電力市場設(shè)計-適合凈零 Electricity market design -FIT FOR NET ZERO - Eurelectric policy recommendations 2023

Electricitymarketdesign

FITFORNETZERO

Eurelectricpolicyrecommendations

KnowledgePartner

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Subtitle

Authors

ExecutiveSummary

Thetransitiontowardsanet-zeroeconomyby2050requiressteppingupthevolumeofinvestmentacrosstheenergysectorandendusesectors,whileensuringbetterengagementandprotectionopportunitiesforconsumers.Thisstudyaimstoaddressthesechallengesandcontributetotheongoingdebateaboutelectricitymarketdesigntomakeitfitfortheenergytransition.

TheenergycrisistriggeredbytheconflictinUkrainehasdemonstratedtheresilienceandbenefitsofanintegratedEuropeanmarket.Yet,thecrisishasalsohighlightedsomeofthegapsinthecurrentmarketdesignandtheneedtopassonthebenefitsofrenewables’andotherlow-carbontechnologies’stablegenerationcostsmoredirectlytoconsumers.

Inthisreport,wepresentananalysisofthekeygapsinthecurrentmarketdesignwithrecommendationstocompletethesetofexistingmarketstosupportanefficienttransitiontowardnetzerooverthenextdecades.Themarketdesignreformwillneedtopreservethecost-efficiencyandnationalandcross-bordercompetitiondeliveredbytheinternalEUenergymarketbybuildingonthecurrentmarketframework.

Policyrecommendationsputforwardinthisreportfocus(i)ontheproperimplementationofexistingEUlegislationsandregulations,(ii)ontheremovalofbarriersandobstaclesand(iii)onmarket-basedsolutionstoreinforceincentivesforstakeholderstocontributetothechallengesfacedbythepowersystemandtoachievethetransitiontowardsanet-zeroeconomy.Theserecommendationswerecarefullydefinedtofosterconsumerengagement,maintaintheefficiencyofpricesignals,andimprovetransparency,liquidityandcompetitionforalltimeframes.Onthecontrary,measuresthatwouldbedetrimentaltotheseobjectiveswouldbecounterproductiveandshouldbeavoided.

Toreachtheserecommendations,thestudystartedinJune2022andhasfollowedastructuredandinteractiveapproachtoanalysethekeygapsinthecurrentmarketdesign,andtoidentifypotentialsolutions.ThestudyisbuiltuponmanyinteractionswithEurelectric’smembersaswellasexternalstakeholders.

Thesepolicyrecommendationsarestructuredinthreemainpillars:(i)aconsumercontractingandengagementframeworkbasedonenhancedforwardhedgingopportunitiesandretailpricestructures,(ii)aninvestmentframeworkunderpinnedbyenhancedlong-termhedging/contractingopportunities,and(iii)aframeworktocoordinatethefuturesystemneedstomeetsecurityofsupplyandpolicyobjectives.

Anenhancedcustomercontractingframework–enablingsufficientpossibilitiesforgenerators,customers,andsupplierstohedgeandcontract,includingoverthelong-term–wouldbringthebenefitsofrenewableenergysources(RES)andlow-carbongenerationmoredirectlytoconsumers,whilestillprovidingefficientshort-termsignalsfosteringactivedemandparticipationinshort-termmarkets.Thisenhancedhedgingframeworkwillberequiredto:

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1.Guaranteeadequateinformationforconsumersandsensibilisationtoriskssotheymaycommitforlongerperiods;

2.Ensuresuppliers’resiliencetoavoidrapid,unexpectedmarketexitsandconsumerslosingtheirsuppliersunexpectedly;

3.Enhancehedgingopportunitiestoprotectconsumersagainstmedium-/long-termpricevolatility(beyondoneyear);and

4.Empowerconsumersfurtherandfacilitatedemand-sideresponse.

Amarket-basedinvestmentframeworkisnecessarytostepupdeploymentofbothrenewablesandlow-carbontechnologies,aswellasfirmandflexibleresources(includingdemand-sideresponseandstorage),andthesupportingnetworkinfrastructure.TheframeworkforRESandlow-carboninvestmentshouldallowinvestorstochooseorcombinewhethertoenterpublicde-riskingcontracts,toenterprivatepowerpurchaseagreements(PPAs)orotherformsofprivatecontracts,ortoparticipateintheelectricitymarketdirectly.Theinvestmentframeworkshouldproviderevenuestabilisationopportunitiesthoughlong-termcontractstofosterinvestmentandreducefinancingcostswhilepreservingeffectiveincentivestoparticipateintheforward,spot,andbalancingmarkets.Differenttypesofmeasuresidentifiedtoenhancelong-termcontractinginclude:

1.Aroleforcapacitymechanismsasacorepartofthemarketdesigntoensureadequacyandsecurityofsupply,andfacilitatingtheirimplementationforMemberStatesthatwouldoptforsuchmechanism;

2.AprivateframeworkforRESandlowcarboncontracting,usuallyreferredtoasPPAs,whichwouldaimatremovingbarrierstoPPAsandimprovingtransparencyandstandardisation,andpotentiallyreducecounterpartyrisksandactivelydrivedemandifMembersStateselecttoprovideactivesupport;

3.ApublicframeworkforRESandlow-carboninvestmentwiththeevolutionofRESsupportschemestowardde-riskingschemesthatshouldbedesignedtobringthebenefitsoflong-termcontractingtoconsumersandtominimisedistortionsinthemarket;and

4.Facilitatinghedgingthroughtheimprovementofforwardmarketsbye.g.,removingbarrierstohedgingonforwardmarkets.

Last,anenhancedframeworktocoordinatetheidentificationofthefuturesystemneedsisrequiredforthetimelydevelopmentofsourcesofflexibleandfirmpower,aswellaskeynetworksandinfrastructuresalongsidethegrowthofcleantechnologies.Newopportunitieswillemerge,bothonthesupplysidewithnewstoragetechnologies,andonthedemandsidewithnewflexibleloadsfromtheelectrificationofthetransport,industry,andbuildingssectors.Anenhancedframeworkforassessing,inaforward-lookingandinaholisticway,theevolutionofsystemneedsisthereforenecessarytoprovidevisibilityformarketparticipantsandnetworkoperators,by:

1.Expandingthescopeofsystemneedsassessmenttohavea‘wholesystem’perspective,toincludewidersystemneeds(network,firmcapacity,flexibility),cross-sectorassessmentsandforalongertimeframe,suchas2040and2050;

2.Improvingthecurrentmethodologiesusedinsystemneedsassessment,tobetteradapttoachangingenergysystem;and

3.Reviewingthegovernancearrangementstoconductthesystemneedsassessment,accountingforcross-sector,distributionlevel,stakeholderinputs.

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Introduction

EuropeanpowermarketshavegonethroughunprecedentedchallengesinthepastfewyearsduetotothegassupplyshortageassociatedwiththeRussianaggressionagainstUkraine.WhilstthecrisisdemonstratedtheresilienceandbenefitsofanintegratedEuropeanmarket,italsohighlightedsomeareasforpotentialimprovementsofmarketdesignandhasledsomepolicymakerstocallforareformoftheEuropeanelectricitymarket.TheconsultationlaunchedbytheEuropeanCommissionhasprovidedsomeinitialguidanceontheareasoffocustoreformEuropeanelectricitymarkets.

ThestudyaimstocontributetotheEUpolicydebateonthereformoftheEuropeanelectricitymarkets.ThisstudyidentifieswaysinwhichcurrentEuropeanpowermarketscouldbecompletedwitharangeofadditionalmeasurestoaddresssomeofthechallengesandgapsidentified,anddeliverthepolicyobjectivesofdecarbonisation,whilstmaintainingsafeandaffordableenergysupply.

Preambleonthestudyinteractionwiththeshort-term‘energycrisis’

Asastartingpoint,itisessentialtorecallafewfundamentalpointsinrelationtothecurrentenergycrisisandkeyguidingprinciples.

First,thecurrentmarketdesignisnottherootcauseofthehighelectricitypriceswitnessedin2022and2023inEurope.Onthecontrary,theintegratedEuropeanmarkethasdeliveredsignificantbenefitstoconsumers.Thecurrentenergypricecrisisistheresultofagassupplycrisisthatishavingmajorcontagioneffectsonelectricityprices,whilemostoftheinterventionsandmeasuresadoptedintheEUarefocusedontheelectricitymarket.

However,theenergycrisishasrevealedtheneedtoprovidemoreinstrumentstopassonthebenefitsofrenewables’andotherlow-carbontechnologies’lowergenerationcostsmoredirectlytoconsumers.Thisinturnwillrequireagreaterroleinthemarketforlong-termhedginginstrumentsandcontracts.

Renewableandlow-carbonenergysourcescanofferenergyatrelativelylowandstablecosts.However,theirpotentialadvantagesforthecustomersmaynotalwaysbevisibleintheconsumers’billsduetotheinfluenceofshort-termpricesignalsonforwardprices.Asaresult,mostcustomersdonotperceivethefullbenefitofrenewableandlow-carbonenergysources,andthishasledtopolicyinterventionssuchasinframarginalpricecaps.Inparallel,thedevelopmentofvariablerenewableenergysourcesalsocreateschallengesregardingtheoperationofthepowersystemandthesecurityofsupply.Inparticular,potentialreformsofthemarketdesignshouldnothamperrecentregulatoryandmarketdevelopmentstofosterflexibilityanddemand-sideparticipation,whicharekeytocopewiththesechallenges.

Second,amarketdesignreviewforthelongtermshouldnotberushedanditsimpactshouldbeadequatelyassessed.Someoftheproposalsthathavebeendiscussedinrecentmonthshavethepotentialtobeprofoundlydisruptiveforthecurrentintegratedenergymarket,suchasdecouplingshort-termwholesaleelectricitypricesfromgasprices,changesinthemarketdesignderivedfromthevariousMemberStates’crisis-relatedinterventions,ortheintroductionofdifferentiatedremunerationforeachgenerationtechnologybasedonits‘trueproductioncosts’.Suchproposalcouldleadtosignificantnegativeimpactsoncost-efficientdispatchandsecurityofsupply,withoutensuringamoreresilientmarketdesignforoperators,investors,andconsumers.

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Moreover,itisparticularlyimportanttodistinguishemergencymeasuresandstructuralsolutions,andtostresstheneedforregulatorystabilityandpredictability.TemporarymeasuresandmarketinterventionsshouldnotbeextendedbeyondtheperiodforeseenbytheCouncilRegulationonanemergencyinterventiontoaddresshighenergyprices.Althoughthestructuralreformshouldnotberushed,policymakersshouldconsiderthefactthatthepolicyandregulatoryuncertaintyassociatedwiththeongoingdebatesandshort-terminterventionsareharminginvestmentandcouldundermineEurope’seffortstoattractinvestmenttodecarbonise.Onthecontrary,themarketdesignshouldprovideanadequateframeworktoguaranteeinvestors’confidencetoensurethenecessaryinvestmentsinrenewableandlow-carbontechnologies,maintainingthesystem’sbalance,fosteringsectorintegration,andcontributingtosecurityofsupply.

Thestudyapproachandmethodology

Thestudyhasfollowedastructuredandinteractiveapproachtoanalysethekeygapsinthecurrentmarketdesign,andtoidentifypotentialsolutions.ThestudyisbuiltuponmanyinteractionswithEurelectric’smembersaswellasexternalstakeholders:twelvesteeringcommittees,morethantwentycoreteammeetings,presentationstotheCustomersandRetailServicesandMarketsandInvestmentsCommitteesandtoEurelectric’swiderStructureofExpertise,externalworkshopswithindustrialconsumers,andEUstakeholderswereorganisedalongthecourseoftheproject.

?Thefirstphasefocusedontheevaluationofthestatusquointhelightofthepolicyobjectivetodecarbonise.Asystematicmappingofthekeystrengthsofthecurrentmarketdesignandgapstobeaddressedwasconductedonsixmaintopics:(i)wholesalemarkets,(ii)balancingmarkets(iii)theinvestmentframework,(iv)retailmarkets,(v)networks,and(vi)sectorcoupling.

oAspartofthisphase,thescopeofthemarketdesignreviewwasfocusedonissuesrelatingtowholesale,retail,investment,andsectorcoupling.Thisisbecausenetworkandbalancingissueswerealreadyextensivelycoveredexternally.

?Thesecondphaseofthestudyintroducedthekeyprinciplesofamarketdesignthatwouldaddressthechallengesandgapsidentified,buildingonthecurrentmarketdesign;severalcasestudieswerediscussedlookingforpotentiallessonsfromothercountriesaroundtheworldthathavefacedsimilarissues.

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oThisincludedpracticalcasestudiessuchasenergy-onlymarkets(Australia,Texas),capacitymechanisms(PJM),long-termcontractingmechanisms(Chile,Brazil),Europeanmarketmechanisms’overviewsaswellasnewmarketdesignapproachesdevelopedbyacademicsorpractitioners,suchastheGreekmodelproposal,theGreenPowerPool(UCL),EquivalentFirmPowerauctions(DieterHelm),decentralisedobligations(EnergySystemCatapult),etc.

?Thethirdphaseofthestudyconsistedofidentifyingthekeyprinciplesofanewmarketdesignbuildingontheexistinginternalenergymarket;andondefiningalistofconcretepolicyrecommendationscorrespondingtoeachoftheseprinciples.

Thestructureofthisreportmirrorsthissequence:

?Thefirstsectionintroducestheevaluationofkeystrengthsofthecurrentmarketdesignandgapstobeaddressed;

?Thesecondsectionintroducesthekeyprinciplesofamarketdesignthatwouldaddressthechallengesandgapsidentified,buildingonthecurrentmarketdesign;

?Thethirdsectionprovides,oneachofthekeypillarsofthenewmarketdesignproposed,alistofconcretepolicyrecommendations.

GapAnalysisofthecurrentmarketdesign

Inthissection,wereviewthecurrentmarketdesignarrangements:

?Thefirstsectioncoversthekeystrengthsofthecurrentmarketdesign,focusingparticularlyonshort-termwholesalemarkets;

?Thesecondsectionreviewsthekeygapsinthecurrentmarketdesign,particularlylookingat(i)consumerengagementandprotection,(ii)investmentand(iii)thecoordinationoffuturesystemneeds.

Keystrengthsofthecurrentmarketdesign

Aswelookbackatthepast20yearsandthecurrentstatusofEUwholesalemarkets,itisimportanttoemphasisethesuccessoftheintegrationofEUwholesaleenergymarkets,whichbringsbenefitstoconsumers.

Theshort-termwholesalemarketisessentialforanefficientfunctioningofthepowersystemandhasensuredefficientdispatchofgenerationandflexibilityassets,efficientcross-bordertrading,andtherefore,reducedvolatilitydespitetheexceptionalcircumstancesoftheenergycrisis.TheintegrationofEUwholesalemarketsbasedonthemeritorderandmarginalpricingprincipleshaveunlockedmajorbenefitsforconsumers.In2021alone,ACER

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estimatedthebenefitsofcross-bordertradingtoamountto€34billionduetoincreaseddispatchefficiency.Itisworthnotingthatmorethanathirdofthesebenefitsweredeliveredinthelastquarterwhereenergypriceswerethehighest.

1BasedonanalysisconductedbyNEMOs.Source:ACER(2022)

ACER’sFinalAssessmentoftheEUWholesaleElectricity

MarketDesign

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Further,thecurrentmarketdesignhasallowedforasignificantreductioninshort-termmarketvolatilityduringthecrisis,withhigherconvergenceacrossEUmarkets.ACER

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estimatedthepricevolatilitywouldhavebeenaboutseventimeshigherin2021ifnationalmarketshadbeenisolated.Buildingonthesestrengths,morereformsarecurrentlyunderwaytofurtherimproveshorttermmarketssuchastheintegrationofbalancingmarketsorincreaseddemand-sideresponseparticipation.

TheEUelectricitymarketintegrationhasalsoimprovedsystemresiliencethroughstrongercoordinationandsolidarity,whichhasbeendemonstratedduringtheenergycrisis,butalsoinpreviouseventswhichcouldhaveputtheEUpowersysteminjeopardy.Assuch,cross-bordertrading,integrationofbalancingmarketsandregionalcoordinationcentreshavecontributedtohigherstandardsofsecurityofsupplyacrosstheEU.

However,marketintegrationisstillinprogress.Furthershort-termmarketintegration(intradayandbalancing),thefullimplementationofallservicestobeprovidedbyregionalcoordinationcentres,furtherimprovementsincross-zonalcapacitycalculationandbettercoordinationofcapacitymechanismswillalsoyieldsubstantialadditionalbenefits.

Thecurrentwholesalemarketdesignisbuilttoensurethegeneratorsaredispatchedbasedonshort-runcoststominimisetotalcosts.Inshort-termmarkets,theelectricitypriceisdeterminedatthemarginalprice,i.e.,thevariablecostofthelastgeneratorbeingaskedtoproduceatagiventime.Throughthespotmarkets,generatorsarerankedaccordingtotheirshort-termcostsinthemeritorder,andonlythecheapestgeneratorsareselectedtoreachdemand.

Thereisnobetteralternativetothemarginalcostdispatchmechanism.Withgrowingdecentralisationofrenewables,preservingthecurrentshort-marketfunctioningwillbekeytoensuringtheefficientreal-timedispatchofgenerationandflexibilityassetsanddemand-sideresponse,aswellasefficientcrossborderexchangesofelectricity.Asaresult,thecurrentshort-termmarketsshouldremainacentralpillarofanynewmarketdesignandinitiativesaimingatfurtherimprovingthemshouldbepursued.

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Keygapsofthecurrentmarketdesign

Therecentenergycrisishashighlightedsomeoftheweaknessesandgapsofthecurrentelectricitymarkets.Thestartingpointforidentifyingthekeygapsinthecurrentmarketdesigninthestudywasbasedonasetofcorefoundationalprinciples:

?Themarketdesignneedstorecognisetheevolutionofpolicyobjectivessincethe1990s.Amarketdesignisneverconceivedinavacuumandisexpectedtodeliversomespecificpolicyobjective.Inthisperspective,thestudyhasmappedtheevolutioninthecontextandobjectivessincethecurrentEUelectricitymarketwasdesigned20yearsago,withagrowingfocusondecarbonisation,whilereducingtheEU’sdependenceonimportedfossilfuels.

?Themarketdesignneedstoenablethedeploymentoftheresourcesnecessary(cleantechnologiesandflexibleresources)fortheenergytransition.Thetransitionwillcreatenewoperationalchallengesassociatedwiththerisingshareofvariablerenewablestechnologies.

2Ibid.

3Theimprovementoftheshort-termmarketfunctioningisbeyondthescopeofCompassLexeconstudy.However,somesuggestionscanbefoundinvariousEurelectricpublications–seeforinstance

Eurelectric’sresponsetotheEuropean

Commissionconsultationonmarketdesign

(p20-21),inparticularitsrequestforaclosertoreal-timeCross-BorderIntradayGateClosureTimetobetterbalancesurpluses/shortagesandontheneedtoassesscarefullyandwithtransparencytheimpactsofongoingintegrationprojectsandinfutureconsiderations.

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Themarketdesignwillneedtorecogniseinadifferentiatedwaythedifferentattributesofdifferenttechnologiesandtheirrespectivecontributiontothesystem’ssafeoperation.Moreover,mostcleantechnologiesandflexibleresourcesrequirelargeCAPEXinvestment,whichsuggeststhataspecificfocusontheinvestmentframeworkforcapitalintensivetechnologiesisneeded.Thereisalsoaneedtoproperlyrecognisechallengesaheadfornetworkstoconnectmorerenewables.

?Themarketdesignneedstotakeaholisticcross-sectorperspectiveandcoordinatesubstantialinvestmentswithinashorttimeframeacrossthepowersector,relatedinfrastructuresandenduses,whichareelectrifying.Theinstitutionalandgovernancearrangementsthatsupportinfrastructureplanningandendusesectorswillthereforealsoneedtoevolvetosupportanefficientmarketfunctioning.

?Themarketdesignneedstobenefitconsumersandsupporttheiractiveengagement.Newtechnologiesallowactiveparticipationinthemarketofdemandaswellasdecentralisedresources.Consumersneedtoseethebenefitsoftheinvestmentsincleantechnologiesthroughelectricitypricesandhedgingapproachesthatprovidebothchoiceandadequateprotection.

Thesestartingprincipleshaveformedthebasisofouranalysisofthespecificchallengesandgapsinthecurrentmarketdesign.Accordingly,thenextparagraphspresentinmoredetailthekeygapswith(i)consumerengagementandprotection,(ii)theneedforaframeworktosupportinvestmentand(iii)thecoordinationoffuturesystemneeds.

Consumerengagementandprotection

Alargeshareofenergyconsumersisnotengagedinthemarket.Thiscanbeduetoe.g.,thelackofinformationorawarenessofrisksandopportunities,retailpricingstructure,barrierstothedevelopmentofexplicitdemand-sideresponse(DSR)orpolicyinterventionsdistortingconsumerpricesignals.Forexample,whilesmartmetersareoftenaprerequisitetoconsumerengagementinoperationaltimeframe,only54%ofEuropeanhouseholdshadasmartmeterbytheendof2021

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,withsignificantdivergencesbetweenMemberStatesintermsofrollout.

TheCleanEnergyPackagesetthefocusonconsumerengagementwithaseriesofmeasurestoempowerconsumersandfacilitatedemand-sideflexibility.

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Consumerscouldthereforebemorereactivetomarketprices,whichcouldcontributetoalleviatingfuturecrises.ThesemeasuresarenotyetfullyimplementedinalltheMemberStatesorneedtobefurtherclarifiedbeforeimplementation.Forexample,theparticipationofexplicitaggregationofdemand-sideflexibilityisnotallowedinallEuropeanenergymarketsandcapacityremunerationmechanisms.

Exceptionalenergypricevolatilitytriggeredbythegassupplycrisishasimpactedcustomersandhashighlightedtheneedtoassesstheresilienceofourcurrentelectricitymarketdesigntosuchexternalshocks,notablyintermsofcustomerprotectionandengagement.Inthemeantime,policymakershaveintroducedshort-termpolicyinterventions,whichaimtoaddresssuchexceptionalcircumstancesandmitigatetheimpactoncustomers.

Forexample,retailpriceshaveincreasedforhouseholdconsumers.ComparedtoSeptember2021,theaverageestimatedEUretailelectricitypriceforsmallhouseholdconsumersinSeptember2022

4ACER-CEER(2022)

AnnualReportontheResultsofMonitoringtheInternalElectricityandNaturalGasMarketsin2021

5EuropeanCommission(2019)

CleanenergyforallEuropeanspackage

.

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increasedby25%to26.3c€/kWh.

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ThisincreaseoccurreddespitetheretailmarketinterventionscarriedoutinallEUMemberStatestoprotectcustomers,suchaswithdirectaidforenergycosts,taxrelief,networktariffexemptions/reductions,orretailpriceregulation.Theseinterventionscomeatsignificantcosts:€600.4bnwasallocatedacrosstheEU

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toprotectconsumersagainstenergycostsbetweenSeptember2021andNovember2022.

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EUindustrialcompetitivenesshasbeennegativelyimpactedatatimewheretheenergytransitionrequiresmajordecarbonisationandelectrificationinvestments.ComparedtoSeptember2021,theaverageestimatedQ32022EUretailpriceforsmallindustrialconsumers

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roseby40%to22.8c€/kWh,andby64%to18.6c€/kWhforlargerindustrials.

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ThisincreaseishigherthaninEUtradingpartners,suchasChina(whereindustrialpricesincreasedby15%year-on-year),ortheUnited-States(dropby3%year-on-year).

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Intheirvastmajority,consumerscurrentlydonothavecommitmentswiththeirsuppliersbeyondonetothreeyearsanddonotengageinlong-termcontractswithproducers.Thismaybeduetothelackofinformation,totheinabilityorthelackofinteresttocommitoverlongperiods,ortolegalorregulatoryhurdles.Thislimitstheabilityofsupplierstohedgeontheirbehalfoverthelongtermandtoprovidethemwithpricestabilityoveralongerperiodoftime.Consumerawarenessandaccesstoinformationcouldbeimprovedtoincreaseinterestinhedgingandensurethattheyunderstandtheriskstheyareexposedtointheircontractualarrangements.Last,asshownintheenergycrisis,thelackoffinancialresilienceofcertainsupplierscanleadtounfavourablecircumstancesforconsumers.

Coordinationoffuturesystemneeds

ThecurrentEUframeworkforlong-termstudies

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isinsufficienttoeffectivelyinformpolicymakers,investors,andotherstakeholdersandcoordinatethelarge-scaleinvestmentsrequiredtoreachEuropeanGreenDealobjectives,thetransitiontoaclimate-neutraleconomyby2050andincreaseEurope'senergyindependencefromunreliablesuppliersandvolatilefossilfuels.Whilethecurrentframeworkhasstartedtoevolvetocatertothesenewchallenges,gapsremaininthesystemneedsframework.

Currently,thekeyEUlong-termstudiesfocusprimarilyonelectricityandgasnetworkexpansion(TYNDP)andpoweradequacy(ERAA).TheTYNDPhasstartedtodevelopa‘systemneed’perspective,withflexibilityassets(storageandCO2-freepeakingunits)asanadditionalinvestmentoptionforthe2040horizontoaddressnetwork-relatedissues.

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Thefocusremainsnarrow,coveringonlypartiallythedifferentsystemneeds,suchasflexibility(long-term,short-term),orstability.TheERAAwouldbenefitfrom(i)moredetailedgranularityofgridconstraintstoimproveconsistencybetweenEUandnationalanalysesand(ii)methodologicalenhancementstoensuretheeconomicviabilityofresources.Further,thetimehorizonof10yearsistooshortforthepathtonet-zero.

6EuropeanCommission(2022)

QuarterlyreportonEuropeanelectricitymarkets

.

7Thisamountsto€705.5bnforEurope,with€264bnearmarkedbyGermany.

8Bruegel(2022),

Nationalfiscalpolicyresponsestotheenergycrisis

.Consultedon27January2023.

9BandIB-Theannualconsumptionofsmallindustrialconsumersfallsintherangeof20MWhto500MWh.ThisconsumptionbandisdefinedbyEurostatasIB.

10EuropeanCommission(2022)

QuarterlyreportonEuropeanelectricitymarkets

.

11Ibid.

12SuchastheTen-YearNetworkDevelopmentPlan(TYNDP)ofENTSO-EandENTSOGandtheEuropeanResourceAdequacyAssessment(ERAA)ofENTSO-E.

13ENTSO-E(2023)

TYNDP2022-OpportunitiesforamoreefficientEuropeanpowersystemin2030and2040

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Further,thestudiesoftenlackacomprehensivevisionfromafullenergysystemperspective,especiallytheenduses.Giventhecross-sectorinterdependencies,withelectrificati