Opinions split on timeline to apply new EU electricity balancing rules

Published on the ICIS Dashboard at 06:30

Whether the six-year timeline to implement rules that would harmonise balancing systems across the EU should be binding or not is a point of contention in the drafting of the code.

The six-year timeline to implement the network code on balancing should not be binding, given the task’s complexity, the European Network of Transmission System Operators for electricity (ENTSO-E) has said after resubmitting its draft of the code to ACER in September ( see EDEM 17 September 2014 ).

ACER has three months to assess the updated draft of the network code. ENTSO-E reworked its draft after ACER criticised the previous version, among other things, for “not respecting” the timelines proposed in its original guidelines. ACER also said that the previous draft had partially introduced a “legally unenforceable framework”, based on voluntary action, “that is not always conducive to” integrating the bloc’s internal electricity market.

ENTSO-E has addressed most of the points ACER raised in its latest drat code version, but the commitment to fixed timelines still has to be balanced against the complexity of the task involved in creating a harmonised European balancing market, the TSO body said.

Complex task ahead

The Agency for the Cooperation of Energy Regulators (ACER) acknowledges that the network code on balancing is complex. The code specifically aims to increase the use of cross-border balancing energy, requiring harmonised national balancing markets that currently differ significantly in design. The novelty of the task, adds to the challenge.

Unlocking greater use of cross-border energy requires standardising and harmonising key elements such as balancing products, balancing energy pricing and imbalance pricing. This step is laid out in four different mechanisms.

These mechanisms, to facilitate the cross-border exchange of balancing energy, are supposed to be implemented regionally within six years after the network code comes into force, culminating in a so-called European integration model.

“Given the low level of harmonisation [among national balancing markets], the innovative aspect of these projects, and the complexity of the task ahead, it is at this stage too early to commit to such a deadline,” an ENTSO-E spokeswoman said by email on Tuesday.

“The [six-year] timeline might be met. Making it binding, however, presents the risk that the European industry will either suffer from an unnecessary resource burden, or worse alter the quality of the final mechanisms,” she added.

The European integration model is supposed to offer TSOs a single European platform for “different types of balancing energy” while accounting for transmission capacity differences between areas, according to ENTSO-E.

Assuming a 12-month period for comitology, when the European Commission scrutinises the details, the network code could come into force by the end of 2015 and be implemented six years later, by 2021.

Procurement timeframe

The potential timeframe for procuring balancing capacity also remains unresolved. ACER has recommended that as much balancing capacity as possible should be sourced short term, while ENTSO-E has proposed allowing TSOs to buy balancing capacity up to two years ahead.

ENTSO-E wants to give European countries the option to procure balancing energy under a short-term one-month timeframe, but also under longer term periods. ENTSO-E expects most member states to chose the one-month timeframe, but “making this binding will require significant investments and create extra costs in some smaller [countries],” the spokeswoman by email.

While such additional costs would have to be passed onto consumers via electricity tariffs, giving TSOs and balancing service providers longer time frames to work under without significantly impacting the final model’s efficiency, she added. Martin Degen