 
energy prices, OJ L 261, 7.10.2022, p. 1.  
Council Regulation (EU) 2022/2577 of 22 December 2022 laying down a framework to accelerate the 
deployment of renewable energy, OJ L 335, 29.12.2022, p. 36. 
Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high 
energy prices, OJ L 261, 7.10.2022, p. 1. 

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These short-term measures helped Member States to deal with the immediate fall-out of the 

energy crisis. However, the crisis also showed how exposed consumers and industries are and 

our  lack  of  resilience  to  energy  price  spikes.  The  impact  of  fossil  fuel-based  generation  on 

setting  electricity  prices  was  seen  as  excessive  by  businesses  and  citizens,  while  Member 

States’  ability  to  cushion  short  term  prices  with  longer  term  contracts  appeared  inadequate. 

For  this  reason,  the  European  Commission  President  announced  in  the  2022  State  of  the 

Union Address9 the need for a fundamental reform of the electricity market design. 

Whilst  the  EU’s  internal  energy  market  delivers  huge  gains  and  growth  across  Europe,  the 

recent  energy  crisis  has  highlighted  that  the  energy  market  design’s  short-term  focus  can 

distract  from  broader,  longer-term  goals.  The  reflection  of  short-term  prices  in  consumers 

bills led to price shocks where energy bills of many consumers tripled or quadrupled, even as 

the costs of wind and solar power were declining;  the sudden  exposure to  volatile and high 

prices  triggered  some  supplier  bankruptcies;  many  industrial  enterprises  in  energy  intensive 

sectors were obliged to shut down. Therefore, the proposal includes a set of measures aimed 

to  create  a  buffer  between  short-term  markets  and  electricity  bills  paid  by  consumers,  in 

particular  by  way  of  incentivizing  longer  term  contracting,  to  improve  the  functioning  of 

short-term  markets  to  better  integrate  renewables  and  enhance  the  role  of  flexibility  and  to 

empower and protect consumers.  

The  recent  price  volatility  has  also  highlighted  the  lack  of  flexibility  in  the  electricity  grid, 

with prices set too often by gas-fired generation and with a general lack of low carbon flexible 

supply, demand response and energy storage. As more wind and solar power enter the system, 

low-carbon flexible technologies will be needed to balance the variable supply with variable 

demand.  In parallel  with this proposal,  the Commission  is  making recommendations for the 

advancement of storage innovation, technologies, and capacities.  

More broadly, the sensitivity of the electricity price to fossil fuel prices highlighted the need 

to speed up the deployment of renewables together with the flexibility of the power system to 

displace  fossil  fuels.  REPowerEU  provides  such  a  boost  to  renewable  energy  and  with  it,  a 

boost to economic growth and quality jobs creation. It builds on the European Green Deal’s 

drive to improve European competitiveness through innovation and the transition to a net zero 

economy  and  is  closely  aligned  with  the  Commission’s  Green  Deal  Industrial  Plan.  To 

facilitate  the  investments  needed  in  the  face  of  recent  price  volatility,  uncoordinated 

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SPEECH/22/5493. 

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regulatory  interventions  and  grid  and  regulatory  barriers  to  entry,  fundamental  reform  is 

needed.  Finally,  in  the  Report  on  the  final  outcome  of  the  Conference  on  the  Future  of 

Europe,  citizens  asked  the  EU  institutions  to  take  measures  to  “Enhance  European  energy 

security, and achieve the EU’s energy independence” and to ‘Reduce dependency of EU from 

foreign actors in economically strategic sectors’, including energy10 

1.2. 

Objectives of the proposal 

The  proposal  is  addressing  consumer,  industry  and  investors’  concerns  over  exposure  to 

volatile short-term prices, driven by high prices of fossil fuels. It will optimize the electricity 

market  design by complementing the short-term  markets  with  a  greater role for longer-term 

instruments, allowing consumers to benefit from more fixed priced contracts, and facilitating 

investments in clean technologies. Ultimately, it will mean that less fossil fuel generation is 

needed and will lead to lower prices for consumers during future fossil fuel crisis due to the 

low operational costs of renewable and low carbon energy. 

The proposal is putting forward measures to protect consumers from such volatility, empower 

them with greater contract choice and more direct access to renewable and low carbon energy. 

To improve investment conditions for businesses, in particular those pursuing decarbonisation 

pathways. it proposes measures to counter exposure to short term price spikes through power 

purchase  agreements  and  more  prudential  obligations  for  energy  suppliers.  It  also  proposes 

measures to improve the way variable renewable and low carbon energies are integrated into 

the  short-term  market.  This  includes  measures  boosting  the  use  of  demand  response  and 

storage, among other forms of non-fossil flexibility. The proposal also improves and clarifies 

access  to  longer  term  contracts  for  developers  (both  State  supported  such  as  contracts  for 

difference, and private, such as power purchase agreements) in order to provide secure, stable 

revenues  for  renewable  and  low  carbon  energy  developers  and  bring  down  risk  and  capital 

costs while avoiding windfall profits in periods of high prices. 

Whilst the current market design has over many decades delivered an efficient, increasingly 

integrated market, the energy crisis has highlighted a number of shortcomings relating to: (i) 

insufficient  tools to  protect  consumers, including  businesses, against  high short term  prices; 

(ii)  the  excessive  influence  of  fossil  fuel  prices  on  electricity  prices  and  the  failure  for  low 

cost  renewables  and  low  carbon  energy  to  be  better  reflected  in  electricity  bills;  (iii)  the 

impact of extreme price volatility and regulatory interventions on investment; (iv) the lack of 

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Report on the final outcome of the Conference on the Future of Europe Report - Proposals 3 and 17  

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sufficient  non-fossil  flexibility  (such  as  storage  or  demand  response)  that  could  reduce 

dependence on gas-fired generation; (v) the limited choice of supplier contract types; (vi) the 

difficulties to directly access renewable energy though energy sharing; and (vii) the need for 

robust monitoring of the energy market to better protect against market abuse. 

To  protect  consumers  from  volatile  prices,  the  proposal  will  provide  for  the  right  to  fixed 

price contacts as well as dynamic price contracts, the right to multiple contracts and to better 

and clearer contract information. Consumers will be offered variety of contracts that best fits 

their circumstances.  In this  way, consumers, including small  businesses,  can lock in secure, 

long-term  prices  to  mitigate  the  impact  of  sudden  price  shocks,  and/or  they  may  choose  to 

have  dynamic  pricing  contracts  with  suppliers  if  they  wish  to  take  advantage  of  price 

variability  to  use  electricity  when  it  is  cheaper  (e.g.,  to  charge  electric  cars  or  use  heat 

pumps).  Such  a  combination  of  both  dynamic  and  fixed  pricing  allows  to  keep  market 

incentives  for  consumers  to  adjust  their  electricity  demand,  while  providing  more  certainty 

also  for  those  who  wish  to  invest  in  renewable  energy  sources  (rooftop  solar  panels  for 

instance)  and  stability  of  costs.  In  addition  to  the  existing  protection  framework  for  energy 

poor and vulnerable consumers, the proposal will also provide access to regulated retail prices 

for households and SME consumers in the event of a crisis and stabilise the supply industry 

by  requiring  that  suppliers  make  more  effort  to  guard  against  high  price  spikes  by  making 

greater  use  of  forward  contracts  with  generators  (locking  in  future  prices)  and  by  requiring 

Member  States  to  establish  a  supplier  of  last  resort  regime.  The  proposal  will  empower 

consumers by creating the right to share renewable energy directly, without the need to create 

energy communities. Greater energy sharing (e.g., sharing surplus roof top solar power with a 

neighbour)  can  improve  the  use  made  of  low  cost  renewable  energy  and  provide  greater 

access to direct use of renewable energy for consumers who might not otherwise have such 

access.  

To enhance stability and predictability of the cost of energy, thereby contributing to the 

competitiveness of the EU economy facing excessive volatile prices, the proposal intends to 

enhance  market  access  to  more  stable  longer-term  contracts  and  markets.  Power  purchase 

agreements (PPAs) - long-term private contracts between a generator (typically renewable or 

low  carbon)  and  a  consumer  –  can  protect  against  price  volatility,  but  they  are  currently 

mostly available only to large energy consumers in very few Member States. A barrier to the 

growth  of  this  market  is  the  credit  risk  that  a  consumer  will  not  always  be  able  to  buy  the 

electricity  over  the  whole  period.  To  address  this,  Member  States  should  ensure  that 

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instruments  to  reduce  the  financial  risks  associated  to  off-taker  payment  default  in  the 

framework  of  PPAs,  including  guarantee  schemes  at  market  prices,  are  accessible  to 

companies  that  face  entry  barriers  to  the  PPA  market  and  are  not  in  financial  difficulty.  To 

further encourage the growth of the market  for such agreements,  renewable and low carbon 

energy project developers participating in a public support tender should be allowed to reserve 

a  share  of  the  generation  for  sale  through  a  PPA.  In  addition,  Member  States  should 

endeavour to apply in some of these tenders' evaluation criteria to incentivise the access to the 

PPA  market  for  customers  that  face  entry  barriers.  Finally,  the  obligation  on  suppliers  to 

hedge appropriately may also boost demand for PPAs (which are a way of locking in future 

prices). 

Some  forms  of  public  support  guarantee  the  energy  producer  a  minimum  price  by  the 

government but allow for the producer to nevertheless earn the full market price even when 

this market  price is  very high. With the recent  high prices much (cheap) publicly supported 

energy  has  been  receiving  these  high  market  prices.  To  curb  this  and  so  stabilise  prices, 

investment  support  should  be  structured  as  “two-way”  (two-way  contract  for  difference), 

which set a minimum price but also a maximum price, so any revenues above the ceiling are 

paid back. The proposal will apply to new investments for the generation of electricity, which 

include  investments  in  new  power-generating  facilities,  investments  aimed  at  repowering 

existing  power-generating  facilities,  investments  aimed  at  extending  existing  power-

generating  facilities  or  at  prolonging  their  lifetime.  Moreover,  the  proposal  will  require  that 

such  money  is  then  channelled  to  support  all  electricity  consumers  in  proportion  to  their 

consumption to mitigate the effect of high prices.  

A further means of guarding against volatile prices is to use long term contracts that lock in 

future prices (“forward contracts”). This market shows low liquidity in many Member States 

but  could  be boosted  across  the EU, so that more suppliers or consumers can  guard  against 

excessively  volatile  prices  over  longer  periods  of  time.  The  proposal  will  create  regional 

reference prices via a hub to increase price transparency and oblige system operators to allow 

transmission rights longer than a year, so that if a forward contract is between parties across 

regions or borders, they can ensure transmission of the electricity.  

Finally,  to  ensure  markets  that  behave  competitively  and  prices  are  set  transparently, 

regulators’ ability to monitor energy market integrity and transparency will be enhanced.  

The  third  objective  is  to  boost  renewable  energy  investment,  in  order  to  ensure  that 

deployment triples, in line with European Green Deal goals. This will be achieved partly by 

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improving the markets for long term contracts. Power purchase agreements and contracts for 

difference  not  only  provide  consumers  with  stable  prices,  they  also  give  renewable  energy 

suppliers reliable  revenues. This  lowers their financial risk and  greatly  reduces their cost  of 

capital. This creates a virtuous circle where stable revenues lower costs and boost demand for 

renewable energy.   

Renewable  energy  is  also  a  better  investment  when  its  ability  to  produce  power  is  not 

curtailed  due  to  technical  constraints  in  the  system.  The  more  flexible  the  system  is 

(generation  that  can  rapidly  turn  on  or  off,  storage  that  can  absorb  or  put  power  onto  the 

system,  or responsive consumers who can increase or decrease their demand for power) the 

more stable prices  can be and the more renewable energy the system can integrate.  For this 

reason, the proposal requires Member States to assess their needs for power system flexibility, 

establish objectives to deliver on these needs. Member States can design or redesign capacity 

mechanisms  in  order  to  promote  low-carbon  flexibility.  Moreover,  the  proposal  opens  the 

possibility for Member States to introduce new support schemes for non-fossil flexibility such 

as demand side response and storage. 

System  operators  should  also  play  an  enhanced  role  integrating  renewables  into  the  grid, 

partly by increasing transparency surrounding availability of grid connection capacity.  First, 

this  clearer  information  would  enhance  renewable  energy  developers’  ability  to  develop 

renewables in areas where the grid is less congested. Second, renewable energy can be more 

efficiently traded and balanced in  the system if trades between market  participants can take 

place  closer  to  “real  time”.  If  offers  to  supply  electricity  are  made  minutes  before 

consumption  rather  than  hours  before  consumption,  the  offers  from  wind  and  solar  power 

producers  are  more  accurate,  more  wind  and  solar  power  can  be  consumed  and  the 

“imbalance costs” of the system are reduced. Thus, trading deadlines will be brought closer to 

real time.  

Consistency with existing policy provisions in the policy area  

The  proposed  initiative  is  strongly  linked  and  complementary  to  the  legislative  proposals 

brought  forward  in  the  context  of  the  European  Green  Deal  Package  and  speed  up  the 

decarbonisation  objectives  laid  down  in  REPowerEU  Plan,  in  particular  as  regards  the 

proposal  to  revise  the  Renewable  Energy  Directive  (“RED  II”),  which  is  the  main  EU 

instrument  dealing  with  the  promotion  of  renewable  energy.  The  proposed  initiative  is 

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complementary in  that it aims to  enable the acceleration in  the uptake of renewable  energy. 

The  proposal  seeks  to  ensure  more  stable  long-term  sources  of  revenue  to  unleash  further 

renewable and low carbon energy investments, while improving the functioning of short-term 

markets, which are key for the integration of renewables in the electricity system. In addition, 

the proposal seeks to enable energy sharing to allow consumers to engage in the market and 

help to speed up the energy transition.   

Reducing energy consumption through price signals, energy efficiency measures or voluntary 

efforts  can  often  be  the  cheapest,  safest  and  cleanest  way  to  reduce  our  reliance  on  fossil 

fuels, to support security of supply and to reduce our energy bills. The proposal will facilitate 

the active participation of the consumers in the market and the development of their demand 

response. It will also enable non-fossil flexibility such as demand side flexibility and storage 

to compete on a level playing field so that the role of natural gas in the short-term market in 

providing  flexibility  is  progressively  reduced.  Therefore,  the  proposal  is  in  line  with  the 

proposed increase of the 2030 target for energy efficiency to 13%, as set out in the proposed 

amendments to Renewable Energy, Energy Performance of Buildings and Energy Efficiency 

Directives11 accompanying the REPowerEU Plan12.  

There  is  also  an  important  link  between  the  proposal  and  the  Energy  Performance  of 

Buildings  Directive  which  is  the  main  EU  instrument  to  help  reach  the  building  and 

renovation  goals  set  out  in  the  European  Green  Deal.  The  proposal  is  strongly  linked  in 

particular  to  provisions  on  sub-metering  and  demand  response  in  addition  to  the 

Commission’s proposal, as part of the European Green Deal Package and expressed under the 

EU  Solar  Strategy  Communication,  on  the  gradual  mandatory  integration  of  solar 

photovoltaic in order to make public, commercial and residential buildings climate neutral.  

• 

Consistency with other Union policies 

The proposal’s objectives to protect and empower consumers, improve competitiveness of EU 

industry  and  boost  renewables  and  low  carbon  investment  are  wholly  consistent  with  the 

framework  of  the  European  Green  Deal  and  coherent  and  complementary  to  current 

initiatives,  including  the  legislative  proposal  for  a  “Net-zero  Industry  Act”  which  is  being 

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Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  amending  Directive  (EU) 
2018/2001 on the promotion of the use of energy from renewable sources, Directive 2010/31/EU on the 
energy  performance  of  buildings  and  Directive  2012/27/EU  on  energy  efficiency,  COM(2022)  222 
final. 
Communication from the Commission to the European Parliament, the European Council, the Council, 
the European Economic and Social Committee and the Committee of the Regions  - REPowerEU Plan, 
COM(2022) 230 final. 

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adopted  in  parallel.  It  responds  to  the  issues  that  were  identified  in  the  Commission’s 

Communication laying out a “Green Industrial Plan for the net-zero age” issued on 1 February 

202313, namely that the competitiveness of many companies has been severely weakened by 

high energy prices and that long-term price contracts could play an important role to enable 

electricity users benefit from more predictable and lower costs of renewable power. Last but 

not  least,  the  legislative  proposal  is  complementary  to  the  ongoing  revision  of  relevant 

financial market regulations such as the Market Abuse Regulation14. The proposal also builds 

on  the  Council  Recommendation  on  ensuring  a  fair  transition  towards  climate  neutrality 

whereby  Member  States  are  invited  to  continue  to  mobilise  public  and  private  financial 

support to invest into renewable energy, tackle mobility challenges and promote cost-saving 

opportunities linked to the circular economy15. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  proposal  is  based  on  Article  194(2)  of  the  Treaty  on  the  Functioning  of  the  European 

Union  (TFEU),  which  provides  the  legal  basis  for  proposing  measures  aiming  inter  alia  to 

ensure the functioning of the energy market, promote energy efficiency and energy saving and 

the development of new and renewable forms of energy.16 In the field of energy, the EU has a 

shared competence pursuant to Article 4(2)(i) TFEU. 

• 

Subsidiarity (for non-exclusive competence)  

The need for EU action 

The  unprecedented  nature  of  the  energy  price  crisis  has  shone  a  spotlight  on  EU  electricity 

markets. Despite the growing shares of low-cost renewables electricity across the EU, there is 

a continuing influence of fossil-fuel generated electricity on overall energy bills. Households 

and businesses across the EU have experienced skyrocketing energy prices during the crisis. 

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16 

Communication from the Commission to the European Parliament, the European Council, the Council, 
the  European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  A  Green  Deal 
Industrial Plan for the Net-Zero Age, COM(2023) 62 final. 
Regulation  (EU)  No  596/2014  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on 
market  abuse  (Market  Abuse  Regulation)  and  repealing  Directive  2003/6/EC  of  the  European 
Parliament  and  of  the  Council  and  Commission  Directives  2003/124/EC,  2003/125/EC  and 
2004/72/EC, OJ L 173, 12.6.2014, p. 1. 
Council Recommendation of 16 June 2022 (2022/C 243/04) 
Article 194(1) TFEU. 

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This is an issue of EU-wide relevance which can only be addressed with action at EU level. 

The  increased  integration  of  EU  electricity  markets  requires  closer  coordination  between 

national  actors,  also  in  the  context  of  market  monitoring  and  surveillance.  National  policy 

interventions in the electricity sector have a direct impact on neighbouring Member States due 

to  energy  interdependence,  grid  interconnections  and  ongoing  electricity  market  integration. 

To preserve the functioning of the electricity system and cross-border trade and investments 

and to accelerate, in a coordinated way, the energy transition towards a more integrated and 

more energy-efficient energy system based on renewable generation, a common approach is 

needed.  

The  amendments  proposed  set  out  a  balance  between  obligations  and  flexibility  left  to  the 

Member States on how to achieve the main objectives pursued of ensuring that the lower cost 

of renewable electricity will be reflected in consumer bills and of boosting the deployment of 

renewable energy. 

Furthermore,  the  objective  of  the  proposed  measures  can  only  be  achieved  by  action  at  EU 

level,  not  at  individual Member  States’  level,  since  the  proposed  action  requires  changes  to 

the existing EU-wide framework for the electricity market design as set out in the Electricity 

Regulation (EU) 2019/943 and the Electricity Directive (EU) 2019/944 as well as to existing 

REMIT framework. 

• 

EU added value 

EU action to address the shortcomings of the current electricity market design brings added 

value because it is more efficient and effective than individual Member States’ actions, thus 

avoiding  a  fragmented  approach.  The  measures  proposed  to  address  the  shortcomings 

identified will be more ambitious and cost-effective if driven by a common legal and policy 

framework.  In  addition,  action  at  Member  State  level  would  only  be  possible  within  the 

constraints of the existing EU-wide framework for the electricity market design as set out in 

the Electricity Regulation and Electricity Directive as well as REMIT Regulation and not be 

able to achieve the necessary changes to that framework. Consequently, the objectives of this 

initiative cannot  be achieved only by Member States themselves and this is  where action at 

EU-level provides an added value. 

• 

Proportionality 

The proposed amendments to the Electricity Regulation, the Electricity Directive, the REMIT 

Regulation and the ACER Regulation are considered proportionate.  

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The proposed measures to incentivise the use of long-term contracts such as power purchase 

agreements and two-way contracts for differences may lead to increased administrative costs 

and burden for undertakings and national administrations. However, the envisaged economic 

impacts  are  necessary  and  proportionate  to  achieve  the  objective  of  incentivising  the  use  of 

such  long-term  contracts  and  ensuring  that  the  energy  bills  of  European  households  and 

companies  as  well  as  the  revenues  of  non-fossil  fuel  technologies  with  low  variable  costs 

become more independent from the fluctuation of prices in short-term markets and thus more 

stable over longer periods of time. 

The measures envisaged to improve the liquidity and integration of markets may also generate 

some  short-term  impact  on  businesses,  as  these  would  have  to  be  adapted  for  new  trading 

arrangements.  These  are  however  considered  necessary  in  order  to  achieve  the  envisaged 

objectives  of  ensuring  better  integration  of  renewable  and  low  carbon  energy  and  reducing 

dependency  on  fossil  fuels  for  flexibility,  and  ultimately  reaching  carbon  neutrality  in  the 

Union with lower costs for consumers. They are also proportionate to these objectives, since 

the  impact  on  businesses  appears  minimal  compared  to  the  current  framework  and  the 

economic  gains  of  the  reform  would  largely  surpass  any  short  or  long-term  administrative 

reorganisation.  

It  is  also  proportionate  with  the  objectives  pursued  not  to  envisage  measures  amending 

existing provisions in the Electricity Regulation and the Electricity Directive where any issues 

identified  with  regard  to  existing  provisions  can  be  addressed  through  their  manner  of 

application or implementation. One such instance relates to the measures concerning resource 

adequacy in  Chapter  IV  of the Electricity Regulation, in  particular, the process  for Member 

States  to  introduce  capacity  mechanisms,  which  could  be  simplified  without  amending  the 

relevant provisions. 

The  measures  envisaged  to  strengthen  consumer  empowerment,  rights  and  protections  will 

expand  duties  and  obligations  placed  on  suppliers  and  network  operators.  However,  the 

additional  burdens  are  necessary  and  proportionate  to  achieve  the  objective  of  ensuring 

consumers have access to better information and variety of offers, decoupling their electricity 

bills  from  short  term  movements  on  energy  markets  and  rebalancing  the  risk  between 

suppliers and consumers.  

The  measures  envisaged  to  improve  the  REMIT  framework  may  increase  reporting 

obligations  for  market  participants  due  to  a  broader  scope  of  REMIT.  These  measures  are 

necessary to  achieve the objective of  increasing  transparency and monitoring  capacities and 

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ensuring more effective investigation and enforcement of cross-border cases in the EU so that 

consumers and market participants have confidence in the integrity of energy markets, prices 

reflect  a  fair  and  competitive  interplay  between  supply  and  demand  and  no  profits  can  be 

drawn  from  market  abuse.  They  are  also  proportionate  to  that  objective,  since  the  gains  in 

terms of quality of market monitoring and surveillance would surpass any short or long-term 

administrative costs.   

Finally,  the  overall  package  of  measures  proposed  is  considered  appropriate  given  the 

overarching imperative  of achieving  climate neutrality at  the least  cost  for consumers while 

ensuring security of supplies. 

• 

Choice of the instrument 

The  proposal  will  amend  the  Electricity  Regulation,  the  Electricity  Directive,  the  REMIT 

Regulation,  the  ACER  Regulation  and  the  Renewables  Energy  Directive.  Given  that  the 

proposal  aims  to  add  a  limited  set  of  new  provisions  and  amend  a  limited  set  of  existing 

provisions  in  these  instruments,  the  recourse  to  an  amending  act  is  adequate.  For  the  same 

reason,  it  also  appears  appropriate  to  use  the  instrument  of  an  amending  regulation  to 

introduce amendments both to existing regulations and existing directives. 

3. 

STAKEHOLDER CONSULTATIONS AND STAFF WORKING DOCUMENT 

• 

Stakeholder consultations 

In preparation for the present initiative, the Commission has conducted a public consultation 

from 23 January 2023 to 13 February 2023. The consultation was open to everybody. 

The  Commission  received  1369  replies  to  this  consultation.  More  than  700  of  those  have 

come  from  citizens,  around  450  from  businesses  and  business  associations,  around  40  from 

national  or  local  administrations  or  from  national  regulators  and  around  70  from  network 

operators.  Also,  around  20  energy  communities,  15  trade  unions  and  20  consumers 

organisations participated. A significant number of NGOs, think tanks and research or other 

academic organisations submitted responses as well. An overview of stakeholders’ opinions is 

available in the Staff Working Document accompanying this legislative initiative.  

In addition, the Commission organised an online targeted stakeholder consultation meeting on 

15  February  2023  which  counted  with  the  participation  of  around  70  market  actors,  non-

governmental  organisations,  network  operators,  ACER  and  national  regulators,  think  tanks 

and academics. The consultation overall highlighted that the stakeholders considered that:  

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– 

Short-term markets and the pricing mechanism based on marginal pricing should be 

preserved, as they function well and provide the right price signals. Short-term (day-

ahead  and  intraday)  markets  are  well-developed,  and  they  result  from  years  of 

implementation of EU energy legislation. 

– 

Short-term  markets  need  to  be  complemented  by  instruments  incentivizing  longer 

term price signals, such as the ones indicated in consultation by the Commission, in 

particular  power  purchase  agreements  (‘PPA’),  contracts  for  difference,  and 

enhanced forward markets.  The right  balance between the different  tools should be 

established. Nonetheless, there should not be mandatory schemes, and the freedom of 

choosing the relevant contracts should be preserved.   

– 

The benefits of non-fossil flexibility solutions such as demand response and storage 

were acknowledged, especially in the context of an increasing share of renewables. 

Their market participation should be facilitated. 

– 

The future electricity markets  will have to  be adapted to  a high share of renewable 

energy. Furthermore, there should be more emphasis on the local dimension and grid 

development. These challenges could be addressed by the solutions presented in the 

public consultation. 

– 

Consumer  protection  is  essential,  as  is  affordability  of  energy,  but  preserving  the 

signals for demand response is equally important. Emerging solutions such as energy 

communities, self-consumption, energy sharing should be enabled and incentivized. 

• 

Staff Working Document 

Given the urgency of the initiative, a Staff Working Document has been produced instead of 

an impact  assessment. The Staff Working Document underpinning the present  proposal  sets 

out the explanation and rationale behind the Commission’s proposals for a structural response 

to  the  high  energy  prices  experienced  by  households  and  businesses  and  to  ensure  secure, 

clean and affordable energy for households and businesses into the future as well as presents 

the available evidence of relevance for the proposed measures. 

The Staff Working Document concludes that the package of proposed reforms is expected to 

significantly  improve  the  structure  and  functioning  of  the  European  electricity  market.  It  is 

another building block to enable the delivery of the Green Deal objectives and in addition it 

takes stock of the shortcomings revealed by the energy crisis and seeks to address them. 

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The document shows that the reform will contribute to protecting and empowering consumers 

currently  facing  high  and  volatile  prices  by  creating  a  buffer  between  them  and  short-term 

markets. This proposal  will decouple the high prices of fossil-fuel technologies operating in 

the  electricity  market  from  the  energy  bills  of  consumers  and  businesses.  More  long-term 

contracting  opportunities  in  the form  of PPAs,  contracts  for difference  and forward markets 

will  ensure  that  the  part  of  the  electricity  bill  exposed  to  short-term  markets  can  be  greatly 

reduced.  In  addition,  including  a  hedging  obligation  on  suppliers  and  an  obligation  to  also 

offer  fixed  price  contracts  will  significantly  increase  the  options  to  reduce  the  exposure  of 

price  volatility  for  electricity  bills.  Consumers  will  also  have  better  information  on  offers 

before  signing  up  and  Member  States  will  have  an  obligation  to  establish  suppliers  of  last 

resort. Besides, they can enable access to regulated retail prices in a crisis. The right to share 

energy is a new feature that will empower consumers and support the decentralised rollout of 

renewable energy as it grants consumers more control over their energy bills.  

The Staff Working Document explains how this reform will also enhance the competitiveness 

of EU industry in  a way that is  fully  complementary  to  the Net-zero  Industry Act.  Member 

States will be required to ensure that the right  conditions exist for PPA markets to develop, 

thereby providing industry access to affordable and clean electricity over the long-term. The 

improvements  to  the  forward  markets  will  provide  far  greater  access  to  cross-border 

renewable  energy  for  industries  and  suppliers  up  to  three  years  in  advance,  a  significant 

improvement compared to today. Overall, public support schemes for renewable energy will 

increase the energy independence in Member States and the penetration of renewables into the 

system while supporting local jobs and skills. 

The document demonstrates that this reform will accelerate the rollout of renewables and tap 

into the full potential of firm generation capacity and flexibility solutions to enable Member 

States to integrate ever higher levels of renewables. The Commission proposes that Member 

States  assess  their  need  for  power  system  flexibility  and  allows  the  introduction  of  new 

support  schemes  for  demand  response  and  storage.  The  proposal  also  introduces  extra 

possibilities for renewables to trade closer to real time at cross-border and national level.  In 

this way, the market can better support the integration of renewables and the business case for 

flexibility solutions that can contribute to security of supply.  

Finally,  the  Staff  Working  Document  describes  how  this  proposal  responds  to  the  request 

from  the  European  Council  to  assess  ways  of  optimising  the  functioning  of  the  electricity 

market  design  in  the  context  of  the  energy  crisis.  It  aims  to  protect  consumers,  creating  a 

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buffer between them and short-term  electricity  markets  through longer-term contracting and 

to make those short-term markets work in a more efficient way for renewables and flexibility 

solutions, with better regulatory oversight. This proposal ensures that the market rules remain 

fit for purpose to drive the cost-effective decarbonisation of the electricity sector and increase 

its resilience to energy price volatility.  

• 

Collection and use of expertise  

The preparation of the present legislative proposal and the Staff Working Document is based 

on  a  large  body  of  material,  which  is  referenced  in  the  footnotes  in  the  Staff  Working 

Document, and on the responses to the public consultation.  

• 

Fundamental rights  

The present proposal may have an impact on a number of fundamental rights established by 

the Charter on Fundamental Rights of the EU, in particular: the freedom to conduct a business 

(Article 16) and the right to property (Article 17). As explained above, however, to the extent 

that  the  proposed  measures  limit  the  exercise  of  these  rights,  these  impacts  are  considered 

necessary and proportionate to achieve the objectives of the proposal and therefore constitute 

legitimate limitations of such rights as allowed under the Charter. 

On  the  other  hand,  the  proposal  enhances  the  protection  of  fundamental  rights,  such  as  the 

respect for private and family life (Article 7), the right to protection of personal data (Article 

8),  the  prohibition  of  discrimination  (Article  21),  access  to  services  of  general  economic 

interest  (Article 36), the integration of a high level  of environmental protection (Article 37) 

and the right to an effective remedy (Article 47), in particular through a number of provisions 

concerning consumer empowerment, rights and protection. 

• 

Regulatory fitness and simplification 

The proposed amendments to the Electricity Directive, the Electricity Regulation, the REMIT 

Regulation  and  the  ACER  Regulation  focus  on  what  is  considered  necessary  to  address  the 

shortcomings of the current electricity market design in the context of the energy crisis and to 

contribute in a cost-effective manner to the Union’s climate ambition. They do not constitute 

a full revision of these instruments. 

The  proposal  may  increase  administrative  requirements  for  national  administrations  and 

undertakings,  albeit  in  a  proportionate  way  as  explained  above.  For  example,  the  proposed 

measures to incentivise the use of long-term contracts such as power purchase agreements and 

two-way contracts for differences may lead to increased administrative costs and burden for 

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undertakings  and  national  administrations.  However,  the  envisaged  economic  impacts  will 

positively benefit businesses and consumers. 

The measures envisaged to improve the liquidity and integration of markets may also generate 

some  short-term  impact  on  businesses,  as  these  would  have  to  be  adapted  for  new  trading 

arrangements. These are however considered minimal compared to the current framework, as 

the economic gains of the reform would largely surpass any short or long-term administrative 

reorganisation. 

The measures envisaged to strengthened consumer empowerment, rights and protections will 

expand duties and obligations placed on suppliers and network operators with the objective to 

improve  choice,  increase  protection  and  facilitate  active  market  participation  by  consumers, 

notably households. However, the additional burdens are minimal because these frameworks 

are being rolled out across Europe and therefore streamlining of rules is needed. 

The  measures  envisaged  to  improve  the  REMIT  framework  may  increase  reporting 

obligations on certain  market participants, albeit  in  a proportionate way.  These are however 

considered  minimal  compared  to  the  current  framework  as  the  gains  in  terms  of  quality  of 

market  monitoring  and  surveillance  would  surpass  any  short  or  long-term  administrative 

costs.   

4. 

BUDGETARY IMPLICATIONS 

The  budgetary  impact  associated  to  the  proposal  on  improving  the  EU’s  electricity  market 

design concerns the resources of the European Union Agency for the Cooperation of Energy 

Regulators  (ACER)  and  of  DG  Energy  which  are  described  in  the  Legislative  Financial 

Statement  accompanying  the  proposal.    Essentially,  for  the  new  tasks  to  be  carried  out  by 

ACER  4  additional  full  time  equivalent  (FTE)  for  ACER  from  2025  onwards,  as  well  as 

corresponding financial resources will be required. DG Energy’s workload will increase by 3 

FTE. 

The budgetary impact associated to the proposal amending REMIT concerns the resources of 

the European  Union  Agency  for  the  Cooperation  of  Energy  Regulators  (ACER)  and  of  DG 

Energy  which  are  described  in  the  Legislative  Financial  Statement  accompanying  the 

proposal.   Essentially,  the  new  tasks  to  be  carried  out  by  ACER,  especially  regarding  the 

enhanced  investigatory  powers  require  a  phasing  in  of  25  additional  full  time  equivalent 

(FTE) in ACER from 2025, as well as corresponding financial resources, although most of the 

additional staff will be funded by fees. To this end Commission Decision (EU) 2020/2152 of 

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17 December 2020 on fees due to ACER for tasks under REMIT will need to be adapted. DG 

Energy's workload will increase by 2 FTE. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The Commission will monitor the transposition and compliance of Member States and other 

actors  with  the  measures  that  shall  be  ultimately  adopted  and  take  enforcement  measures  if 

and  when  required.  For  monitoring  and  implementation  purposes,  the  Commission  will 

notably  be  supported  by  ACER,  in  particular  in  relation  to  the  REMIT  Regulation.  The 

Commission will also liaise with ACER and the national regulatory authorities in relation to 

the Electricity Regulation and the Electricity Directive.  

Moreover,  to  facilitate  the  implementation,  the  Commission  will  be  available  for  bilateral 

meetings and calls with Member States in case of specific questions.  

• 

Explanation of the specific provisions of the proposals   

The amendments concerning the Electricity Regulation provide clarifications to the scope and 

subject matter of the Regulation, emphasising the importance of undistorted market signals to 

provide for increased flexibility  as well as  the role of long-term investments  to  mitigate the 

volatility  of  short-term  market  prices  on  the  electricity  bills  of  consumers  including  energy 

intensive industries,  SMEs and households.  It  clarifies certain  main principles  for trading  in 

the day-ahead and intraday markets. It provides for new rules concerning the procurement by 

TSOs  of  demand  response  in  the  form  of  a  peak  shaving  product  and  rules  allowing 

transmission  system  operators  and  distribution  system  operators  to  use  data  from  dedicated 

metering  devices.  It  sets  out  new  rules  concerning  forward  electricity  markets,  to  improve 

their  liquidity.  It  includes  new  rules  aiming  to  clarify  and  incentivise  the  role  and  use  of 

longer-term  contracts  in  the  form  of  power  purchase  agreements  and  two-way  contracts  for 

difference.  It  provides  for  new  rules  regarding  the  assessment  of  the  flexibility  needs  by 

Member  States,  the  possibility  for  them  to  introduce  flexibility  support  schemes  and  design 

principles  for  such  flexibility  support  schemes.  It  also  introduces  new  transparency 

requirements  for  transmission  system  operators  as  regards  the  capacity  available  for  new 

connections in the grid. 

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The amendments concerning the Electricity Directive provide for new rules on the protection 

and  empowerment  of  consumers.  The  amendment  regarding  Free  Choice  of  Supplier 

introduces new requirements to ensure that customers are able to have more than one supplier 

on  their  premises,  by  enabling  multiple  meters  (sometimes  called  submeters)  for  a  single 

connection point.  

The amendments regarding consumer empowerment and protection ensure that customers are 

offered a variety of contracts that best fits their circumstances, by ensuring that all customers 

have a least one fixed term, fixed price offer. Furthermore, customers must be provided with 

clear pre-contractual information in relation to these offers.  

A  new  right  for  households  and  small  and  medium  sized  enterprises  is  also  established  to 

participate in energy sharing- that is the self-consumption by active customers of renewable 

energy  generated  or  stored  offsite  either  from  facilities  they  own,  lease,  rent  in  whole  or  in 

part or which has been transferred to them by another active customer. 

Important  new protections for customers are also  introduced to  ensure continuous supply of 

electricity–  including  the  requirement  for  Member  States  to  appoint  suppliers  of  last  resort 

who  take  responsibility  for  the  customers  of  failed  suppliers  and  protection  from 

disconnection  for  vulnerable  customers.  Suppliers  will  also  be  required  to  put  in  place  risk 

management  to  limit  the  risk  of  failure,  by  implementing  appropriate  hedging  strategies. 

These will be overseen by national regulatory authorities.   

The  amendments  to  the  Electricity  Directive  introduce  new  transparency  requirements  for 

distribution system operators as regards the capacity available for new connections in the grid. 

It  clarifies  the  role  of  regulatory  authorities  regarding  the  single  allocation  platform 

established in accordance with Regulation (EU) 2016/1719. 

The  amendments  concerning  REMIT  Regulation  adapt  the  scope  of  REMIT  to  current  and 

evolving  market  circumstances  by  inter  alia  extending  the  scope  of  data  reporting  to  new 

electricity  balancing  markets  and  coupled  markets  as  well  algorithmic  trading.  It  ensures 

stronger, more established and  regular cooperation between energy  and  financial regulators, 

including ACER and ESMA regarding derivative wholesale energy products.  It  will as well 

improve  process  for  the  collection  of  inside  information  and  market  transparency  by 

enhancing  the  oversight  of  ACER  and  adjustment  of  inside  information  definition. 

Amendments  to  REMIT  Regulation  enhance  supervision  of  reporting  parties  such  as 

Registered Reporting Mechanisms (RRMs) and persons professionally arranging transactions 

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(PPATs).  Amendments  improve  data  sharing  possibilities  between  ACER,  relevant  national 

authorities  and  the  Commission.  REMIT  amendment  introduces  stronger  role  for  ACER  in 

investigations  of  significant  cross-border  cases  to  fight  against  the  REMIT  breaches.  It  also 

sets-out  the  framework  for  harmonisation  of  fines  set  by  regulatory  authorities  at  national 

level. 

The amendments concerning the ACER Regulation aim to clarify the role of ACER as regards 

the single allocation platform established in accordance with Regulation (EU) 2016/1719 and 

as regards the new rules introduced in the Electricity Regulation concerning forward markets 

and  flexibility  support  schemes.  It  also  clarifies  the  role  and  competences  of  ACER  in 

accordance  with  the  amendment  to  REMIT  Regulation.  The  amendment  RED  II  aims  to 

clarify  the  scope  of  application  of  the  rules  concerning  the  types  of  direct  price  support 

schemes for renewable energy sources that Member States may introduce. 

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2023/0077 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and 
(EU) 2019/944 to improve the Union’s electricity market design 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) 
thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 

Having regard to the opinion of the European Economic and Social Committee,  

Having regard to the opinion of the Committee of the Regions,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

17 

Very high prices and volatility in electricity markets have been observed since September 2021. 
As set out by the European Agency for the Cooperation of Energy Regulators (‘ACER’) in its 
April  2022  assessment  of  EU  wholesale  electricity  market  design17,  this  is  mainly  a 
consequence of the high price of gas, which is used as an input to generate electricity.   

The  escalation  of  the  Russian  military  aggression  against  Ukraine,  a  Contracting  Party  of  the 
Energy  Community,  and  related  international  sanctions  since  February  2022  have  disrupted 
global  energy  markets,  exacerbated  the  problem  of  high  gas  prices,  and  have  had  significant 
knock-on  impacts  on  electricity  prices.  The  Russian  invasion  of  Ukraine  has  also  caused 
uncertainty on the supply of other commodities, such as hard coal and crude oil, used by power-
generating installations. This has resulted in substantial additional increases in the volatility of 
price levels of electricity. 

In  response  to  this  situation,  the  Communication  on  Energy  Prices  presented  by  the 
Commission  in  October  2021  contained  a  toolbox  of  measures  that  the  EU  and  its  Member 
States  may  use  to  address  the  immediate  impact  of  high  energy  prices  on  households  and 

European  Union  Agency  for  the  Cooperation  of  Energy  Regulators,  ACER’s  Final  Assessment  of  the  EU 
Wholesale Electricity Market Design, April 2022. 

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businesses  (including  income  support,  tax  breaks,  gas  savings  and  storage  measures)  and  to 
strengthen  resilience  against  future  price  shocks.  In  its  Communication  of  8  March  2022 
entitled  ‘REPowerEU:  Joint  European  Action  for  more  affordable,  secure  and  sustainable 
energy’18 the Commission outlined a series of additional measures to strengthen the toolbox and 
to  respond  to  rising  energy  prices.  On  23  March  2022,  the  Commission  also  established  a 
temporary  State  Aid  regime  to  allow  certain  subsidies  to  soften  the  impact  of  high  energy 
prices.19 
On 18 May 2022 the Commission presented the REPowerEU plan20 that introduced additional 
measures focusing on energy savings, diversification of energy supplies and accelerated roll-out 
of  renewable  energy  aiming  at  ending  the  Union’s  dependency  on  Russian  fossil  fuels, 
including a proposal to increase the Union’s 2030 target for renewables to 45%.  Furthermore, 
the Communication on Short-Term Energy Market Interventions and Long-Term Improvements 
to the Electricity Market Design21, in addition to setting out additional short-term measures to 
tackle high energy prices identified potential areas for improving the electricity market design 
and  announced  the  intention  to  assess  these  areas  with  a  view  to  change  the  legislative 
framework. 

To  address  urgently  the  price  crisis  and  security  concerns  and  to  tackle  the  price  hikes  for 
citizens, and based on a series of Commission proposals, the Union adopted a strong gas storage 
regime22, effective demand reduction measures for gas and electricity23, price limiting regimes 
to  avoid  windfall  profits  in  both  gas  and  electricity  markets24  and  measures  to  accelerate  the 
permit-granting procedures for renewable energy installations25. 

(4) 

(5) 

(6) 

A well-integrated market which builds on the Clean Energy for all Europeans Package adopted 
in  2018  and  201926  should  allow  the  Union  to  reap  the  economic  benefits  of  a  single  energy 

18 

19 

20 

21 

22 

23 

24 

25 

26 

Communication  from  the  Commission  to  the  European  Parliament,  the  European  Council,  the  Council,  the 
European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  REPowerEU:  Joint  European 
Action for more affordable, secure and sustainable energy, COM/2022/108 final 
Communication  from  the  Commission  Temporary  Crisis  Framework  for  State  Aid  measures  to  support  the 
economy following the aggression against Ukraine by Russia C 131 I/01, C/2022/1890. 
Communication  from  the  Commission  to  the  European  Parliament,  the  European  Council,  the  Council,  the 
European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  REPowerEU  Plan, 
COM(2022)230. 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and 
Social Committee and the Committee of the Regions  - Short-Term Energy Market Interventions and Long Term 
Improvements to the Electricity Market Design – a course for action, COM(2022) 236 final. 
Regulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending Regulations 
(EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage (Text with EEA relevance), OJ L 173 
Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas, OJ L 
206  and  Council  Regulation  (EU)  2022/1854  of  6  October  2022  on  an  emergency  intervention  to  address  high 
energy prices, OJ L 261 
Council  Regulation  (EU)  2022/1854  of  6  October  2022  on  an  emergency  intervention  to  address  high  energy 
prices, OJ L 261. 
Council Regulation (EU) 2022/2577 of 22 December 2022 laying down a framework to accelerate the deployment 
of renewable energy, OJ L 335, 29.12.2022. 
Regulation  (EU)  2018/1999  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  the 
Governance of the Energy Union and Climate Action, OJ L 328, 21.12.2018, p. 1; Directive (EU) 2018/2001 of the 
European  Parliament  and  of  the  Council  of  11  December  2018  on  the  promotion  of  the  use  of  energy  from 
renewable  sources  (recast),  OJ  L  328,  21.12.2018,  p.  82; Directive  (EU)  2018/2002 of  the  European  Parliament 
and  of  the  Council  of  11  December  2018  amending  Directive  2012/27/EU  on  energy  efficiency,  OJ  L  328, 
21.12.2018,  p.  210;  Regulation  (EU)  2019/942  of  the  European  Parliament  and  of  the  Council  of  5  June  2019 
establishing a European Union Agency for the Cooperation of Energy Regulators (recast), OJ L 158, 14.6.2019, p. 

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(7) 

(8) 

(9) 

market  in  normal  market  circumstances,  ensuring  security  of  supply  and  sustaining  the 
decarbonisation  process.  Cross-border  interconnectivity  also  ensures  safer,  more  reliable  and 
efficient operation of the power system.  

The  current  electricity  market  design  has  also  helped  the  emergence  of  new  and  innovative 
products, services and measures on retail electricity markets, supporting energy efficiency and 
renewable  energy  uptake  and  enhancing  choice  so  as  to  help  consumers  reduce  their  energy 
bills  also  through  small-scale  generation  installations  and  emerging  services  for  providing 
demand  response.  Building  on  and  seizing  the  potential  of  the  digitalisation  of  the  energy 
system,  such  as  active  participation  by  consumers,  should  be  a  key  element  of  our  future 
electricity markets and systems. At the same time, there is a need to respect consumer choices 
and allow consumers to benefit from a variety of contract offers. 

In  the  context  of  the  energy  crisis,  the  current  electricity  market  design  has  however  also 
revealed  a  number  of  important  shortcomings  linked  to  the  impact  of  high  and  volatile  fossil 
fuel  prices  on  short-term  electricity  markets,  which  expose  households  and  companies  to 
significant price spikes with effects on their electricity bills.  

A faster deployment of renewable  energy and clean flexible technologies constitutes the most 
sustainable  and  cost-effective  way  of  structurally  reducing  the  demand  for  fossil  fuels  for 
electricity  generation  and  for  direct  consumption  through  electrification  and  energy  system 
integration.  Thanks  to  their  low  operational  costs,  renewable    sources  can  positively  impact 
electricity prices across the Union and reduce direct consumption of fossil fuels.  

(10)  The  changes  to  the  electricity  market  design  should  ensure  that  the  benefits  from  rising 
renewable  power deployment, and the energy transition as a whole, are brought to consumers, 
including the most vulnerable ones,  and ultimately, shield  them from energy  crises and  avoid 
more  households  falling  into  energy  poverty  trap.  These  should  mitigate  the  impact  of  high 
fossil  fuel  prices,  notably  that  of  gas,  on  electricity  prices,  aiming  to  allow  households  and 
companies to reap the benefits of affordable and secure energy from sustainable renewable and 
low carbon sources in the longer term.  

(11)  The  reform  of  the  electricity  market  design  should  benefit  not  just  household  consumers  but 
also the competitiveness of the Union’s industries by facilitating their possibilities to make the 
clean tech investments they require to meet their net zero transition paths. The energy transition 
in  the  Union  needs  to  be  supported  by  a  strong  clean  technology  manufacturing  basis.  These 
reforms  will  support  the  affordable  electrification  of  industry  and  the  Union’s  position  as  a 
global leader in terms of research and innovation in clean energy technologies.   

(12)  Well-functioning and efficient short-term markets are a key tool for the integration of renewable  
energy and flexibility sources in the market and facilitate energy system integration in a cost-
effective manner.  

(13) 

Intraday  markets  are  particularly  important  for  the  integration  of  variable  renewable  energy 
sources  in  the  electricity  system  at  the  least  cost  as  they  give  the  possibility  to  market 
participants  to  trade  shortages  or  surplus  of  electricity  closer  to  the  time  of  delivery.    Since 
variable renewable energy generators are only able to accurately estimate their production close 

22;  Regulation  (EU)  2019/943  of  the  European  Parliament  and  of  the  Council  of  5  June  2019  on  the  internal 
market for electricity (recast), OJ L 158, 14.6.2019, p. 54; Directive (EU) 2019/944 of the European Parliament 
and  of  the  Council  of  5  June  2019  on  common  rules  for  the  internal  market  for  electricity  (recast),  OJ  L  158, 
14.6.2019, p. 125. 

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to the delivery time, it is crucial for them to have a maximum of trading opportunities via access 
to a liquid market as close as possible to the time of delivery of the electricity.  

(14) 

It  is  therefore  important  for  the  intraday  markets  to  adapt  to  the  participation  of  variable 
renewable energy technologies such as solar and wind as well as to the participation of demand 
side  response  and  storage.  The  liquidity  of  the  intraday  markets  should  be  improved  with  the 
sharing  of  the  order  books  between  market  operators  within  a  bidding  zone,  also  when  the 
cross-zonal  capacities  are  set  to  zero  or  after  the  gate  closure  time  of  the  intraday  market. 
Furthermore,  the  gate  closure  time  of  the  intraday  market  should  be  set  closer  to  the  time  of 
delivery to maximize the opportunities for market participants to trade shortages and surplus of 
electricity and contribute to better integrating variable renewables in the electricity system.  

(15) 

In addition, the short-term electricity markets should ensure that small-scale flexibility service 
providers can participate by lowering the minimum bid size.  

(16)  To  ensure  the  efficient  integration  of  electricity  generated  from  variable  renewable  energy 
sources and to reduce the need for fossil-fuel based electricity generation in times when there is 
high  demand  for  electricity  combined  with  low  levels  of  electricity  generation  from  variable 
renewable energy sources, it should be possible for transmission system operators to  design a 
peak  shaving  product  enabling    demand  response  to  contribute  to  decreasing  peaks  of 
consumption  in  the  electricity  system  at  specific  hours  of  the  day.  The  peak  shaving  product 
should  contribute  to  maximize  the  integration  of  electricity  produced  from  renewable  sources 
into  the  system  by  shifting  the  electricity  consumption  to  moments  of  the  day  with  higher 
renewable  electricity  generation.  As  the  peak  shaving  product  aims  to  reduce  and  shift  the 
electricity  consumption, the scope of this product  should be limited to  demand side response. 
The procurement of the peak shaving product should take place in such a way that it does not 
overlap with the activation of balancing products which aim at maintaining the frequency of the 
electricity  system  stable.  In  order  to  verify  volumes  of  activated  demand  reduction,  the 
transmission  system  operator  should  use  a  baseline  reflecting  the  expected  electricity 
consumption without the activation of the peak shaving product.  

(17) 

In  order  to  be  able  to  actively  participate  in  the  electricity  markets  and  to  provide  their 
flexibility, consumers are progressively equipped with smart metering systems. However, in  a 
number of Member States the roll-out of smart metering systems is still slow. In those instances 
where  smart  metering  systems  are  not  yet  installed  and  in  instances  where  smart  metering 
systems do not provide for the sufficient level of data granularity, transmission and distribution 
system  operators  should  be  able  to  use  data  from  dedicated  metering  devices  for  the 
observability and settlement of flexibility services such as demand response and energy storage. 
Enabling  the  use  of  data  from  dedicated  metering  devices  for  observability  and  settlement 
should facilitate the active participation of the consumers in the market and the development of 
their  demand  response.  The  use  of  data  from  these  dedicated  metering  devices  should  be 
accompanied by quality requirements relating to the data.    

(18)  This  Regulation  establishes a  legal  basis  for  processing  of  personal  data  in  compliance  with 
Article 6(1)(c) GDPR. Member States should ensure that all personal data protection principles 
and  obligations  laid  down  in  the  GDPR  are  met,  including  on  data  minimisation.  Where  the 
objective  of  this  Directive  can  be  achieved  without  processing  of  personal  data,  providers 
should rely on anonymised and aggregated data. 

(19)  Consumers and suppliers need effective and efficient forward markets to cover their long-term 
price  exposure  and  decrease  the  dependence  on  short-term  prices.  To  ensure  that  energy 
customers all over the EU can fully benefit from the advantages of integrated electricity markets 

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and  competition  across  the  Union,  the  functioning  of  the  Union’s  electricity  forward  market 
should be improved via the establishment of regional virtual hubs with a view to overcome the 
existing  market  fragmentation  and  the  low  liquidity  experienced  in  many  bidding  zones. 
Regional  virtual  hubs  should  cover  multiple  bidding  zones  while  ensuring  an  adequate  price 
correlation. Some bidding zones may not be covered by a virtual hub in terms of contributing to 
the hub reference price. However, market participants from these bidding zones should still be 
able to hedge through a hub.  

(20)  Virtual  hubs  should  reflect  the  aggregated  price  of  multiple  bidding  zones  and  provide  a 
reference price, which should be used by market operators to offer forward hedging products. 
To  that  extent,  virtual  hubs  should  not  be  understood  as  entities  arranging  or  executing 
transactions. The regional virtual hubs, by providing a reference price index, should enable the 
pooling of liquidity and provide better hedging opportunities to market participants.  

(21)  To enhance the possibilities of market participants for hedging, the role of the single allocation 
platform  established  in  accordance  with  Commission  Regulation  (EU)  2016/1719  should  be 
expanded.  The  single  allocation  platform  should  offer  trading  of  financial  long-term 
transmission  rights  between  the  different  bidding  zones  and  the  regional  virtual  hubs.  The 
orders submitted by market participants for financial transmission rights shall be matched by a 
simultaneous allocation of long term cross zonal capacity. Such matching and allocation should 
be  performed  on  a  regular  basis,  to  ensure  enough  liquidity  and,  hence,  efficient  hedging 
possibilities  to  market  participants.  The  long-term  transmission  rights  should  be  issued  with 
frequent  maturities  (ranging  from  month  ahead  to  at  least  three  years  ahead),  in  order  to  be 
aligned  with  the  typical  hedging  time  horizon  of  market  participants.  The  single  allocation 
platform  should  be  subject  to  monitoring  and  enforcement  to  ensure  that  it  performs  its  tasks 
properly. 

(22)  Network  tariffs  should  incentivise  transmission  and  distribution  system  operators  to  use 
flexibility services through further developing innovative solutions to optimise the existing grid 
and to procure flexibility services, in particular demand response or storage. For this purpose, 
network  tariffs  should  be  designed  so  as  to  take  into  account  the  operational  and  capital 
expenditures of system operators or an efficient combination of both so that they can operate the 
electricity system cost-efficiently. This would further contribute to integrating renewables at the 
least  cost  for  the  electricity  system  and  enable  final  customers  to  value  their  flexibility 
solutions.     

(23)  Offshore  renewable  energy  sources,  such  as  offshore  wind,  ocean  energy  and  floating 
photovoltaic,  will  play  an  instrumental  role  in  building  a  power  system  largely  based  on 
renewables  and  in  ensuring  climate  neutrality  by  2050.  There  are,  however,  substantial 
obstacles  to  their  wider  and  efficient  deployment  preventing  the  massive  scale  up  needed  to 
achieve  those  objectives.  Similar  obstacles  could  arise  for  other  offshore  technologies  in  the 
future.  These  obstacles  include  investment  risks  associated  with  the  unique  topographical 
situation  of  offshore  hybrid  projects  connected  to  more  than  one  market.  In  order  to  reduce 
investment  risk  for  these  offshore  project  developers  and  to  ensure  that  the  projects  in  an 
offshore bidding zone have full market access to the surrounding markets, transmission system 
operators should guarantee access of the offshore project to the capacity of the respective hybrid 
interconnector for all market time units. If the available transmission capacities are reduced to 
the  extent  that  the  full  amount  of  electricity  generation  that  the  offshore  project  would  have 
otherwise  been  able  to  export  cannot  be  delivered  to  the  market,  the  transmission  system 
operator or operators responsible for the need to limit the capacity should, in future, be enabled 
to  compensate  the  offshore  project  operator  commensurately  using  congestion  income.  This 

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compensation should only be related to the production capability available to the market, which 
may be weather dependent and excludes the outage and maintenance operations of the offshore 
project. The details, including the conditions under which the measure may expire, are intended 
to be defined in an implementing Regulation. 

(24) 

In the day-ahead wholesale market, the power plants with lower marginal costs are dispatched 
first, but the price received by all market participants is set by the last plant needed to cover the 
demand,  which  is  the  plant  with  the  highest  marginal  costs,  when  the  markets  clear.  In  this 
context, the energy crisis has shown that a surge in the price of gas and hard coal can translate 
into exceptional  and lasting increases of the prices at  which the  gas and  coal-fired  generation 
facilities  bid  in  the  day-ahead  wholesale  market.  That  in  turn  has  led  to  exceptionally  high 
prices in the day-ahead market across the Union, as gas and coal-fired generation facilities are 
often the plants with the highest marginal costs needed to meet the demand for electricity. 

(25)  Given  the  role  of  the  price  in  the  day-ahead  market  as  a  reference  for  the  price  in  other 
wholesale electricity markets, and the fact that all market participants receive the clearing price, 
the  technologies  with  significantly  lower  marginal  costs  have  consistently  recorded  high 
revenues. 

(26)  To  reach  the  Union’s  decarbonisation  targets  and  the  objectives  set  out  in  REPowerEU  to 
become more energy independent, the Union needs to accelerate the deployment of renewables 
at  a  much  faster  pace.  In  view  of  the  investment  needs  required  to  achieve  these  goals,  the 
market should ensure that a long-term price signal is established. 

(27) 

In this framework, Member States should strive to create the right market conditions for long-
term  market-based  instruments,  such  as  power  purchase  agreements  (‘PPAs’).  PPAs  are 
bilateral purchase agreements between producers and buyers of electricity. They provide long-
term  price  stability  for  the  customer  and  the  necessary  certainty  for  the  producer  to  take  the 
investment decision. Nevertheless, only a handful of Member States have active PPA markets 
and  buyers  are  typically  limited  to  large  companies,  not  least  because  PPAs  face  a  set  of 
barriers, in particular the difficulty to cover the risk of payment default from the buyer in these 
long-term  agreements.  Member  States  should  take  into  consideration  the  need  to  create  a 
dynamic PPA market when setting the policies to achieve the energy decarbonisation objectives 
set out in their integrated national energy and climate plans.  

(28)  According to Article 15(8) of Directive (EU) 2018/2001 of the European Parliament and of the 
Council,  Member  States  are  to  assess  the  regulatory  and  administrative  barriers  to  long-term 
renewables  PPAs,  and  shall  remove  unjustified  barriers  to,  and  promote  the  uptake  of,  such 
agreements.  In  addition,  Member  States  are  to  describe  policies  and  measures  facilitating  the 
uptake  of  renewables  PPAs  in  their  integrated  national  energy  and  climate  plans.    Without 
prejudice  to  that  obligation  to  report  on  the  regulatory  context  affecting  the  PPA  market, 
Member  States  should  ensure  that  instruments  to  reduce  the  financial  risks  associated  to  the 
buyer defaulting on its long-term payment obligations in the framework of PPAs are accessible 
to companies that face entry barriers to the PPA market and are not in financial difficulty in line 
with Articles 107 and 108 TFEU. Member States could decide to set up a guarantee scheme at 
market prices. Member States should include provisions to avoid lowering the liquidity  in the 
electricity markets, such as by using financial PPAs. Member States should not provide support 
to PPAs that purchase generation from fossil fuels. While the default approach should be non-
discrimination  between consumers, Member States could  decide to  target these instruments  to 
specific  categories  of  consumers,  applying  objective  and  non-discriminatory  criteria.  In  this 
framework, Member States should take into account the potential role of instruments provided 
at Union level, for instance by the European Investment Bank (‘EIB’).  

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(29)  Member  States  have  at  their  disposal  several  instruments  to  support  the  development  of  PPA 
markets  when  designing  and  allocating  public  support.  Allowing  renewable  energy  project 
developers participating in a public support tender to reserve a share of the generation for sale 
through a PPA would contribute to nurture and grow PPA markets. In addition, as part of these 
tender evaluation Member States should endeavour to apply criteria to incentivise the access to 
the PPA market for actors that face entry barriers, such as small and medium-sized enterprises 
(‘SMEs’), giving preference to bidders presenting a commitment to sign a PPA for part of the 
project’s generation from one or several potential buyers that face difficulties to access the PPA 
market.  

(30)  Where  Member  States  decide  to  support  publicly  financed  new  investments  (“direct  price 
support schemes”) in low carbon, non-fossil fuel electricity generation to achieve the Union’s 
decarbonisation objectives, those schemes should be structured by way of two-way contracts for 
difference  such  as  to  include,  in  addition  to  a  revenue  guarantee,  an  upward  limitation  of  the 
market  revenues  of  the  generation  assets  concerned.  New  investments  for  the  generation  of 
electricity should include investments in new power generating facilities, investments aimed at 
repowering existing power generating facilities, investments aimed at extending existing power 
generating facilities or at prolonging their lifetime. 

(31)  Such two-way contracts for difference would ensure that revenues of producers stemming from 
new  investments  in  electricity  generation  which  benefit  from  public  support  become  more 
independent  from  the  volatile  prices  of  fossil  fuels-based  generation  which  typically  sets  the 
price in the day-ahead market.  

(32)  However, to the extent that  the limitation to set out direct price support schemes in the form of 
two-way contracts  for difference narrows down the types of direct  price support schemes that 
Member  States  can  adopt  as  regards  renewable  energy  sources,  it  should  be  limited  to  low 
carbon, non-fossil fuel technologies, with low and stable operational costs and to technologies 
which typically do not provide flexibility to the electricity system, while excluding technologies 
that  are  at  early  stages  of  their  market  deployment.  This  is  necessary  to  ensure  that  the 
economic viability of generation technologies with high marginal costs is not jeopardised and to 
maintain the incentives of the technologies which can offer flexibility to the electricity system 
to bid in the electricity market based on their opportunity costs. In addition, the limitation to set 
out  direct  price  support  schemes  in  the  form  of  two-way  contracts  for  difference  should  not 
apply to emerging technologies for which other types of direct price support schemes may be 
better  placed  to  incentivise  their  uptake.  The  limitation  should  be  without  prejudice  to  the 
possible exemption for small-scale installations and demonstration projects pursuant to Article 4 
(3)  of  (EU)  2018/2001  of  the  European  Parliament  and  of  the  Council  and  consider  the 
specificities  of  renewable  energy  communities  in  accordance  with  Article  22  (7)  of  that 
Directive. 

(33) 

In  view  of  the  need  to  provide  regulatory  certainty  of  producers,  the  obligation  for  Member 
States to apply direct price support schemes for the production of electricity in the form of two-
way  contracts  for  difference  should  apply  only  to  new  investments  for  the  generation  of 
electricity from the sources specified in the recital above. 

(34)  Thanks to the upward limitation of the market revenues direct price support schemes in the form 
of  two-way  contracts  for  difference  should  provide  an  additional  source  of  revenues  for 
Member  States  in  periods  of  high  energy  prices.  To  further  mitigate  the  impact  of  high 
electricity  prices  on  the  energy  bills  of  consumers,  Member  States  should  ensure  that  the 
revenues collected from producers subject to direct price support schemes in the form of two-
way  contracts  for  difference  are  passed  on  to  all  final  electricity  customers,  including 

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households, SMEs and industrial consumers, based on their consumption. The redistribution of 
revenues should be done in a way that ensures that consumers are still to some extent exposed 
to the price signal, so that they reduce their consumption when the prices are high, or shift it to 
periods  of  lower  prices  (which  are  typically  periods  with  a  higher  share  of  RES  production). 
Member States should ensure that the level playing-field and competition between the different 
suppliers is not affected by the redistribution of revenues to the final electricity consumers. 

(35)  Furthermore, Member States should ensure that the direct price support schemes, irrespective of 
their form, do not undermine the efficient, competitive and liquid functioning of the electricity 
markets,  preserving  the  incentives  of  producers  to  react  to  market  signals,  including  stop 
generating  when  electricity  prices  are  below  their  operational  costs,  and  of  final  customers  to 
reduce consumption when electricity prices are high. Member States should ensure that support 
schemes do not constitute a barrier for the development of commercial contracts such as PPAs.  

(36)  Thus,  two-way  contracts  for  difference  and  power  purchase  agreements  play  complementary 
roles in advancing the energy transition and bringing the benefits of renewables and low carbon 
energy  to  consumers.  Subject  to  the  requirements  set  out  in  the  present  Regulation,  Member 
States  should  be  free  to  decide  which  instruments  they  use  to  achieve  their  decarbonisation 
objectives. Through PPAs, private investors contribute to additional renewable and low carbon 
energy deployment while locking low and stable electricity prices over the long-term. Likewise, 
through two-way contracts for difference, the same objective is achieved by public entities on 
behalf  of  consumers.  Both  instruments  are  necessary  to  achieve  the  Union’s  decarbonisation 
targets  through  renewable  and  low  carbon  energy  deployment,  while  bringing  forward  the 
benefits of low-cost electricity generation for consumers.  

(37)  The  accelerated  deployment  of  renewables  necessitates  a  growing  availability  of  flexibility 
solutions to ensure their integration to the grid and to enable the electricity system and grid to 
adjust to the variability of electricity generation and consumption across different time horizons. 
Regulatory authorities should periodically assess the need for flexibility in the electricity system 
based  on  the  input  of  transmission  and  distribution  system  operators.  The  assessment  of  the 
flexibility  needs  of  the  electricity  system  should  take  into  account  all  existing  and  planned 
investments  (including  existing  assets  that  are  not  yet  connected  to  the  grid)  on  sources  of 
flexibility such as flexible electricity generation, interconnectors, demand side response, energy 
storage  or  the  production  of  renewable  fuels,  in  view  of  the  need  to  decarbonise  the  energy 
system. On this basis, Member States should define a national objective for non-fossil flexibility 
such  as  demand  side  response  and  storage  which  should  also  be  reflected  in  their  integrated 
national energy and climate plans.  

(38)  To  achieve  the  national  objective  for  non-fossil  flexibility  such  as  demand  side  response  and 
storage investment needs, Member States can design or redesign capacity mechanisms in order 
to  create  a  green  and  flexible  capacity  mechanism.  Member  States  that  apply  a  capacity 
mechanism  in  line  with  the  existing  rules  should  promote  the  participation  of  non-fossil 
flexibility  such  as  demand  side  response  and  storage  by  introducing  additional  criteria  or 
features in the design.  

(39)  To  support  environmental  protection  objectives  the  CO2  emissions’  limit,  set  out  in  Article 
22(4) of Regulation (EU) 2019/943 of the European Parliament and of the Council, should be 
seen as an upper limit. Therefore, Member States could set technical performance standards and 
CO2 emissions’ limits that restrict participation in capacity mechanisms to flexible, fossil-free 
technologies  in  full  alignment  with  the  Guidelines  on  State  aid  for  climate,  environmental 

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protection and energy27 which encourage Member States to introduce green criteria in capacity 
mechanisms. 

(40) 

In addition, if Member States do not apply a capacity mechanism or if the additional criteria or 
features in the design of their capacity mechanism are insufficient to achieve national objective 
for demand response and storage investment needs they could apply flexibility support schemes 
consisting of payments for the available capacity of non-fossil flexibility such as demand side 
response and storage. 

(41)  The  connection  of  new  generation  and  demand  installations,  in  particular  renewable  energy 
plants, often faces delays in grid connection procedures. One of the reasons for such delays is 
the lack of available grid capacity at the location chosen by the investor, which implies the need 
for grid extensions or reinforcements to connect the installations to the system in a safe manner. 
A new requirement for electricity system operators, both at transmission and distribution levels, 
to  publish  and  update  information  on  the  grid  capacity  available  in  their  areas  of  operation 
would contribute to decision-making by investors on the basis of information of grid capacity 
availability  within  the  system  and  thus  to  the  required  acceleration  in  the  deployment  of 
renewable energy. 

(42)  Furthermore, to tackle the problem of lengthy reply times on requests for connection to the grid, 
transmission and distribution system operators should provide clear and transparent information 
to  system  users  about  the  status  and  treatment  of  their  connection  requests.  Transmission  and 
distribution system operators should endeavour to provide such information within a period of 
three months from the submission of the request. 

(43)  During the energy crisis, consumers have been exposed to extremely volatile wholesale energy 
prices  and  had  limited  opportunities  to  engage  in  the  energy  market.  Consequently,  many 
households, have been facing difficulties when paying their bills. Vulnerable consumers and the 
energy poor are the hardest hit28, but middle-income households have also been exposed to such 
difficulties.  It  is  therefore  important  to  update  consumer  rights  and  protections,  allowing 
consumers to benefit from the energy transition, decouple their electricity bills from short term 
price movements on energy markets and rebalance the risk between suppliers and consumers. 

(44)  Consumers  should  have  access  to  a  wide  range  of  offers  so  that  they  can  choose  a  contract 
according  to  their  needs.  However,  suppliers  have  reduced  their  offers,  fixed-price  contracts 
have  become  scarce,  and  the  choice  of  offers  has  become  limited.  Consumers  should  always 
have  the  possibility  to  opt  for  an  affordable  fixed  price  and  fixed  term  contract  and  suppliers 
should not unilaterally modify the terms and conditions before such contract expires. 

(45)  When suppliers’ do not  ensure that their electricity portfolio is sufficiently hedged changes in 
wholesale electricity prices can leave them financially at risk and, result in their failure, passing 
on costs to consumers and other network users. Hence, it  should be ensured that suppliers are 
appropriately  hedged  when  offering  fixed  price  contracts.  An  appropriate  hedging  strategy 
should take into account the suppliers' access to its own generation and its capitalisation as well 
as its exposure to changes in wholesale market prices.   

27 

28 

Communication from the Commission – Guidelines on State aid for climate, environmental protection and energy 
2022 (OJ C 80, 18.2.2022, p. 1). 
Particular groups are more at risk of being affected by energy poverty or more susceptible to the adverse impacts of 
energy  poverty,  such  as  women,  persons  with  disabilities,  older  persons,  children,  and  persons  with  a  minority 
racial or ethnic background. 

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(46)  Consumers should be able to choose the supplier which offers them the price and service which 
best  suits  their  needs.  Advances  in  metering  and  sub-metering  technology  combined  with 
information  and  communication  technology  mean  that  it  is  now  technically  possible  to  have 
multiple suppliers for a single premises.  If they so wish, customers should be able to use these 
possibilities  to  choose  a  separate  supplier  notably  for  electricity  to  power  appliances  such  as 
heat pumps or electric vehicles which have a particularly high consumption or which also have 
the  capability  to  shift  their  electricity  consumption  automatically  in  response  to  price  signals. 
Moreover, with fast-responding dedicated metering devices which are attached to or embedded 
in appliances with flexible, controllable loads, final customers can participate in other incentive-
based demand response schemes that provide flexibility services on the electricity market and to 
transmission and distribution system operators. Overall, such arrangements should contribute to 
the increased uptake of demand response and to consumer empowerment allowing them to have 
more control over their energy use and bills, while providing to the electricity system additional 
flexibility in order to cope with demand and supply fluctuations.   

(47)  Due to the increasing complexity of energy offers and different marketing practices, consumers 
have often difficulties to fully understand what they sign up to. In particular, there is a lack of 
clarity on how the price is set, the conditions for the renewal of the contract, the consequences 
of terminating a contract or the reasons for changing conditions by the supplier. Therefore, the 
key  information  on  energy  offers  should  be  provided  to  consumers  by  suppliers  or  market 
participants engaged in aggregation in a short and easily understandable manner prior to signing 
the contract. 

(48)  To ensure continuity of supply for consumers in case of supplier failure, Member States should 
be obliged to appoint suppliers of last resort which may be treated as the provider of universal 
service. That  supplier might  be the sales division  of a vertically integrated undertaking which 
also  performs  distribution  functions,  provided  that  it  meets  the  unbundling  requirements  of 
Article  35  of  Directive  (EU)  2019/944  of  the  European  Parliament  and  of  the  Council. 
However,  this  does  not  imply  an  obligation  of  Member  States  to  supply  at  a  certain  fixed 
minimum price.   

(49)  Energy sharing  can  create resilience  against the effects of high and volatile wholesale market 
prices on consumers’ energy bills, empowers a wider group of consumers that do not otherwise 
have the option of becoming an active customer due to financial or spatial constraints, such as 
energy poor and vulnerable consumers,  and leads to increased uptake of renewable energy by 
mobilising additional private capital investments and diversifying remuneration pathways. With 
the integration of appropriate price signals and storage facilities, electricity sharing can help lay 
the foundation to help tap into the flexibility potential of smaller consumers.  

(50)  Active customers that own, lease or rent a storage or generation facility should have the right to 
share  excess  production  and  empower  other  consumers  to  become  active,  or  to  share  the 
renewable  energy  generated  or  stored  by  jointly  leased,  rented  or  owned  facilities,  either 
directly  or  through  a  third-party  facilitator.  Energy  sharing  arrangement  are  either  based  on 
private contractual agreement between active customers or organised through a legal entity. A 
legal  entity  that  incorporates  the  criteria  of  a  renewable  energy  community  as  defined  in 
Directive  (EU)  2018/2001  of  the  European  Parliament  and  of  the  Council  or  a  citizen  energy 
community  as  defined  in  Directive  (EU)  2019/944  of  the  European  Parliament  and  of  the 
Council  can  share  with  their  members  electricity  generated  from  facilities  they  have  in  full 
ownership.  The  protection  and  empowerment  framework  for  energy  sharing  should  pay 
particular attention to energy poor and vulnerable consumers. 

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(51)  Energy sharing operationalises the collective consumption of self-generated or stored electricity 
injected into the grid by more than one jointly acting active customers. Member States should 
put in place the appropriate IT infrastructure to allow for the administrative matching within a 
certain  timeframe  of  consumption  with  self-generated  or  stored  renewable  energy  for  the 
purpose  of  calculating  the  energy  component  of  the  energy  bill.  The  output  of  these  facilities 
should be distributed among the aggregated consumer load profiles based on static, variable or 
dynamic calculation methods that can be pre-defined or agreed upon by the active customers. 

(52)  Vulnerable  customers  should  be  adequately  protected  from  electricity  disconnections  and 
should, as well, not be put in a position that forces them to disconnect. The role of suppliers and 
all relevant national authorities to identify appropriate measures, in both the short and the long-
term, which should be made available to vulnerable customers to manage their energy use and 
costs remain essential, including by means of close cooperation with social security systems. 

(53)  Public  interventions  in  price  setting  for  the  supply  of  electricity  constitute,  in  principle,  a 
market-distortive  measure.  Such  interventions  may  therefore  only  be  carried  out  as  public 
service obligations and are subject to specific conditions. Under this Directive regulated prices 
are  possible  for  energy  poor  and  vulnerable  households,  including  below  costs,  and,  as  a 
transition measure, for households and micro-enterprises. In times of crisis, when wholesale and 
retail electricity prices increase significantly, and this is having a negative impact on the wider 
economy, Member States should be allowed to extend, temporarily, the application of regulated 
prices  also  to  SMEs.  For  both  households  and  SMEs,  Member  States  should  be  temporarily 
allowed  to  set  regulated  prices  below  costs  as  long  as  this  does  not  create  distortion  between 
suppliers  and  suppliers  are  compensated  for  the  costs  of  supplying  below  cost.  However,  it 
needs  to  be  ensured  that  such  price  regulation  is  targeted  and  does  not  create  incentives  to 
increase  consumption.  Hence,  such  price  regulation  should  be  limited  to  80%  of  median 
household consumption for households, and 70% of the previous year’s consumption for SMEs. 
The Commission should determine when such an electricity price crisis exists and consequently  
when this possibility becomes applicable. The Commission should also specify the validity of 
that  determination,  during  which  the  temporary  extension  of  regulated  prices  applies,  which 
may  be  for  up  to  one  year.  To  the  extent  that  any  of  the  measures  envisaged  by  the  present 
Regulation constitute State aid, the provisions concerning such measures are without prejudice 
to the application of Articles 107 and 108 TFEU.  

(54)  The measures envisaged by the present Regulation are also without prejudice to the application 
of Directive 2014/65/EU, Regulation (EU) 2016/1011 and Regulation (EU) 648/2012.  

(55)  Regulation  (EU)  2019/942  of  the  European  Parliament  and  of  the  Council,  Regulation  (EU) 
2019/943  of  the  European  Parliament  and  of  the  Council,  Directive  (EU)  2019/944  of  the 
European  Parliament  and  of  the  Council  and  Directive  (EU)  2018/2001  of  the  European 
Parliament and of the Council should be amended accordingly. 

(56)  Since the objectives of this Regulation  cannot  be sufficiently achieved by the Member States, 
but can rather be better achieved at Union level, the Union may adopt measures, in accordance 
with  the  principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  on  European  Union.  In 
accordance with the principle of proportionality, as set out in that Article, this Regulation does 
not go beyond what is necessary to achieve those objectives. 

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HAS ADOPTED THIS REGULATION: 

Article 1 

Amendments to  Regulation (EU) 2019/943  of the European Parliament and of the Council of 5 June 

2019 on the internal market for electricity 

Regulation (EU) 2019/943 is amended as follows:  

(1) Article 1 is amended as follows: 

[a] point (b) is replaced by the following: 

‘(b)  set  fundamental  principles  for  well-functioning,  integrated  electricity  markets,  which  allow  all 

resource providers and electricity customers non-discriminatory market access, enable the development 

of forward electricity markets to allow suppliers and consumers to hedge or protect themselves against 

the  risk  of  future  volatility  in  electricity  prices,  empower  consumers,  ensure  competitiveness  on  the 

global  market,  enhance  flexibility  through  demand  response,  energy  storage  and  other  non-fossil 

flexibility solutions, ensure energy efficiency, facilitate aggregation of distributed demand and supply, 

and enable market and sectoral integration and market-based remuneration of electricity generated from 

renewable sources;’ 

[b] the following point is added: 

‘(e) 

support long-term investments in renewable energy generation and enable consumers’ to make 

their energy bills less dependent from fluctuations of short-term electricity market prices, in particular 

fossil fuel prices in the medium to long-term.’ 

(2) In Article 2, the following points are added: 

‘(72) ‘peak hour’ means an hour with the highest electricity consumption combined with a low level of 

electricity generated from renewable energy sources, taking cross-zonal exchanges into account;  

(73) ‘peak shaving’ means the ability of market participants to reduce electricity consumption at peak 

hours determined by the transmission system operator; 

(74)  ‘peak  shaving  product’  means  a  market-based  product  through  which  market  participants  can 

provide peak shaving to the transmission system operators; 

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30 

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(75)  ‘virtual  hub’  means  a    non-physical  region  covering  more  than  one  bidding  zone  for  which  an 

index price is set in application of a methodology; 

(76)  ‘two-way  contract  for  difference’    means  a  contract  signed  between  a  power  generating  facility 

operator  and  a  counterpart,  usually  a  public  entity,  that  provides  both  minimum  remuneration 

protection  and  a  limit  to  excess  remuneration;  the  contract  is  designed  to  preserve  incentives  for  the 

generating facility to operate and participate efficiently in the electricity markets and complies with the 

principles  set  out  in  Article  4(2)  and  Article  4(3),  first  and  third  subparagraphs,  of  Directive  (EU) 

2018/2001; 

(77)  ‘power  purchase  agreement’  or  ‘PPA’  means  a  contract  under  which  a  natural  or  legal  person 

agrees to purchase electricity from an electricity producer on a market basis; 

(78) ‘market revenue’ means realised income an electricity producer receives in exchange for the sale 

and  delivery  of  electricity  in  the  Union,  regardless  of  the  contractual  form  in  which  such  exchange 

takes place, and excluding any support granted by Member States; 

(79) ‘dedicated metering device’ means a device attached to or embedded in an asset that sells demand 

response  or  flexibility  services  on  the  electricity  market or  to  transmission  and  distribution  system 

operators; 

(80) ‘flexibility’ means the ability of an electricity system to adjust to the variability of generation and 

consumption patterns and grid availability, across relevant market timeframes.’ 

(3) Article 7 is amended as follows: 

[a] paragraph 1 is replaced by the following: 

‘1. 

Transmission  system  operators  and  NEMOs,  or  an  entity  designated  by  them,  shall  jointly 

organise  the  management  of  the  integrated  day-ahead  and  intraday  markets  in  accordance  with 

Regulation (EU) 2015/1222. Transmission system operators and NEMOs shall cooperate at Union level 

or, where more appropriate, at a regional level in order to maximise the efficiency and effectiveness of 

Union electricity day-ahead and intraday trading. The obligation to cooperate shall be without prejudice 

to  the  application  of  Union  competition  law.  In  their  functions  relating  to  electricity  trading, 

transmission system  operators  and NEMOs shall be  subject  to  regulatory oversight  by the  regulatory 

authorities pursuant to Article 59 of Directive (EU) 2019/944 and ACER pursuant to Articles 4 and 8 

of Regulation (EU) 2019/942.’ 

[b] paragraph 2 is amended as follows: 

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31 

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(i) point (c) is replaced by the following: 

(c) maximise the opportunities for all market participants to participate in cross-zonal and intra-zonal 

trade in  a non-discriminatory  way and  as close  as possible to  real  time across and  within all bidding 

zones; 

(ii) the following point (ca) is inserted:  

‘(ca)  be  organised  in  such  a  way  as  to  ensure  the  sharing  of  liquidity  between  all  NEMOs,  both  for 

cross-zonal and for intra-zonal trade;’ 

(4) the following Articles 7a and 7b are inserted: 

‘Article 7a 

Peak shaving product 

1. 

2. 

Without prejudice to Article 40(5) and 40(6) of the Electricity Directive, transmission system 
operators  may  procure  peak  shaving  products  in  order  to  achieve  a  reduction  of  electricity 
demand during peak hours.  

Transmission  system  operators  seeking  to  procure  a  peak  shaving  product  shall  submit  a 
proposal  setting out the dimensioning and conditions for the procurement of the peak shaving 
product  to  the  regulatory  authority  of  the  Member  State  concerned.  The  proposal  of  the 
transmission system operator shall comply with the following requirements: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the dimensioning of the peak shaving product shall be based on an analysis of the need 
for  an  additional  service  to  ensure  security  of  supply.  The  analysis  shall  take  into 
account a reliability standard or objective and transparent grid stability criteria approved 
by  the  regulatory  authority.  The  dimensioning  shall  take  into  account  the  forecast  of 
demand,  the  forecast  of  electricity  generated  from  renewable  energy  sources  and  the 
forecast  of  other  sources  of  flexibility  in  the  system.  The  dimensioning  of  the  peak 
shaving product  shall be limited to  ensure that the expected benefits  of the product do 
not exceed the forecasted costs; 

the procurement of a peak shaving product shall be based on objective, transparent, non-
discriminatory criteria and be limited to demand response;  

the  procurement  of  the  peak  shaving  product  shall  take  place  using  a  competitive 
bidding process, with selection based on the lowest cost of meeting pre-defined technical 
and environmental criteria; 

contracts for a peak shaving product shall not be concluded more than two days before 
its activation and the contracting period shall be no longer than one day;  

the activation of the peak shaving product shall not reduce cross-zonal capacity; 

the activation of the peak shaving product shall take place after the closure of the day-
ahead market and before the start of the balancing market; 

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(g) 

the peak shaving product shall not imply starting generation located behind the metering 
point. 

The actual reduction of consumption resulting from the activation of a peak shaving product 
shall be measured against  a baseline, reflecting the expected electricity consumption without 
the  activation  of  the  peak  shaving  product.  Transmission  system  operators  shall  develop  a 
baseline methodology in consultation with market participants and submit it to the regulatory 
authority. 

Regulatory authorities shall approve the proposal of the transmission system operators seeking 
to procure a peak shaving product and the baseline methodology submitted in accordance with 
paragraphs 2 and 3 or shall request the transmission system operators to amend the proposal 
where it does not meet the requirements set out in these paragraphs. 

Article 7b 

Dedicated metering device 

“Member States shall allow transmission system operators and distribution system operators to 
use  data  from  dedicated  metering  devices  for  the  observability  and  settlement  of  demand 
response and flexibility services, including from storage systems. 

Member  States  shall  establish  requirements  for  a  dedicated  metering  device  data  validation 
process to check and ensure the quality of the respective data.’; 

3. 

4. 

1. 

2. 

(5) Article 8 is amended as follows: 

(a) paragraph 1 is replaced by the following: 

‘NEMOs shall allow market participants to trade energy as close to real time as possible and at least up 

to the intraday cross-zonal gate closure time. By 1 January 2028, the intraday cross-zonal gate closure 

time shall be at the earliest 30 minutes ahead of real time.’ 

(b) paragraph 3 is replaced by the following: 

‘NEMOs shall provide products  for trading in  day-ahead  and intraday markets  which are sufficiently 

small  in  size,  with  minimum  bid  sizes  of  100kW  or  less,  to  allow  for  the  effective  participation  of 

demand-side  response,  energy  storage  and  small-scale  renewables  including  direct  participation  by 

customers.’ 

[6] Article 9 is replaced by the following: 

EN 

Article 9 

Forward markets 

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1. 

By 1 December 2024 the ENTSO for Electricity shall submit to ACER, after having consulted 
ESMA, a proposal for the establishment of regional virtual hubs for the forward market. The 
proposal shall:  

(a) 

(b) 

define the geographical scope of the virtual hubs for the forward market, including the 
bidding zones constituting these hubs, aiming to maximise the price correlation between 
the reference prices and the prices of the bidding zones constituting virtual hubs; 

include a methodology for the calculation of the reference prices for the virtual hubs for 
the forward market, aiming to maximise the correlations between the reference price and 
the  prices  of  the  bidding  zones  constituting  a  virtual  hub;  such  methodology  shall  be 
applicable to all virtual hubs and based on predefined objective criteria;  

(c) 

include a definition of financial long-term transmission rights from bidding zones to the 
virtual hubs for the forward market; 

(d)  maximise the trading opportunities for hedging products referencing the virtual hubs for 
the forward market  as well as for long  term  transmission rights  from  bidding zones to 
virtual hubs. 

2. 

3. 

Within six months of receipt of the proposal on the establishment of the regional virtual hubs 
for the  forward market,  ACER shall  evaluate it  and either  approve or  amend it.  In the latter 
case,  ACER  shall  consult  the  ENTSO  for  Electricity  before  adopting  the  amendments.  The 
adopted proposal shall be published on ACER's website. 

The  single  allocation  platform  established  in  accordance  with  Regulation  (EU)  2016/1719 
shall have a legal form as referred to in Annex II to Directive (EU) 2017/1132 of the European 
Parliament and of the Council. 

4. 

The single allocation platform shall: 

(a) 

(b) 

(c) 

offer  trading  of  long-term  transmission  rights  between  each  bidding  zone  and  virtual 
hub; where a bidding zone is not part of a virtual hub it may issue financial long-term 
transmission rights  to  a  virtual  hub or to  other bidding zones that are part  of the same 
capacity calculation region; 

allocate long-term cross-zonal capacity on a regular basis and in a transparent, market-
based  and  non-discriminatory  manner;  the  frequency  of  allocation  of  the  long-term 
cross-zonal capacity shall support the efficient functioning of the forward market; 

offer  trading  of  financial  transmission  rights  that  shall  allow  holders  of these  financial 
transmission rights to remove exposure to positive and negative price spreads, and with 
frequent maturities of up to at least three years ahead. 

Where  a  regulatory  authority  considers  that  there  are  insufficient  hedging  opportunities 
available for market participants, and after consultation of relevant financial market competent 
authorities in case the forward markets concern financial instruments as defined under Article 
4(1)(15),  it  may  require  power  exchanges  or  transmission  system  operators  to  implement 
additional measures, such as market-making activities, to improve the liquidity of the forward 
market. Subject to compliance with Union competition law and  with Directive (EU) 2014/65 
and  Regulations  (EU)  648/2012  and  600/2014,  market  operators  shall  be  free  to  develop 
forward hedging products, including long-term forward hedging products, to  provide market 
participants, including owners of power-generating facilities using renewable energy sources, 

5. 

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with  appropriate  possibilities  for  hedging  financial  risks  against  price  fluctuations.  Member 
States shall not require that such hedging activity may be limited to trades within a Member 
State or bidding zone. 

(7) Article 18 is amended as follows: 

[a] paragraph 2 is replaced by the following: 

“2. 

Tariff  methodologies  shall  reflect  the  fixed  costs  of  transmission  system  operators  and 

distribution  system  operators  and  shall  consider  both  capital  and  operational  expenditure  to  provide 

appropriate incentives to transmission system operators and distribution system operators over both the 

short  and  long  run,  including  anticipatory  investments,  in  order  to  increase  efficiencies,  including 

energy efficiency, to foster market integration and security of supply, to support the use of flexibility 

services,  efficient investments including  solutions  to  optimise the  existing  grid and facilitate demand 

response and related research activities, and to facilitate innovation in the interest of consumers in areas 

such as digitalisation, flexibility services and interconnection”;  

[b] paragraph 8 is replaced by the following: 

“8.  Transmission  and  distribution  tariff  methodologies  shall  provide  incentives  to  transmission  and 

distribution system operators for the most cost-efficient operation and development of their networks 

including through the procurement of services. For that purpose, regulatory authorities shall recognise 

relevant  costs  as  eligible,  shall  include  those  costs  in  transmission  and  distribution  tariffs,  and  shall 

introduce  performance  targets  in  order  to  provide  incentives  to  transmission  and  distribution  system 

operators  to  increase  efficiencies  in  their  networks,  including  through  energy  efficiency,  the  use  of 

flexibility services and the development of smart grids and intelligent metering systems.” 

[c] in paragraph 9, point (f) is replaced by the following: 

‘(f)  methods  to  ensure  transparency  in  the  setting  and  structure  of  tariffs,  including  anticipatory 

investments;’ 

[d] in paragraph 9, the following point (i) is added: 

‘(i)  incentives  for  efficient  investments  in  networks,  including  on  flexibility  resources  and  flexible 

connection agreements.’ 

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[8] in Article 19, paragraph 2 is amended as follows: 

[a] point (b) is replaced by the following: 

(b)  maintaining  or  increasing  cross-zonal  capacities  through  optimisation  of  the  usage  of 

existing  interconnectors  by  means  of  coordinated  remedial  actions,  where  applicable,  or 

covering  costs  resulting  from  network  investments  that  are  relevant  to  reduce  interconnector 

congestion; or 

[b] the following point (c) is added: 

‘(c) compensating offshore generation plant operators in an offshore bidding zone if access to 

interconnected markets has been reduced in such a way that one or more transmission system 

operators have not made enough capacity available on the interconnector or the critical network 

elements affecting the capacity of the interconnector, resulting in the offshore plant operator not 

being able to export its electricity generation capability to the market.’ 

[9] The following chapter IIIa is inserted:  

Chapter IIIa  

Specific investment incentives to achieve the Union’s decarbonisation objectives  

Article 19a 

Power purchase agreements 

1. 

2. 

3. 

4. 

Member  States  shall  facilitate  power  purchase  agreements  (‘PPAs’)  with  a  view  to  reaching 
the objectives set out in their integrated national  energy and climate plan with respect to the 
dimension decarbonisation referred to in point (a) of Article 4 of Regulation (EU) 2018/1999, 
while preserving competitive and liquid electricity markets. 

Member  States  shall  ensure  that  instruments  such  as  guarantee  schemes  at  market  prices,  to 
reduce  the  financial  risks  associated  to  off-taker  payment  default  in  the  framework  of  PPAs 
are in place and accessible to customers that face entry barriers to the PPA market and are not 
in  financial  difficulty  in  line  with  Articles  107  and  108  TFEU.  For  this  purpose,  Member 
States  shall  take  into  account  Union-level  instruments.  Member  States  shall  determine  what 
categories  of  customers  are  targeted  by  these  instruments,  applying  non-discriminatory 
criteria. 

Guarantee schemes for PPAs backed by the Member States shall include provisions to avoid 
lowering the liquidity in  electricity markets  and shall not  provide support  to  the purchase of 
generation from fossil fuels. 

In  the  design  of  the  support  schemes  for  electricity  from  renewable  sources,  Member  States 
shall allow the participation of projects which reserve part of the electricity for sale through a 

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PPA or other market-based arrangements and endeavour to make use of evaluation criteria to 
incentivise the access to the PPA market for customers that face entry barriers. In particular, 
such  evaluation  criteria  may  give  preference  to  bidders  presenting  a  signed  PPA  or  a 
commitment  to sign a PPA for part of the project’s generation from  one or several  potential 
buyers that face entry barriers to the PPA market. 

PPAs shall specify the bidding zone of delivery and the responsibility for securing cross-zonal 
transmission rights in case of a change of bidding zone in accordance with Article 14. 

PPAs shall specify the conditions under which customers and producers may exit from PPAs, 
such as any applicable exit fees and notice periods, in accordance with Union competition law. 

Direct price support schemes for new investments in generation 

Article 19b  

Direct  price  support  schemes  for  new  investments  for  the  generation  of  electricity  from  the 
sources listed in paragraph 2 shall take the form of a two-way contract for differences. New 
investments  for  the  generation  of  electricity  shall  include  investments  in  new  power-
generating  facilities,  investments  aimed  at  repowering  existing  power-generating  facilities, 
investments  aimed  at  extending  existing  power-generating  facilities  or  at  prolonging  their 
lifetime. 

Paragraph  1  shall  apply  to  new  investments  in  generation  of  electricity  from  the  following 
sources: 

5. 

6. 

1. 

2. 

(a)  wind energy; 

(b) 

solar energy; 

(c) 

geothermal energy; 

(d)  hydropower without reservoir; 

(e) 

nuclear energy; 

3. 

Direct price support schemes in the form of two-way contracts for difference shall: 

(a) 

(b) 

be  designed  so  that  the  revenues  collected  when  the  market  price  is  above  the  strike 
price are distributed to all final electricity customers based on their share of consumption 
(same cost / refund per MWh consumed); 

ensure that the distribution of the revenues to final electricity customers is designed so 
as not to remove the incentives of consumers to reduce their consumption or shift it to 
periods  when  electricity  prices  are  low  and  not  to  undermine  competition  between 
electricity suppliers; 

Article 19c 

Assessment of flexibility needs 

1. 

By 1 January  2025  and  every two  years thereafter, the regulatory  authority of each Member 
State shall assess and draw up a report on the need for flexibility in the electricity system for a 

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period of at least 5 years, in view of the need to cost effectively achieve security of supply and 
decarbonise  the  power  system,  taking  into  account  the  integration  of  different  sectors.  The 
report shall be based on the data and  analyses provided by the transmission  and distribution 
system  operators  of  that  Member  State  pursuant  to  paragraph  2  and  using  the  methodology 
pursuant to paragraph 3.  

The  report  shall  include  an  evaluation  of  the  need  for  flexibility  to  integrate  electricity 
generated  from  renewable  sources  in  the  electricity  system  and  consider,  in  particular,  the 
potential of non-fossil flexibility such as demand side response and storage to fulfil this need, 
both  at  transmission  and  distribution  levels.  The  report  shall  distinguish  between  seasonal, 
daily and hourly flexibility needs. 

The  transmission  and  distribution  system  operators  of  each  Member  State  shall  provide  the 
data  and  analyses  needed  for  the  preparation  of  the  report  referred  to  in  paragraph  1  to  the 
regulatory authority. 

The  ENTSO  for  Electricity  and  the  EU  DSO  entity  shall  coordinate  transmission  and 
distribution  system  operators  as  regards  the  data  and  analyses  to  be  provided  in  accordance 
with paragraph 2. In particular, they shall: 

(a) 

define  the  type  of  data  and  format  that  transmission  and  distribution  system  operators 
shall provide to the regulatory authorities; 

(b)  develop  a  methodology  for  the  analysis  by  transmission  and  distribution  system 
operators  of  the  flexibility  needs,  taking  into  account  at  least  all  existing  sources  of 
flexibility  and  planned  investments  at  interconnection,  transmission  and  distribution 
level as well as the need to decarbonise the electricity system. 

The  ENTSO  for  Electricity  and  the  EU  DSO  entity  shall  closely  cooperate  with  each  other 
regarding the coordination of transmission and distribution system operators.  

By 1 March 2024, the ENTSO for Electricity and the EU DSO entity shall jointly submit to 
ACER  a  proposal  regarding  the  type  of  data  and  format  to  be  submitted  to  regulatory 
authorities and the methodology referred to in paragraph 3. Within three  months of receipt of 
the proposal, ACER  shall either  approve the proposal  or  amend it.  In the latter case,  ACER 
shall  consult  the  ENTSO  for  Electricity  and  the  EU  DSO  entity  before  adopting  the 
amendments. The adopted proposal shall be published on ACER's website. 

The  regulatory  authorities  shall  submit  the  reports  referred  to  in  paragraph  1  to  ACER  and 
publish them. Within 12 months of receipt of the reports, ACER shall issue a report analysing 
them  and  providing  recommendations  on  issues  of  cross-border  relevance  regarding  the 
findings of the regulatory authorities. 

2. 

3. 

4. 

5. 

6. 

7. 

Indicative national objective for demand side response and storage 

Article 19d 

Based  on  the  report  of  the  regulatory  authority  pursuant  to  Article  19c(1),  each  Member  State  shall 

define an indicative national objective for demand side response and storage. This indicative national 

objective  shall  also  be  reflected  in  Member  States’  integrated  national  energy  and  climate  plans  as 

regards the dimension ‘Internal Energy Market’ in accordance with Articles 3, 4 and 7 of Regulation 

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(EU)  2018/1999  and  in  their  integrated  biennial  progress  reports  in  accordance  with  Article  17  of 

Regulation (EU) 2018/1999. 

Article 19e 

Flexibility support schemes 

1. 

2. 

3. 

Member  States  which  apply  a  capacity  mechanism  in  accordance  with  Article  21  shall 
consider  the  promotion  of  the  participation  of  non-fossil  flexibility  such  as  demand  side 
response and storage by introducing additional criteria or features in the design of the capacity 
mechanism. 

Where the measures introduced in accordance with paragraph 1 to promote the participation of 
non-fossil  flexibility  such  as  demand  response  and  storage  in  capacity  mechanisms  are 
insufficient to achieve the flexibility needs identified in accordance with19d, Member States 
may  apply  flexibility  support  schemes  consisting  of  payments  for  the  available  capacity  of 
non-fossil flexibility such as demand side response and storage. 

Member  States  which  do  not  apply  a  capacity  mechanism  may  apply  flexibility  support 
schemes  consisting  of  payments  for  the  available  capacity  of  non-fossil  flexibility  such  as 
demand side response and storage. 

Article 19f 

Design principles for flexibility support schemes 

Flexibility  support  scheme  for  non-fossil  flexibility  such  as  demand  response  and  storage  applied  by 

Member States in accordance with Article 19e(2) and (3) shall: 

(a) 

not  go  beyond  what  is  necessary  to  address  the  identified  flexibility  needs  in  a  cost-
effective manner; 

(b)  be limited to new investments in non-fossil flexibility such as demand side response and 

storage; 

(c)  must not imply starting fossil fuel-based generation located behind the metering point; 

(d) 

(e) 

(f) 

select  capacity  providers  by  means  of  an  open,  transparent,  competitive,  non-
discriminatory and cost-effective process; 

prevent undue distortions to the efficient functioning of the electricity markets including 
preserving  efficient  operation  incentives  and  price  signals  and  the  exposure  to  price 
variation and market risk; 

provide  incentives  for  the  integration  in  the  electricity  market  in  a  market-based  and 
market-responsive way, while avoiding unnecessary distortions of electricity markets as 
well as taking into account possible system integration costs and grid stability;  

(g) 

set  out  a  minimum  level  of  participation  in  the  market  in  terms  of  activated  energy, 
which takes into account the technical specificities of storage and demand response; 

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(h) 

apply  appropriate  penalties  to  capacity  providers  which  do  not  respect  the  minimum 
level  of  participation  in  the  market  referred  to  in  point  (g),  or  which  do  not  follow 
efficient operation incentives and prices signals; 

(i) 

be open to cross-border participation.’; 

(10) in Article 37 (1), point (a) is replaced by the following: 

“(a), carrying out the coordinated capacity calculation in accordance with the methodologies developed 

pursuant  to  the  forward  capacity  allocation  guideline,  the  capacity  allocation  and  congestion 

management guideline and the electricity balancing guideline adopted on the basis of Article 18(5) of 

Regulation (EC) No 714/2009;”; 

(11) Article 50 is amended as follows: 

  (a)  the following paragraph 4a is added: 

“4a. Transmission system operators shall publish in a clear and transparent manner, information on the 

capacity  available  for  new  connections  in  their  respective  areas  of  operation,  including  in  congested 

areas  if  flexible  energy  storage  connections  can  be  accommodated,  and  update  that  information 

regularly, at least quarterly. 

Transmission  system  operators  shall  also  provide  clear  and  transparent  information  to  system  users 

about the status and treatment of their connection requests. They shall provide such information within 

a period of three months from the submission of the request "; 

(12) in Article 57, the following paragraph 3 is added: 

“3. Distribution system operators and transmission system operators shall cooperate with each other in 

publishing  information  on  the  capacity  available  for  new  connections  in  their  respective  areas  of 

operation in a consistent manner and giving sufficient granular visibility to developers of new energy 

projects and other potential network users. 

(13) in Article 59 (1), point (b) is replaced by the following: 

“(b),  capacity-allocation  and  congestion-  management  rules  pursuant  to  Article  6  of  Directive  (EU) 

2019/944  and Articles 7 to  10, 13 to 17, 19 and 35 to  37 of this Regulation, including rules on day-

ahead,  intraday  and  forward  capacity  calculation  methodologies  and  processes,  grid  models,  bidding 

zone configuration, redispatching and countertrading, trading algorithms, single day-ahead and intraday 

coupling including the possibility of being operated by a single entity, the firmness of allocated cross-

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zonal capacity, congestion income distribution, the allocation of financial long-term transmission rights 

by  the  single  allocation  platform,  cross-zonal  transmission  risk  hedging,  nomination  procedures,  and 

capacity allocation and congestion management cost recovery;”; 

(14) The following Article 69a is added: 

Article 69a 

Interaction with Union financial legislation 

Nothing in  this  Regulation  shall derogate from  the provisions of Directive (EU) 2014/65,  Regulation 

(EU) 648/2012 and Regulation (EU) 600/2014 when market participants or market operators engage in 

activities  related  to  financial  instruments  in  particular  as  defined  under  Article  4(1)(15)  of  Directive 

(EU) 2014/65. 

(15) in Annex I point 1.2 is replaced by the following: 

“1.2. Coordinated capacity calculation shall be performed for all allocation timeframes”. 

Article 2 

Amendments  to  Directive  (EU)  2019/944  of  the  European  Parliament  and  of  the  Council  of  5  June 

2019 on common rules for the internal market for electricity 

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common 

rules for the internal market for electricity is amended as follows:  

(1) Article 2 is amended as follows: 

(a) points (8) and (49) is replaced by the following: 

“(8) 

‘active  customer’  means  a  final  customer,  or  a  group  of  jointly  acting  final  customers,  who 

consumes  or  stores  electricity  generated  within  its  premises  located  within  confined 

boundaries  or  self-generated  or  shared  electricity  within  other  premises  located  within  the 

same  bidding  zone,  or  who  sells  self-generated  electricity  or  participates  in  flexibility  or 

energy  efficiency  schemes,  provided  that  those  activities  do  not  constitute  its  primary 

commercial or professional activity.”; 

“(49)  'non-frequency  ancillary  service'  means  a  service  used  by  a  transmission  system  operator  or 

distribution  system  operator  for  steady  state  voltage  control,  fast  reactive  current  injections, 

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inertia  for  local  grid  stability,  short-circuit  current,  black  start  capability,  island  operation 

capability and peak shaving;” 

(b) the following points are added: 

(15a) ‘fixed term, fixed price electricity supply contract’ means an electricity supply contract between a 

supplier and a final customer that guarantees the same contractual conditions, including the price, while 

it  may,    within  a  fixed  price,  include  a  flexible  element  with  for  example  peak  and  off  peak  price 

variations;  

(10a) ‘energy sharing’ means the self-consumption by active customers of renewable energy either: 

(a) 

(b) 

generated or stored offsite or on sites between them by a facility they own, lease,   rent 
in whole or in part; or 

the right to which has been transferred to them by another active customer  
 whether free of charge or for a price.  

(10b) ‘peer-to-peer trading’ of renewable energy means peer-to-peer trading as defined in point (18) of 

Article 2 of Directive (EU) 2018/2001.  

(24a) ‘supplier of last resort’ means a supplier who is designated by a Member State to take over the 

supply of electricity to customers of a supplier which has ceased to operate; 

(2) Article 4 is replaced by the following: 

“Article 4 

Free choice of supplier 

Member States shall ensure that all customers are free to purchase electricity from the supplier of their 

choice. Member States shall ensure that all customers are free to have more than one electricity supply 

contract  at  the  same  time,  and  that  for  this  purpose  customers  are  entitled  to  have  more  than  one 

metering and billing point covered by the single connection point for their premises.”  

(3) Article 11 is amended as follows: 

(a) the title is replaced by the following: 

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‘Entitlement to a fixed term, fixed price and dynamic electricity price contract’; 

(b) paragraph 1 is replaced by the following: 

1.   Member States shall ensure that the national regulatory framework enables suppliers to offer fixed-

term,  fixed-price  contracts  and  dynamic  electricity  price  contracts. Member  States  shall  ensure  that 

final  customers who have a smart  meter installed can request  to  conclude a dynamic electricity price 

contract and that all final customers can request to conclude a fixed-term, fixed-price electricity price 

contract of a duration of at least one year,  with at least one supplier and with every supplier that has 

more than 200 000 final customers. 

(c) the following paragraph 1a is inserted: 

1a.  Prior  to  the  conclusion  or  extension  of  any  contract,  final  customers  shall  be  provided  with  a 

summary of the key contractual conditions in a prominent manner and in concise and simple language. 

This  summary  shall  include  at  least  information  on  total  price,  promotions,  additional  services, 

discounts  and  include  the  rights  referred  to  in  points  (a),  (b),  (d),  (e)  and  (f)  of  Article  10(3).  The 

Commission shall provide guidance in this regard.  

(d) paragraph 2 is replaced by the following: 

2.   Member  States  shall  ensure  that  final  customers  are  fully  informed  by  the  suppliers  of  the 

opportunities, costs and risks of dynamic electricity price contracts, and shall ensure that suppliers are 

required to provide information to the final customers accordingly, including with regard to the need to 

have  an  adequate  electricity  meter  installed.  Regulatory  authorities  shall  monitor  the  market 

developments and assess the risks that the new products and services may entail and deal with abusive 

practices. 

(4) The following Articles are inserted: 

“Article 15a” 

Right to energy sharing 

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1. 

All  households,  small  and  medium  sized  enterprises  and  public  bodies  have  the  right  to 
participate in energy sharing as active customers.  

(a)  Active customers shall be entitled to share renewable energy between themselves based 

on private agreements or through a legal entity.  

(b)  Active customers may use a third party that owns or manages for installation, operation, 
including  metering  and  maintenance  a  storage  or  renewable  energy  generation  facility 
for the purpose of facilitating energy sharing, without that third party being considered 
an active customer. 

(c)  Member States shall ensure that active customers participating in energy sharing: 

(d) 

(e) 

(f) 

(g) 

(h) 

are  entitled  to  have  the  shared  electricity  netted  with  their  total  metered  consumption 
within  a  time  interval  no  longer  than  the  imbalance  settlement  period  and  without 
prejudice to applicable taxes, levies and network charges; 

benefit from all consumer rights and obligations as final customers under this Directive, 
except  in  case  of    energy  sharing  between  households  with  an  installed  capacity  up  to 
10.8  kW  and  up  to  50  kW  for  multi-apartment  blocks  using  peer-to-peer  trading 
agreements; 

have access to template contracts with fair and transparent terms and conditions for peer-
to-peer trading agreements between households, and for agreements on leasing, renting 
or  investing  in  storage  and  renewable  energy  generation  facilities  for  the  purpose  of 
energy sharing; in case of conflicts arising over such agreements, final customers shall 
have access to out of court dispute settlement in accordance with Article 26; 

are  not  subject  to  unfair  and  discriminatory  treatment  by  market  participants  or  their 
balance responsible parties; 

are informed of the possibility for changes in bidding zones in accordance with Article 
14 of Regulation (EU) 2019/943 and of the fact that the right to share energy is restricted 
to within one and the same bidding zone.  

(i)  Member States shall ensure that relevant transmission or distribution system operators or 

other designated bodies:  

(j)  monitor, collect, validate and communicate metering data related to the shared electricity 
with  relevant  final  customers  and  market  participants  at  least  every  month,  and  in 
accordance with Article 23;  

(k)  provide  a  relevant  contact  point  to  register  energy  sharing  arrangements,  receive 
information  on  relevant  metering  points,  changes  in  location  and  participation,  and, 
where applicable, validate calculation methods in a clear, transparent and timely manner.  

2. 

Member States shall take appropriate and non-discriminatory measures to ensure that energy 
poor  and  vulnerable  households  can  access  energy  sharing  schemes.  Those  measures  may 
include financial support measures or production allocation quota. 

“Article 18a 

Supplier risk management 

1. 

National  Regulatory  Authorities  shall  ensure  that  suppliers  have  in  place  and  implement 
appropriate hedging strategies to limit the risk of changes in wholesale electricity supply to the 

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2. 

3. 

1. 

2. 

3. 

4. 

5. 

economic viability of their contracts with customers, while maintaining liquidity on and price 
signals from short-term markets.    

Supplier  hedging  strategies  may  include  the  use  of  power  purchase  agreements.  Where 
sufficiently  developed  markets  for  power  purchase  agreements  exist  which  allow  effective 
competition, Member States may require that a share of suppliers’ risk exposure to changes in 
wholesale  electricity  prices  is  covered  using  power  purchase  agreements  for  electricity 
generated from renewable energy sources matching the duration of their risk exposure on the 
consumer side, subject to compliance with Union competition law.    

Member  States  shall  endeavour  to  ensure  the  accessibility  of  hedging  products  for  citizen 
energy communities and renewable energy communities.” 

(5) The following Article XX is inserted: 

“Article 27a 

Supplier of last resort 

Member States shall appoint suppliers of last resort at least for household customers. Suppliers 
of last resort shall be appointed in a fair, open, transparent and non-discriminatory procedure. 

Final  customers  who  are  transferred  to  suppliers  of  last  resort  shall  not  lose  their  rights  as 
customers, in particular those rights laid down in Articles 4, 10, 11, 12, 14, 18 and 26. 

Member States shall ensure that suppliers of last resort promptly communicate the terms and 
conditions  to  transferred  customers  and  ensure  seamless  continuity  of  service  for  those 
customers for at least 6 months.  

Member  States  shall  ensure  that  final  customers  are  provided  with  information  and 
encouragement to switch to a market-based offer.  

Member  States  may  require  the  supplier  of  last  resort  to  supply  electricity  to  household 
customers  who  do  not  receive  market  based  offers.  In  such  cases,  the  conditions  set  out  in 
Article 5 shall apply.” 

  Article 28a 

Protection from disconnections for vulnerable customers 

Member  States  shall  ensure  that  vulnerable  customers  are  protected  from  electricity  disconnections. 

This shall be provided as part of the concept of vulnerable customers pursuant to Article 28 (1) of this 

Directive and without prejudice to the measures set out in Article10(11). 

(6) in Article 27, paragraph 1 is replaced by the following: 

“1.  Member  States  shall  ensure  that  all  household  customers,  and,  where  Member  States  consider  it 

appropriate, small enterprises, enjoy universal service, namely the right to be supplied with electricity 

of  a  specified  quality  within  their  territory  at  competitive,  easily  and  clearly  comparable,  transparent 

and  non-discriminatory  prices. To  ensure  the  provision  of  universal  service,    Member  States  shall 

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impose  on  distribution  system  operators  an  obligation  to  connect  customers  to  their  network  under 

terms,  conditions  and  tariffs  set  in  accordance  with  the  procedure  laid  down  in  Article 59(7).  This 

Directive  does  not  prevent  Member  States  from  strengthening  the  market  position  of  the  household 

customers and small and medium-sized non-household customers by promoting the possibilities for the 

voluntary aggregation of representation for that class of customers.” 

(7) In Article 31, paragraph 3 is replaced by the following: 

“3.  The  distribution  system  operator  shall  provide  system  users  with  the  information  they  need  for 

efficient  access  to,  including  use  of,  the  system.  In  particular,  the  distribution  system  operator  shall 

publish in a clear and transparent manner information on the capacity available for new connections in 

its  area  of  operation,  including  in  congested  areas  if  flexible  energy  storage  connections  can  be 

accommodated, and update that information regularly, at least quarterly.  

Distribution system operators shall also provide clear and transparent information to system users about 

the  status  and  treatment  of  their  connection  requests.  They  shall  provide  such  information  within  a 

period of three months from the submission of the request.” 

(8) Article 40 is amended as follows: 

[a] a new paragraph is added after paragraph 6: 

The  requirements  in  paragraphs  5  and  6  shall  not  apply  with  regard  to  the  peak  shaving  product 

procured in accordance with Article 7a of Regulation (EU) 2019/943. 

(9) Article 59 is amended as follows: 

[a] In paragraph 1, subparagraph (c) is replaced by the following: 

(c), in close coordination with the other regulatory authorities, ensuring the compliance of the   single 

allocation  platform  established  in  accordance  with  Regulation  (EU)  2016/1719,  the  ENTSO  for 

Electricity  and  the  EU  DSO  entity  with  their  obligations  under  this  Directive,  Regulation  (EU) 

2019/943, the network codes and guidelines adopted pursuant to Articles 59, 60 and 61 of Regulation 

(EU) 2019/943, and other relevant Union law, including as regards cross-border issues, as well as with 

ACER's  decisions,  and  jointly  identifying  non-compliance  of  the  single  allocation  platform,  the 

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ENTSO for Electricity and the EU DSO entity with their respective obligations; where the regulatory 

authorities have not been able to reach an agreement within a period of four months after the start of 

consultations for the purpose of jointly identifying non-compliance, the matter shall be referred to the 

ACER for a decision, pursuant to Article 6(10) of Regulation (EU) 2019/942; 

[b] In paragraph 1, subparagraph (z) is replaced by the following: 

(z)  The  regulatory  authority  shall  have  the  following  duties:  monitoring  the  removal  of  unjustified 

obstacles  to  and  restrictions  on  the  development  of  consumption  of  self-generated  electricity  and 

citizen  energy  communities,  including  related  to  the  connection  of  flexible  distributed  energy 

generation within a reasonable time in accordance with Article 58(d). 

[c] paragraph 4 is replaced by the following:  

4.  The  regulatory  authority  located  in  the  Member  State  in  which  the  single  allocation  platform,  the 

ENTSO  for  Electricity  or  the  EU  DSO  entity  has  its  seat  shall  have  the  power  to  impose  effective, 

proportionate and dissuasive penalties on those entities where they do not comply with their obligations 

under  this  Directive,  Regulation  (EU)  2019/943  or  any  relevant  legally  binding  decisions  of  the 

regulatory authority or of ACER, or to propose that a competent court impose such penalties. 

(10) the following Article 66a is inserted 

“Article 66a 

Access to affordable energy during an electricity price crisis  

1. 

The Commission may by decision declare a regional or Union-wide  electricity price crisis, if 
the following conditions are met: 

(a) 

(b) 

very high prices in wholesale electricity markets at least two and a half times the average 
price during the previous 5 years which is expected to continue for at least 6 months;  

sharp  increases  in  electricity  retail  prices  of  at  least  70%  occur  which  are  expected  to 
continue for at least 6 months; and 

(c) 

the wider economy is being negatively affected by the increases in electricity prices.  

2. 

3. 

The  Commission  shall  specify  in  its  decision  declaring  a  regional  or  Union-wide  electricity 
price crisis the period of validity of that decision which may be for a period of up to one year.  

Where the Commission has adopted a decision pursuant to paragraph 1, Member States may 
for  the  duration  of  the  validity  of  that  decision  apply  targeted  public  interventions  in  price 
setting  for  the  supply  of  electricity  to  small  and  medium  sized  enterprises.  Such  public 
interventions shall:  

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(a) 

be limited to at most 70% of the beneficiary's consumption during the same period of the 
previous year and retain an incentive for demand reduction; 

(b) 

comply with the conditions set out in Article 5(4) and (7); 

(c)  where relevant, comply with the conditions set out in Paragraph 4. 

4. 

Where the Commission has adopted a decision pursuant to paragraph 1, Member States may 
for the duration of the validity of that decision, by way of derogation from Article 5(7), point 
(c),  when  applying  targeted  public  interventions  in  price  setting  for  the  supply  of  electricity 
pursuant  to  Article 5(6)  or  paragraph  3  of  this  Article,  exceptionally  and  temporarily  set  a 
price for the supply of electricity which is below cost provided that the following conditions 
are fulfilled:  

(a) 

the  price  set  for  households  only  applies  to  at  most  80%  of  median  household 
consumption and retains an incentive for demand reduction; 

(b) 

there is no discrimination between suppliers; 

(c) 

(d) 

suppliers are compensated for supplying below cost; and 

all suppliers are eligible to provide offers for the price for the supply of electricity which 
is below cost on the same basis. 

(11) in Article 71, paragraph 1 is replaced by the following: 

‘1.  Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 

necessary to comply with Article 2 points 8 and 49, Articles 3 and 5, Article 6(2) and (3), Article 7(1), 

point (j) and (l) of Article 8(2), Article 9(2), Article 10(2) to (12), Article 11(3) and (4), Articles 12 to 

24, Articles 26, 28 and  29,  Article 31(1),  (2) and (4) to  (10; Articles 32 to  34 and 36, Article 38(2), 

Articles 40 and 42, point (d) of Article 46(2), Articles 51 and 54, Articles 57 to 58, Article 59(1) points 

(a), (b) and (d) to (y), Article 59(2) and (3), Article 59(5) to (10), Articles 61 to 63, points (1) to (3), 

(5)(b)  and  (6)  of  Article  70  and  Annexes  I  and  II  by  31  December  2020.  They  shall  immediately 

communicate the text of those provisions to the Commission. 

However, Member States shall bring into force the laws, regulations and administrative provisions 

necessary to comply with: 

(a) point (5)(a) of Article 70 by 31 December 2019; 

(b) point (4) of Article 70 by 25 October 2020. 

Member States shall bring into force the laws, regulations and administrative provisions necessary to 

comply  with  Article  2  points  10a,  10b,  15a,  24a,  Article  4,  Article  11(1),  (1a)  and  (2),    Article15a, 

Article 18a, Article 27(1), Article 27a, Article 28a, Article 31(3), Article 40(7), Article 59(1) points (c) 

and (z), Article 59(4) and Article 66a by six months after entry into force of this Regulation. 

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When  Member  States  adopt  those  measures,  they  shall  contain  a  reference  to  this  Directive  or  be 

accompanied by such a reference on the occasion of their official publication. They shall also include a 

statement  that  references  in  existing  laws,  regulations  and  administrative  provisions  to  the  Directive 

repealed  by  this  Directive  shall  be  construed  as  references  to  this  Directive.  Member  States  shall 

determine how such reference is to be made and how that statement is to be formulated.’ 

Amendment  to  Directive  (EU)  2018/2001of  the  European  Parliament  and  of  the  Council  of  11 

December 2018 on the promotion of the use of energy from renewable sources 

Article 3 

Directive (EU) 2018/2001 is amended as follows: 

(1) Article 4(3) is amended as follows: 

 (a) the second subparagraph is replaced by the following:  

‘To  that  end,  with  regard  to  direct  price  support  schemes,  support  shall  be  granted  in  the  form  of  a 

market premium, which could be, inter alia, sliding or fixed. This sentence shall not apply to support 

for  electricity  from  the  renewable  sources  listed  in  Article  19b(2)  of  Regulation  (EU)  2019/944,  to 

which Article 19b(1) of that Regulation applies.’ 

(2) in Article 36, paragraph 1 is replaced by the following: 

‘1.   Member States shall bring into force the laws, regulations and administrative provisions necessary 

to  comply  with  Articles  2  to  13,  15  to  31  and  37  and  Annexes  II,  III  and  V  to IX,  by 30 June 2021. 

However,  Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 

necessary to  comply with Article 4(3), second subparagraph, by [six  months  after entry into force of 

this Regulation]. 

They shall immediately communicate the text of those measures to the Commission. 

When  Member States  adopt  those  measures,  they  shall  contain  a  reference  to  this  Directive  or  be 

accompanied by such a reference on the occasion of their official publication. They shall also include a 

statement  that  references  in  existing  laws,  regulations  and  administrative  provisions  to  the  Directive 

repealed  by  this  Directive  shall  be  construed  as  references  to  this  Directive.  Member States  shall 

determine how such reference is to be made and how that statement is to be formulated.’ 

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Amendments to  Regulation (EU) 2019/942  of the European Parliament and of the Council of 5  June 

2019 establishing a European Union Agency for the Cooperation of Energy Regulators 

Article 4 

Regulation (EU) 2019/942 is amended as follows: 

(1) Article 2 is amended as follows: 

 (a) point (a) is replaced by the following: 

‘(a) issue opinions and recommendations addressed to transmission system operators, the ENTSO for 

Electricity,  the  ENTSO  for  Gas,  the  EU  DSO  Entity,  the  single  allocation  platform  established  in 

accordance with  Regulation  (EU) 2016/1719, regional coordination  centres  and nominated electricity 

market  operators  ,  on  approving  the  methodologies,  terms  and  conditions  in  accordance  with  Article 

4(4),  Article  5(2),  (3)  and  (4);  on  bidding  zones  reviews  as  referred  to  in  Article  5(7);  on  technical 

issues as referred to in Article 6(1); on arbitration between regulators in accordance with Article 6(10); 

related  to  regional  coordination  centres  as  referred  to  in  Article  7(2),  point  (a);  on  approving  and 

amending methodologies and calculations and technical specifications as referred to in Article 9(1); on 

approving and amending methodologies as referred to in Article 9(3); on exemptions as referred to in 

Article  10;  on  infrastructure  as  referred  to  in  Article  11  point  (d);    on  matters  related  to  wholesale 

market integrity and transparency pursuant to Article 12;’ 

(b) point (d) is replaced by the following: 

“ (d) issue individual decisions on the provision of information in accordance with Article 3(2), Article 

7(2),  point  (b),  and  Article  8,  point  (c);  on  approving  the  methodologies,  terms  and  conditions  in 

accordance  with  Article  4(4),  Article  5(2),  (3)  and  (4);  on  bidding  zones  reviews  as  referred  to  in 

Article  5(7);  on  technical  issues  as  referred  to  in  Article  6(1);  on  arbitration  between  regulators  in 

accordance  with  Article  6(10);  related  to  regional  coordination  centres  as  referred  to  in  Article  7(2), 

point (a); on approving  and amending methodologies and calculations  and technical  specifications as 

referred to in Article 9(1); on approving and amending methodologies as referred to in Article 9(3); on 

exemptions  as  referred  to  in  Article  10;  on  infrastructure  as  referred  to  in  Article  11,  point  (d);    on 

matters related to wholesale market integrity and transparency pursuant to Article 12, on approving and 

amending  proposals  from  the  ENTSO  for  electricity  related  to  the  regional  virtual  hubs  pursuant  to 

Article  5(9);  and  on  approving  and  amending  proposals  from  the  ENTSO  for  electricity  and  the  EU 

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DSO entity related to the methodology concerning the data and analysis to be provided as regards the 

flexibility needs pursuant to Article 5(10). ”; 

(2) in Article 3(2), the following fourth subparagraph is added: 

“This  paragraph  shall  also  apply  to  the  single  allocation  platform  established  in  accordance  with 

Regulation (EU) 2016/1719.”; 

(3) in Article 4, the following paragraph 9 is added: 

“9. Paragraphs 6, 7 and  8 shall also apply to the single allocation platform established in accordance 

with Regulation (EU) 2016/1719.”; 

(4) in Article 5(8), the following second subparagraph is added:”;   

ACER  shall  monitor  the  single  allocation  platform  established  in  accordance  with  Regulation  (EU) 

2016/1719. 

(5) In Article 5, the following paragraph 9 is added: 

“9. ACER shall approve and where necessary amend the proposal from the ENTSO for electricity on 

the  establishment  of  the  regional  virtual  hubs  for  the  forward  market  pursuant  to  Article  9(2)  of 

Regulation (EU) 2019/943.” 

(6) In Article 5. the following paragraph 10 is added: 

“10.  ACER  shall  approve  and  where  necessary  amend  the  joint  proposal  from  the  ENTSO  for 

electricity and  the EU DSO entity related to  the methodology concerning the data and analysis to  be 

provided as regards the flexibility needs pursuant to Article 19e(5) of Regulation (EU) 2019/943." 

 (7) in Article 15, the following paragraph 5 is added: 

“5. ACER shall issue a report analysing the national assessments of the flexibility needs and providing 

recommendations  on  issues  of  cross-border  relevance  regarding  the  findings  of  the  regulatory 

authorities pursuant to Article 19e(6) of Regulation (EU) 2019/943.”; 

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Article 5 

Entry into force  

This Regulation shall enter into force on the [xxx] day following that of its publication in the Official 
Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Strasbourg, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 'AGENCIES' 

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53 

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1. 

1.1. 

1.2. 

1.3. 

1.4. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE 

Title of the proposal/initiative 

Policy area(s) concerned 

The proposal/initiative relates to: 

Objective(s) 

1.4.1.  General objective(s) 

1.4.2. 

Specific objective(s) 

1.4.3.  Expected result(s) and impact 

1.4.4. 

Indicators of performance 

1.5. 

Grounds for the proposal/initiative 

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of 

the implementation of the initiative 

1.5.2.  Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g.  coordination 
gains,  legal  certainty,  greater  effectiveness  or  complementarities).  For  the  purposes  of  this 
point 'added value of Union involvement' is the value resulting from Union intervention, which 
is additional to the value that would have been otherwise created by Member States alone. 

1.5.3.  Lessons learned from similar experiences in the past 

1.5.4.  Compatibility  with  the  Multiannual  Financial  Framework  and  possible  synergies  with  other 

appropriate instruments 

1.5.5.  Assessment of the different available financing options, including scope for redeployment 

1.6. 

Duration and financial impact of the proposal/initiative 

1.7.  Method(s) of budget implementation planned 

2. 

MANAGEMENT MEASURES 

2.1.  Monitoring and reporting rules 

2.2.  Management and control system(s) 

2.2.1. 

2.2.2. 

Justification  of  the  management  mode(s),  the  funding  implementation  mechanism(s),  the 
payment modalities and the control strategy proposed 

Information  concerning  the  risks  identified  and  the  internal  control  system(s)  set  up  to 
mitigate them 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio of "control costs ÷ 
value of the related funds managed"), and assessment of the expected levels of risk of error (at 
payment & at closure) 

2.3.  Measures to prevent fraud and irregularities 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected 

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3.2. 

Estimated financial impact of the proposal on appropriations 

3.2.1. 

Summary of estimated impact on operational appropriations 

3.2.2.  Estimated output funded with operational appropriations 

3.2.3. 

Summary of estimated impact on administrative appropriations 

3.2.3.1.  Estimated requirements of human resources 

3.2.4.  Compatibility with the current multiannual financial framework 

3.2.5.  Third-party contributions 

3.3. 

Estimated impact on revenue 

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LEGISLATIVE FINANCIAL STATEMENT 'AGENCIES' 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Regulation (EU) of the European Parliament and of the Council amending Regulation (EU) 
2019/943, Directive (EU) 2019/944, Directive (EU) 2018/2001 and Regulation (EU) 2019/942 
to improve the EU’s electricity market design.  

1.2. 

Policy area(s) concerned 

Policy area: Energy 

Activity: European Green Deal 

1.3. 

The proposal relates to  

X a new action  

 a new action following a pilot project/preparatory action29  

X the extension of an existing action  

 a merger of one or more actions towards another/a new action  

1.4. 

Objective(s) 

1.4.1.  General objective(s)  

See explanatory memorandum 

1.4.2. 

Specific objective(s)  

The following specific objectives focus on those which are addressed by provisions which 
require additional resources for ACER and DG Energy. 

Specific objective No 1: 
Facilitating forward markets. Defining the new forward market trading hubs.  

Specific objective No 2 

Facilitating flexibility solutions, in particular demand response 

Specific objective No 3:  

29 

As referred to in Article 58(2)(a) or (b) of the Financial Regulation. 

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56 

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Ensuring supplier hedging and fair rules as regards suppliers of last resort. Giving customers a 
right to energy sharing. 

EN 

57 

  EN 

1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The additional resources will allow ACER and DG Energy to carry out the tasks necessary to 
fulfil their mandate under EU legislation as per the requirements under this proposal. 

1.4.4. 

Indicators of performance  

Specify the indicators for monitoring progress and achievements. 

See explanatory memorandum as regards monitoring progress and achievements of the 
initiative. 

(a)  Effectiveness  and  timeliness:  indicators  should  allow  to  monitor  performance  by 
providing  information  on  progress  on  a  regular  basis  and  on  achievements  along  the 
programming period. 

(b)  Efficiency:  processes  should  be  optimised  for  collection  and  processing  of  data, 

avoiding unnecessary or duplicative requests for information. 

(c)  Relevance of the indicators and the need to limit the associated administrative burden. 

(d)  Clarity:  indicators  should  be  delivered  in  a  clear  and  understandable  form,  with 
supporting metadata and in a form that facilitates proper interpretation and meaningful 
communication. 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of 

the implementation of the initiative 

The  following  assessment,  to  the  extent  that  it  concerns  ACER,  takes  into  account  the 
estimates of resources needs in 2023 for comparabel tasks as  identified in 2020/2021 by an 
independent consultant. 

Specific objective No 1:  Defining the new forward market trading hubs (Article 9): 

A  new  provision  is  introduced  requiring  ENTSO-E  to  submit  to  ACER  a  proposal  for  the 
establishment  of  virtual  hubs  for  the  forward  market.  Within  6  months  ACER  shall  either 
approve  or  amend  it.  After  the  establishment  of  such  virtual  hubs,  it  can  be  expected  that 
ACER  will  need  to  continue  monitoring  them.  ACER  will  also  have  a  role  in  enforcing 
possible failure of compliance by the single allocation platform with EU legislation. 

ACER 

 The  design  of  such  hub  is  of  critical  importance  for  their  possibility  to  attract  forward 
liquidity  and  replace  the  zonal  products.  The  zone  to  hub  model  represents  a  significant 

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58 

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paradigm  shift  compared  to  the  existing  design.  In  particular,  the  following  new  tasks  will 
have to be performed: 

Design (including detailed studies) on price formation of forward trading hubs (at least Core 
and Nordic, potentially others) as well as the approval of a new methodology of the topic 

Design  (including  detailed  studies)  on  long-term  transmission  rights  products  to  be  offered 
(geographical reach and design) 

Potential decisions on hedging opportunities stemming from the new requirements following 
escalations from NRAs 

Monitoring  activities  linked  to  the  new  hub  design  (LTTR  volumes,  hub  liquidity,  LTTR 
valuation, …)  

Given the increasing importance of forward markets it is estimated that at least 1 FTE will be 
required for work related to virtual hubs and the single allocation platform. 

ENER 

Given  that  forward  markets  will  increase  in  importance  and  complement,  but  not  replace 
electricity  markets  over  shorter  time-frames  (day-ahead,  intraday,  balancing)  it  is  estimated 
that  ensuring  proper  implementation  of  the  new  provisions  will  result  in  new  workload  for 
ENER totalling 1 FTE. 

Specific objective No 2: Facilitating flexibility solutions, in particular demand response 

Every  two  years  the  regulatory  authority  of  each  Member  State  shall  assess  and  produce  a 
report  on  the  need  for  flexibility  in  the  electricity  system  based  on  data  and  analyses  from 
network operators.  ENTSO-E and the EU DSO entity shall coordinate the network operators 
as regards this data and analyses. For this purpose ENTSO-E and the EU DSO shall propose a 
methodology.  Within  6  months  ACER  shall  either  approve  or  amend  it.  The  regulatory 
authorities shall submit  their national  assessments to  ACER. ACER then shall issue a report 
within 12 months. 

Member  States  shall  set  a  national  objective  for  demand  side  response  and  include  them  in 
their  National  Energy  and  Climate  Plans.  Those  Member  States  which  apply  a  capacity 
mechanism  shall  consider  demand  side  response  in  the  design  of  the  capacity  mechanism. 
Other provisions stipulate when financial support can be given to flexibility support schemes 
and design principles for such schemes. 

Also related to this specific objective are new provisions are also introduced related to “peak 
shaving products” and on the use of data from metering devices.  

ACER 

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Workload of ACER for approving or amending the methodology related to data and analysis 
of  flexibility  needs  can  be  expected  to  be  similar  to  the  one  for  approving  of  amending 
ENTSO-E's  draft  methodology  for  the  European  Resource  Adequacy  Assessment,  hence 
requiring 0.75 FTE. Workload of ACER for preparing the report on flexibility every two years 
can  be  expected  to  be  similar  to  the  one  for  the  as  well  biennial  best  practice  report  on 
transmission  and  distribution  tariffs  methodologies  pursuant  to  Article  18(9)  of  Regulation 
(EU)  2019/943,  hence  requiring  0.5  FTE.  Additional  workload  can  be  expected  due  to  the 
impact of facilitating flexibility solutions on assessing resource adequacy: ACER’s workload 
related to the European Resource Adequacy Assessment will likely increase. Furthermore, in 
case  ENTSO-E  or  the  EU  DSO  do  not  comply  with  their  obligations  under  EU  law,  ACER 
may need to request information by Decision pursuant to Article 3(2) or ACER together with 
the national regulators may need to take action pursuant to Articles 4(6) to 4(8) of Regulation 
(EU) 2019/942 may need to be taken. Therefore, it is estimated that overall 2 FTE are needed 
for implementing specific objective 2. 

ENER 

Specific objective 2 will make the Commission’s assessment of capacity mechanisms (both 
the required preceeding implementation plan as well as the State aid process) more complex. 
Furthermore, Member States will report national objectives for demand side response under 
the National Energy and Climate Plan process, informatino which will need to be processed by 
the Commission. Therefore, it is estimated that this will create new workload for ENER 
totalling 1 FTE. 

Specific objective No 3: Ensuring supplier hedging and fair rules as regards suppliers of 
last resort. Giving customers a right to energy sharing. 

ACER 

Not applicable 

ENER 

Specific objective No 3 includes new rules in the Electricity Directive whose proper 
transposition and implementation by Member States need to be monitored by the Commission. 
Furthermore, given that it directly concerns consumers, may lead to a significant number of 
complaints, letters etc. Therefore, it is estimated that this will create new workload for ENER 
totalling 1 FTE. 

Overhead 

ACER 

Those additional FTE as described above do not include overhead. One  additional FTE, 
preferably an AST replacing interim staff employed in the Corporate Services Department. 
ENER 

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Not applicable 

1.5.2.  Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g.  coordination 
gains,  legal  certainty,  greater  effectiveness  or  complementarities).  For  the  purposes  of  this 
point 'added value of Union involvement' is the value resulting from Union intervention which 
is additional to the value that would have been otherwise created by Member States alone. 

See explanatory memorandum 

1.5.3.  Lessons learned from similar experiences in the past 

The experience with previous legislative proposals has shown that staffing needs of ACER are 
easily underestimated. In order to avoid a repeat of the experience with the third internal 
market package of 2009, where underestimating the staffing needs resulted in structural 
understaffing (only comprehensively solved starting with the EU budget for 2022), for this 
proposal staffing needs are estimated for several years into the future. 

1.5.4.  Compatibility  with  the  Multiannual  Financial  Framework  and  possible  synergies  with  other 

appropriate instruments 

This initiative is included in the Commission Work Programme for 2023 as part of the 
European Green Deal. 

1.5.5.  Assessment of the different available financing options, including scope for redeployment 

The FTE are needed for additional tasks while existing tasks will not decrease in the 
foreseeable future.  

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1.6. 

Duration and financial impact of the proposal/initiative 

 limited duration  

 Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

 Financial impact from YYYY to YYYY 

X unlimited duration 

Implementation with a start-up period from YYYY to YYYY, 

followed by full-scale operation. 

1.7.  Method(s) of budget implementation planned30  

X Direct management by the Commission through 

 executive agencies  

 Shared management with the Member States  

X Indirect management by entrusting budget implementation tasks to: 

 international organisations and their agencies (to be specified); 

the EIB and the European Investment Fund; 

X bodies referred to in Articles 70 and 71; 

 public law bodies; 

 bodies governed by private law with a public service mission to the extent that they are 
provided with adequate financial guarantees; 

 bodies governed by the private law of a Member State that are entrusted with the 
implementation of a public-private partnership and that are provided with adequate financial 
guarantees; 

 bodies or persons entrusted with the implementation of specific actions in the CFSP 
pursuant to Title V of the TEU, and identified in the relevant basic act. 

Comments 

30 

Details  of  budget  implementation  methods  and  references  to  the  Financial  Regulation  may  be  found  on  the 
https://myintracomm.ec.europa.eu/corp/budget/financial-rules/budget-
BUDGpedia 
implementation/Pages/implementation-methods.aspx 

site: 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

According to its financial regulation, ACER has to provide, in the context of its Programming 
Document, an annual Work Programme including details on resources, both financial and 
human, per each of the activities carried out. 

ACER reports monthly to DG ENER on budget execution, including commitments, and 
payments by budget title, and vacancy rates by type of staff. 

In addition, DG ENER is directly represented in the governance bodies of ACER. Through its 
representatives in the Administrative Board, DG ENER will be informed of the use of the 
budget and the establishment plan at each of its meetings during the year. 

Finally, also in line with financial rules, ACER is subject to annual requirements for reporting 
on activities and the use of resources through the Administrative Board and its Annual 
Activity Report. 

The tasks directly implemented by DG ENER will follow the annual cycle of planning and 
monitoring, as implemented in the Commission and the executive agencies, including 
reporting the results through the Annual Activity Report of DG ENER. 

2.2.  Management and control system(s)  

2.2.1. 

Justification  of  the  management  mode(s),  the  funding  implementation  mechanism(s),  the 
payment modalities and the control strategy proposed 

While ACER will have to develop new expertise, it is nevertheless most cost-effective to 
allocate the new tasks under this proposal to an existing agency which already works on 
similar tasks. 

DG ENER established a control strategy for managing its relations with ACER, part of the 
2017 Internal Control Framework of the Commission. ACER revised and adopted its own 
Internal Control Framework in December 2018. 

2.2.2. 

Information  concerning  the  risks  identified  and  the  internal  control  system(s)  set  up  to 
mitigate them 

Main risk are wrong estimates as regards the workload created by this proposal, given that it 
introduces new tasks. This risk needs to be accepted, since, as experience has shown, if 
additional resources needs are not included in the initial proposal, it is very difficult to remedy 
this situation later on. 

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That the proposal includes several new tasks mitigates this risk, since while the workload of 
some future tasks may be underestimated, others may be overestimated, providing scope for 
possible future redeployment. 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio of "control costs ÷ 
value of the related funds managed"), and assessment of the expected levels of risk of error (at 
payment & at closure)  

The allocation of additional tasks to the existing mandate of ACER is not expected to generate specific 
additional controls at ACER, therefore, the ratio of control costs over value of funds managed will 
remain unaltered. 

Similarly, the tasks assigned for DG ENER will not result in additional controls or change in the ratio 
of control costs. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy. 

ACER applies the anti-fraud principles of decentralised EU Agencies, in line with the 
Commission approach. 

In March 2019 ACER adopted a new Anti-Fraud Strategy, repealing Decision 13/2014 of the 
Administrative Board of ACER. The new strategy, spanning over a three-year period, is based 
on the following elements: an annual risks assessment, the prevention and management of 
conflicts of interest, internal rules on whistleblowing, the policy and procedure for the 
management of sensitive functions, as well as measures related to ethics and integrity. 

DG ENER also adopted a revised Anti-fraud Strategy (AFS) in 2020. The ENER AFS is based 
on the Comission Anti-fraud Strategy and a specific risk assessment carried out internally to 
identify the areas most vulnerable to fraud, the controls already in place and the actions 
necessary to improve DG ENER’s capacity to prevent, detect and correct fraud. 

Both the ACER Regulation and the contractual provisions applicable to public procurement 
ensure that audits and on-the-spot checks can be carried out by the Commission services, 
including OLAF, using the standard provisions recommended by OLAF. 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

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Heading of 
multiannual 
financial 
framework 

Number  

Budget line 

Type of  
expenditure 

Contribution  

Diff./Non-
diff.31 

from 
EFTA 
countries
32 

from 
candidate 
countries 
and 
potential 
candidates
33 

From 
other 
third 
countries 

other assigned 
revenue  

02 

02 10 06  and ITER budget line 

Diff./Non-
diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

Diff./non-
diff. 

from 
EFTA 
countries 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates 

from 
other 
third 
countries 

other assigned 
revenue  

[XX.YY.YY.YY] 

YES/NO  YES/NO  YES/NO 

YES/NO 

31 
32 
33 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

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3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial  
framework  

01 

Single Market, Innovation and Digital 

EUR million (to three decimal places) 

ACER 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

Title 1: 

Title 2: 

Title 3: 

TOTAL appropriations 
for ACER 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(1a) 

(2a) 

(3a) 

(3b) 

=1+1a 
+3a 

=2+2a 

+3b 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

0,684 

2,736 

2,736 

2,736 

2,736 

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Heading of multiannual financial  
framework  

7 

‘Administrative expenditure’ 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)  

TOTAL 

EUR million (to three decimal places) 

DG: ENER 

 Human Resources  
 Other administrative expenditure  

0,513 

0,513 

0,513 

0,513 

TOTAL DG ENER 

Appropriations  

0,513 

0,513 

0,513 

0,513 

TOTAL appropriations 
under HEADING 734 
of the multiannual financial framework  

(Total commitments = 
Total payments) 

0,513 

0,513 

0,513 

0,513 

2,052 

2,052 

2,052 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EUR million (to three decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 7 
of the multiannual financial framework  

Commitments 

Payments 

1,197 

1,197 

1,197 

1,197 

1,197 

1,197 

1,197 

1,197 

4,788 

4,788 

34 

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by  appropriations  from  the  DG  that  are 
already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be 
granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints. 

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EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.2.  Estimated impact on [body]'s appropriations  

 The proposal/initiative does not require the use of operational appropriations  

 The proposal/initiative requires the use of operational appropriations, as explained below: 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

Amounts in EUR million (to three decimal places) 

OUTPUTS 

  Cost 
o
N

o
N

Cost 

o
N

Cost 

  Cost 
o
N

  Cost 
o
N

  Cost 
o
N

Total 
No 

Total 
cost 

Indicate 
objectives and 
outputs  

 

Type
35 

Avera
ge 
cost  N

  Cost 
o

SPECIFIC OBJECTIVE No 136… 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

SPECIFIC OBJECTIVE No 2 ... 

- Output 

Subtotal for specific objective No 2 

TOTAL COST 

Where applicable, amounts reflect the sum of the Union contribution to the agency and other revenue of the agency (fees and charges).

35 
36 

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

68 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on ACER's human resources  

3.2.3.1.  Summary  

 The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

X  The  proposal/initiative  requires  the  use  of  appropriations  of  an  administrative 

nature, as explained below: 

EUR million (to three decimal places) Where applicable, amounts reflect the sum of the Union contribution to 
the agency and other revenue of the agency (fees and charges). 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

0,513 

0,513 

0,513 

0,513 

2,052 

0,171 

0,171 

0,171 

0,171 

0,684 

Temporary agents (AD 
Grades) 

Temporary agents 
(AST grades) 

Temporary agents 
(AST/SC grades) 

Contract staff 

Seconded National 
Experts 

TOTAL 

0,684 

0,684 

0,684 

0,684 

2,736 

Staff requirements (FTE): 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

3 

1 

3 

1 

3 

1 

3 

1 

3 

1 

Temporary agents (AD 
Grades) 

Temporary agents 
(AST grades) 

Temporary agents 
(AST/SC grades) 

Contract staff 

Seconded National 
Experts 

EN 

69 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL 

4 

4 

4 

4 

4 

Planned recruitment date for the FTEs is the 1 January 2024.  

EN 

70 

  EN 

 
 
3.2.3.2.  Estimated requirements of human resources for the parent DG 

 The proposal/initiative does not require the use of human resources.  

  The proposal/initiative requires the use of human resources, as explained below: 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

Enter as many years as 
necessary to show the 
duration of the impact (see 
point 1.6) 

3 

3 

3 

3 

 Establishment plan posts (officials and 

temporary staff) 

20 01 02 01 and 20 01 02 02 
(Headquarters and Commission’s 
Representation Offices) 

20 01 02 03 (Delegations) 

01 01 01 01 (Indirect research) 

10 01 05 01 (Direct research) 

 External staff (in Full Time Equivalent 
unit: FTE)37 

20 02 01 (AC, END, INT from the 
‘global envelope’) 

20 02 03 (AC, AL, END, INT and 
JPD in the Delegations) 

(1) 

(2) 

Budget 
line(s) 
(specify) 
38 

- at 
Headquarters39 

- in 
Delegations  

01 01 01 02 (AC, END, INT – 
Indirect research) 

10 01 05 02 (AC, END, INT – 
Direct research) 

Other budget lines (specify) 

TOTAL 

3 

3 

3 

3 

37 

38 
39 

AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff; JPD = 
Junior Professionals in Delegations.  
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 
Mainly  for  the  EU  Cohesion  Policy  Funds,  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD) and the European Maritime Fisheries and Aquaculture Fund (EMFAF).   

EN 

71 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
The human resources required will be met by staff from the DG who are already assigned to 
management of the action and/or have been redeployed within the DG, together if necessary 
with any additional allocation which may be granted to the managing DGunder the annual 
allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary staff 

Three additional FTEs (ADs) are needed for the following additional 
tasks: 

  To ensure proper implementation of the new provisions  
  Furthermore, Member States will report national objectives for 

demand side response under the National Energy and Climate Plan 
process. This information will need to be processed by the 
Commission.  

  To monitor the proper transposition and implementation by Member 
States of the new rules in the Electricity Directive. Furthermore, 
given that it directly concerns consumers, it may lead to a significant 
number of complaints, letters etc.  

External staff 

N/A 

EN 

72 

  EN 

 
 
3.2.4.  Compatibility with the current multiannual financial framework  

 The proposal/initiative is compatible the current multiannual financial framework. 

X  The proposal/initiative will entail reprogramming of the relevant heading in the multiannual 

financial framework. 

The initiative has been triggered by the current energy crisis and hence was not factored in 
when the MFF headings were calculated. This specific initiative being new, it will require 
reprogramming both for the line of the contribution to ACER and the line that will support 
additional work within DG ENER.The budgetary impact on ACER as described in this 
legislative financial statement will be offset by a compensatory reduction on programmed 
spending in the ITER budget line.  

 The  proposal/initiative  requires  application  of  the  flexibility  instrument  or  revision  of  the 

multiannual financial framework40. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts. 

3.2.5.  Third-party contributions  

The proposal/initiative does not provide for co-financing by third parties.  

The proposal/initiative provides for the co-financing estimated below: 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6) 

Total 

EUR million (to three decimal places) 

Specify the co-financing 
body  

TOTAL appropriations 
co-financed  

40 

See Articles 12 and 13 of Council Regulation (EU, Euratom) No 2093/2020 of 17 December 2020 laying down the 
multiannual financial framework for the years 2021 to 2027. 

EN 

73 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.3. 

Estimated impact on revenue  

X  The proposal/initiative has no financial impact on revenue. 

 The proposal/initiative has the following financial impact: 

 

 

on own resources  

on other revenue  

 please indicate, if the revenue is assigned to expenditure lines  

Appropriation
s available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

EUR million (to three decimal places) 

Impact of the proposal/initiative41 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected. 

Specify the method for calculating the impact on revenue. 

41 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. 
gross amounts after deduction of 20 % for collection costs. 

EN 

74 

  EN