While most of Europe’s wholesale gas markets are functioning efficiently, there are still difficulties to be ironed out for the electricity and retail energy markets, according to the latest annual report on the monitoring of the European Union’s electricity and natural gas markets, published on Wednesday 28 October by the European Agency for the Cooperation of Energy Regulators (ACER).
Electricity
In particular, the paper identifies insufficient availability of cross-border capacity as one of the main obstacles to further integration of wholesale electricity markets.
There is thus a significant gap between the margin available for cross-border trade and the minimum target of 70% required by the European regulation (2019/943) on the internal market for electricity, ACER stresses.
According to this regulation, transmission system operators must provide market players with at least 70% of transmission capacity for cross-border trade.
Another major obstacle highlighted by the document: the recurrent delays in the implementation of the ‘Core FB MC’ market coupling project involving 13 Central European Member States.
“There is an urgent need to finalise this coupling project (...) and the pending integration of the various market coupling projects that still coexist”, ACER emphasises, while also advocating a more coordinated approach to ensure security of supply.
Nevertheless, compared to 2018, the level of electricity price convergence was generally higher in 2019, indicating progress in the integration of wholesale electricity markets.
Gas
As far as gas is concerned, the report estimates that 75% of the gas consumed benefits from well-integrated markets.
It also points to the risk of certain infrastructure becoming ‘stranded assets’, given the EU’s energy decarbonisation targets.
“Particular caution should be used regarding public financial support, for example for PCI projects (‘projects of common interest’), which must from now on critically include the sustainability criteria to assist the gas decarbonation transition”, the report says.
Recalling that renewable gases currently account for less than 4% of EU gas consumption, the paper points out that much work remains to be done to make the EU’s gas grid hydrogen-ready, with 65% of Member States not allowing blending of hydrogen with methane.
In conclusion, ACER underlines that, although important progress has been made, the EU internal market for energy is still far from being truly integrated.
To consult the report: https://bit.ly/2HOqjZs (Original version in French by Damien Genicot)