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Summaries of EU Legislation

    Cross-border exchanges in electricity

     

    SUMMARY OF:

    Regulation (EU) 2019/943 on the internal market for electricity

    WHAT IS THE AIM OF THE REGULATION?

    • It revises the rules and principles of the internal EU electricity market to ensure it is well-functioning, competitive and undistorted.
    • It also supports the decarbonisation of the EU’s energy sector and the removal of barriers to cross-border trade in electricity.
    • The regulation is part of the Clean Energy for all Europeans package.

    KEY POINTS

    Principles

    The regulation set outs a number of principles on which electricity markets should be operated including to:

    • encourage free price formation and avoid actions which prevent price formation on the basis of supply and demand;
    • facilitate the development of more flexible generation, sustainable low-carbon generation and more flexible demand;
    • provide opportunity for consumers to act as market players in the energy market and in the energy transition;
    • permit the decarbonisation of the electricity system, including making it possible to integrate electricity produced from renewable energy sources and providing incentives for energy efficiency;
    • provide incentives for investment in production, in particular long-term investment in a low-carbon and sustainable electricity system;
    • facilitate the progressive removal of obstacles to cross-border flows of electricity between bidding zones* or EU countries and to cross-border transactions on electricity and related service markets;
    • allow the development of demonstration projects in sustainable, safe and low-carbon energy sources, technologies or systems to be carried out and used for the benefit of society.

    Just transition

    The European Commission must help EU countries to address the social and economic impacts of the transition to clean energy including by supporting national strategies to reduce the extraction of coal and other solid fossil fuels.

    Network access and capacity management

    • EU countries must take all appropriate measures to remedy congestion*.
    • Bidding zones should therefore be defined in such a way as to ensure market liquidity, efficient congestion management and overall market efficiency.
    • The European Network of Transmission System Operators for Electricity should report every 3 years on structural and other major physical congestion within and between bidding areas, including the location and frequency of such congestion.
    • Any EU countries with an identified structural congestion would then decide, in cooperation with its transmission system operators*, either to establish national or multinational action plans in order to increase cross-border capacity available for trade or to revise or amend its bidding zone configuration.

    Capacity mechanism

    • The regulation set out the conditions under which EU countries could set up capacity mechanisms* and the principles for creating them.
    • These mechanisms aim to ensure that electricity supply is sufficient during peak periods by remunerating resources for their availability. They should be temporary and designed to address an identified problem of resource adequacy. They should be open to cross-border participation.
    • A European generation adequacy assessment is introduced to verify if the introduction of capacity mechanisms is justified. EU countries introducing capacity mechanisms also need to notify implementation plans to the Commission to improve market functioning.
    • An emission limit of 550 g of fossil CO2 per kWh of electricity is put in place. New power plants that emit more than that and start commercial production after the regulation comes into force are no longer able to participate in capacity mechanisms.
    • Existing power plants emitting more than 550 g of fossil CO2 per kWh and an average of 350 kg of CO2 per year per kW installed will not be able to participate in capacity mechanisms after 1 July 2025.
    • Capacity contracts concluded before 31 December 2019 are not be affected by the new rules.

    Regional coordination centres

    • These centres support the regional coordination of transmission system operators.
    • They replace the existing Regional Security Coordinators, but have additional tasks related to system operation, market operation and risk preparedness.
    • The regulation also creates an EU distribution system operators (DSOs)* entity working in the common interest of the EU.

    Repeal

    Regulation (EU) 2019/943 repeals Regulation (EC) No 714/2009 (see summary on Cross-border exchanges in electricity) with effect from 31 December 2019.

    FROM WHEN DOES THE REGULATION APPLY?

    It applies from 1 January 2020.

    BACKGROUND

    For more information, see:

    KEY TERMS

    Congestion: a situation in which all requests from market participants to trade between network areas cannot be accommodated because they would significantly affect the physical flows on network elements which cannot accommodate those flows.
    Bidding zone: the largest geographical area within which market participants are able to exchange energy without capacity allocation.
    Transmission system operator: a person who is responsible for operating and developing the electricity transmission system in an area, and its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity.
    Capacity mechanism: a temporary measure to ensure the achievement of the necessary level of resource adequacy by remunerating resources for their availability, excluding measures relating to ancillary services or congestion management.
    Distribution system operator: a person responsible for operating and developing the electricity distribution system in an area, and its interconnections with other systems, and for ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity.

    MAIN DOCUMENT

    Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ L 158, 14.6.2019, pp. 54-124)

    RELATED DOCUMENTS

    Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC (OJ L 158, 14.6.2019, pp. 1-21)

    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 (OJ L 158, 14.6.2019, pp. 22-53)

    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 and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, pp. 125-199)

    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, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, pp. 1-77)

    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 (OJ L 328, 21.12.2018, pp. 82-209)

    Directive (EU) 2018/844 of the European Parliament and of the Council of 30 May 2018 amending Directive 2010/31/EU on the energy performance of buildings and Directive 2012/27/EU on energy efficiency (OJ L 156, 19.6.2018, pp. 75-91)

    Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, pp. 1-56)

    Successive amendments to Directive 2012/27/EU have been incorporated into the original text. This consolidated version is of documentary value only.

    Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (OJ L 153, 18.6.2010, pp. 13-35)

    See consolidated version.

    last update 25.07.2019

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