François Beaude, Strategy Lead at ACER, talks about the European energy market reform and its challenges for EU member states. He also discusses the importance of expanding European interconnectors, as a basis for a stable, flexible energy market.
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Major progress has been made regarding the integration of energy markets within the EU, in particular for short-term markets. This progress led to monetary savings for consumers and to increase resilience to supply or demand shocks.
The energy market reform (e.g., RED III) should be implemented by the EU member states. In which areas do you see the main technical, regulatory and political challenges by the implementation of the energy market reform by the EU member states?
The reform will help accelerate the deployment and integration of more renewable energy sources in the energy system, and enhance protection against market manipulation, promoting stable and predictable energy prices.
We see the following key implementation challenges:
- Addressing the implementation backlog (from the 2019 Clean Energy Package and even before, e.g. regarding capacity for cross-border trade) to deliver the related benefits, and in parallel to start implementing the recent energy market reform.
- Ensuring that adequate (clean) flexibility complements renewable energy and hence accommodates the energy transition, while leveraging the complementarities of the various national energy systems and taking advantage of digitalisation to moderate the related costs for consumers. This requires stepping up cooperation across Member States, sharing the costs/benefits across countries, and anchoring an institutional framework that guarantees the free flow of energy across borders (and robust enforcement against any infringement).
- Ensuring proper surveillance of electricity markets to maintain trust that competitive markets deliver affordable prices for consumers (even when facing price volatility, see below).
The European energy market is currently highly fragmented. What recommendations can ACER give regarding the different grid capacities in the various EU member states, more particularly concerning remote regions in Europe (e.g. Southern and Eastern Europe)?
Major progress has been made regarding the integration of energy markets within the EU, in particular for short-term markets. This progress led to monetary savings for consumers and to increase resilience to supply or demand shocks.
Besides actual grid build-out, ensuring sufficient availability of the grid for cross-border trading, (an obligation for transmission system operators) is also crucial. However, a lack of electricity capacity for cross-border trading on some borders persists, e.g. in Southern and Eastern Europe. These countries thus do not fully benefit from cheap renewable electricity from their neighbours, and may have more difficulty to manage consumption variations (especially peaks).
Various studies (e.g., ACER 2024; EMBER 2023) have shown that the expansion of European interconnectors is the most important basis for ensuring a flexible and stable energy market. How do the EU member states plan for expanding interconnectors align with the EU Commission's objectives in terms of interconnection?
Making capacity (in line with the minimum 70% target1) available for cross-border electricity trade is a prerequisite for delivering the benefits of an integrated EU market. ACER’s 70% report finds that there is significant room for increasing cross-border capacity by optimising the operations of existing (and future) grid and by better planning future grids.
Besides, digitalisation (e.g. real-time grid monitoring and control) increases the capacity of existing grids and moderates future grid investments (and the related increases in network tariffs).
Beyond increasing the capacity of the existing grid, it is important that interconnectors are developed where such needs are identified, starting where the benefits are the highest. In grid planning, grid operators should
- provide more transparency (about risks),
- consider innovative technologies that can be cheaper and faster alternatives to building new lines, and
- make sure that the needs identified are properly addressed.
1See article 16(8) of the Electricity Regulation
About
François Beaude
Strategy Lead | ACER
François Beaude leads the strategy of the EU agency for the cooperation of energy regulators (ACER). Previously, he held various roles at ACER and at the DG Competition of the European Commission (working on renewable support schemes, security of energy supply, and hydrogen-related measures). François also worked for RTE, a French electricity grid operator, on various topics related to how to integrate renewables and new technologies into the electric system and markets. He holds a Master in Engineering from Ecole Polytechnique and a Master of Science in Nuclear Engineering and Engineering Physics from the University of Wisconsin, Madison.
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