The role of fossil fuels in the electricity system is diminishing as renewables expand, but delays in implementing changes

in electricity market design are hampering flexibility. This is one of the conclusions reached by the EU’s Agency for

Cooperation in Energy Regulation (ACER) in its annual report on the integration of the EU wholesale electricity market.

ACER emphasizes the need to improve the flexibility of the electrical system in order to achieve an efficient energy transition.

ACER’s EU Electricity Market Monitoring Report: progress to 2024 assesses progress in the integration of the EU electricity

market across all market timeframes (forward, daily and intraday); and highlights challenges in balancing market integration,

forward market development, and the slow progress in the implementation of the methodology for defining the operation

of the daily and intraday markets.

The paper also describes ACER’s proposals and efforts to improve electricity market efficiency, infrastructure investment and

utilization, and flexibility through demand response. In addition, for the first time, it is accompanied by three interactive

dashboards on key market indicators, balance data and long-term transmission rights (LTTR) data.

EU electricity market

The report shows that ACER reported in March 2024 on the frequency of negative electricity prices in the EU, while in June it

warned that the cost of congestion management on the EU grid will continue to increase and will reach €4 billion by 2023.

In this sense, ACER emphasizes the importance of improving interregional trade capacity.

In turn, the ACER report emphasizes the need to increase the flexibility of the power system in order to achieve an efficient

energy transition. The expansion of renewable energy sources is emphasized. However, delays in the implementation of

market design changes hinder flexibility: 27% of market design rules (methods, terms and conditions) are delayed in

implementation.

Regarding balancing market integration, the report notes that it will still be limited in 2023. Only four Member States’ Transport

System Operators (TSOs) have joined the balancing platforms that will be operational in 2022. In this regard, ACER urges more

TSOs to join the balancing energy platform, emphasizing that more participation could expand interregional exchanges and

reduce the incidence of high balancing tariffs.

In response to the recommendations, ACER suggests a proactive approach to further integrate energy markets and strengthen

linkages; prioritizing energy infrastructure investments and their use in an efficient way to ensure that each MW installed is fully

utilized. It also emphasized that improving long-term investment structures and ensuring better market integration would

promote Europe’s energy transition and economic growth.