Design principles for non-fossil flexibility support schemes

Non-fossil flexibility support schemes applied by Member States in accordance with Article 19g(1) shall:

not go beyond what is necessary to achieve the indicative national objective, or where relevant the provisional indicative national objective, defined pursuant to Article 19f in a cost-effective manner;

be limited to new investment in non-fossil flexibility resources such as demand side response and energy storage;

endeavour to take into consideration locational criteria to ensure that investments in new capacity take place in optimal locations;

not imply starting fossil fuel-based generation located behind the metering point;

select capacity providers by means of an open, transparent, competitive, voluntary, non-discriminatory and cost-effective process;

prevent undue distortions to the efficient functioning of electricity markets including preserving efficient operation incentives and price signals and the exposure to price variation and market risk;

provide incentives for the integration in the electricity markets in a market-based and market-responsive way, while avoiding unnecessary distortions of electricity markets as well as taking into account possible system integration costs and grid congestion and stability;

set out a minimum level of participation in the electricity markets in terms of activated energy, which takes into account the technical specificities of the asset delivering the flexibility;

apply appropriate penalties to capacity providers which do not respect the minimum level of participation in the electricity markets referred to in point (h), or which do not follow efficient operation incentives and price signals referred to in point (f);

promote the opening to the cross-border participation of those resources that are capable of providing the required technical performance, where a cost-benefit analysis is positive.

( *8 ) OJ L 282, 19.10.2016, p. 4 .’;"

Article 21 is amended as follows:

paragraph 1 is replaced by the following:

‘1. Member States may, while implementing the measures referred to in Article 20(3) of this Regulation in accordance with Articles 107, 108 and 109 TFEU, introduce capacity mechanisms.’

paragraph 7 is deleted;

paragraph 8 is replaced by the following:

‘8. Capacity mechanisms shall be approved by the Commission for no longer than 10 years. The amount of the committed capacities shall be reduced on the basis of the implementation plans referred to in Article 20(3). Member States shall continue to apply the implementation plan after the introduction of the capacity mechanism.’

in Article 22(1), point (a) is deleted;

in Article 37(1), point (a) is replaced by the following:

carrying out the coordinated capacity calculation in accordance with the methodologies developed pursuant to the forward capacity allocation guideline established by Regulation (EU) 2016/1719, the capacity allocation and congestion management guideline established by Regulation (EU) 2015/1222 and the electricity balancing guideline established by Regulation (EU) 2017/2195;’

in Article 50, the following paragraph is inserted:

‘4a. Transmission system operators shall publish in a transparent manner clear information on the capacity available for new connections in their areas of operation with high spatial granularity, respecting public security and data confidentiality, including the capacity under connection request and the possibility of flexible connection in congested areas. The publication shall include information on the criteria for the calculation of the available capacity for new connections. Transmission system operators shall update that information on a regular basis, at least every month.

Transmission system operators shall provide in a transparent manner clear information to system users about the status and treatment of their connection requests including, where relevant, information related to flexible connection agreements. They shall provide such information within three months of the submission of the request. Where the requested connection is neither granted nor permanently rejected, transmission system operators shall update that information on a regular basis, at least quarterly.’

in Article 57, the following paragraph is added:

‘3. Distribution system operators and transmission system operators shall cooperate with each other in publishing, in a consistent manner, consistent information on the capacity available for new connections in their respective areas of operation that provides sufficient granular visibility to developers of new energy projects and other potential network users.’

Article 59 is amended as follows:

in paragraph 1, point (b) is replaced by the following:

capacity-allocation and congestion- management rules pursuant to Articles 7 to 10, 13 to 17, 19 and 35 to 37 of this Regulation and Article 6 of Directive (EU) 2019/944, including rules on day-ahead, intraday and forward capacity calculation methodologies and processes, grid models, bidding zone configuration, redispatching and countertrading, trading algorithms, single day-ahead and intraday coupling, different governance options, the firmness of allocated cross-zonal capacity, congestion income distribution, the details and specific features of the tools referred to in Article 9(3) of this Regulation by reference to the elements specified in paragraphs (4) and (5) thereof, the allocation and facilitation of trading of financial long-term transmission rights by the single allocation platform as well as the frequency, maturity and specific nature of such long-term transmission rights, cross-zonal transmission risk hedging, nomination procedures, and capacity allocation and congestion management cost recovery, and methodology for compensating offshore renewable electricity plant operators for capacity reductions;’

in paragraph 2, point (a) is replaced by the following:

network connection rules including rules on the connection of transmission-connected demand facilities, transmission-connected distribution facilities and distribution systems, connection of demand units used to provide demand response, requirements for grid connection of generators and other system users, requirements for high-voltage direct current grid connection, requirements for direct current-connected power park modules and remote-end high-voltage direct current converter stations, and operational notification procedures for grid connection;’

in Article 64, the following paragraphs are inserted:

‘2a. By way of derogation from Article 6(9), (10) and (11), Estonia, Latvia and Lithuania, may conclude financial contracts for balancing capacity up to five years before the start of the provision of the balancing capacity. The duration of such contracts shall not extend beyond eight years after Estonia, Latvia and Lithuania have joined the Continental Europe Synchronous Area.

The regulatory authorities of Estonia, Latvia and Lithuania may allow their transmission system operators to allocate cross-zonal capacity on a market-based process as set out in Article 41 of Regulation (EU) 2017/2195, without volume limitations until six months after the day on which the co-optimised allocation process is fully implemented and operational pursuant to Article 38(3) of that Regulation.

2b. By way of derogation from Article 22(4), point (b), Member States may request that generation capacity that started commercial production before 4 July 2019 and that emits more than 550 g of CO 2 of fossil fuel origin per kWh of electricity and more than 350 kg CO 2 of fossil fuel origin on average per year per installed kWe may, subject to compliance with Articles 107 and 108 TFEU, exceptionally be committed or receive payments or commitments for future payments after 1 July 2025 under a capacity mechanism approved by the Commission before 4 July 2019.

2c. The Commission shall assess the impact of the request referred to in paragraph 2b in terms of greenhouse gas emissions. The Commission may grant the derogation after assessing the report referred to in paragraph 2d, provided that the following conditions are fulfilled:

the Member State has carried out, on or after 4 July 2019, a competitive bidding process pursuant to Article 22 and for a delivery period after 1 July 2025, which aims to maximise the participation of capacity providers which meet the requirements in Article 22(4);

the amount of capacity offered in the competitive bidding process referred to in point (a) of this paragraph is not sufficient to address the adequacy concern as identified pursuant to Article 20(1) for the delivery period covered by that bidding process;

the generation capacity that emits more than 550 g of CO 2 of fossil fuel origin per kWh of electricity is committed or receives payments or commitments for future payments for a period not exceeding one year, and for a delivery period which does not exceed the duration of the derogation, and is procured through an additional procurement process which complies with all requirements of Article 22 except for those laid down in paragraph 4, point (b) of that Article and only for the amount of capacity that is needed to solve the adequacy concern referred to in point (b) of this paragraph.

The derogation pursuant to this paragraph may be applied until 31 December 2028, provided that the conditions set out therein are complied with for the entire duration of the derogation.

2d. The request for the derogation referred to in paragraph 2b shall be accompanied by a report of the Member State which shall include:

an assessment of the impact of the derogation in terms of greenhouse gas emissions, and on the transition towards renewable energy, increased flexibility, energy storage, electromobility and demand response;

a plan with milestones to transition away from the participation of generation capacity referred to in paragraph 2b in capacity mechanisms by the date of the expiry of the derogation, including a plan to procure the necessary replacement capacity in line with the indicative national trajectory for the overall share of renewable energy and an assessment of the investment barriers causing the lack of sufficient bids in the competitive bidding procedure referred to in paragraph 2c, point (a).’

Article 69 is amended as follows:

paragraph 2 is replaced by the following:

‘2. By 30 June 2026, the Commission shall review this Regulation and shall submit a comprehensive report to the European Parliament and to the Council on the basis of that review, accompanied by a legislative proposal where appropriate.

The Commission’s report shall assess, inter alia:

the effectiveness of the current structure and functioning of the short-term electricity markets, including in crisis or emergency situations, and, more generally, the potential inefficiencies concerning the internal electricity market and the different options for the introduction of possible remedies and tools to be applied in crisis or emergency situations in view of the experience at international level and of the evolution and new developments in the internal electricity market;

the suitability of the current Union legal and financing framework on distribution grids to achieve the Union’s renewable and internal energy market objectives.

in accordance with Article 19a, the potential and viability of the establishment of one or several Union market platforms for PPAs, to be used on a voluntary basis, including the interaction of those potential platforms with other existing electricity market platforms and the pooling of demand for PPAs through aggregation.’

the following paragraph is added:

‘3. By 17 January 2025, the Commission shall submit to the European Parliament and to the Council a detailed report assessing possibilities of streamlining and simplifying the process of applying a capacity mechanism under Chapter IV, so as to ensure that adequacy concerns can be addressed by Member States in a timely manner. In that context, the Commission shall request that ACER amend the methodology for the European resource adequacy assessment referred to in Article 23 in accordance with Articles 23 and 27, as appropriate.

By 17 April 2025, the Commission shall, after consultation with Member States, submit proposals with a view to simplifying the process of assessing capacity mechanisms as appropriate.’

the following article is inserted:

REGULATION (EU) 2024/1747 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 June 2024 amending Regulations (EU) 2019/942 and (EU) 2019/943 as regards improving the Union’s electricity market design