Source - ACER Recommendation 01-2025 on NC DR

Full title: ACER Recommendation No 01/2025 of 7 March 2025 on the Network Code on Demand Response Author: ACER (Agency for the Cooperation of Energy Regulators) Published: 7 March 2025 Status: Recommendation to the European Commission; the Commission will use this (alongside the ENTSO-E/EU DSO Entity proposal) to draft the final regulation Raw file: raw/ACER_Recommendation_01-2025_Demand_Response_Network_Code.pdf

Summary

ACER’s recommendation is the regulators’ response to the ENTSO-E/EU DSO Entity NC DR proposal. It substantially revises the original proposal and recommends the Commission adopt not one but four legal instruments: a new DR Network Code plus amendments to three existing regulations (Electricity Balancing, System Operation, and Demand Connection). This redistribution reflects ACER’s view that many provisions proposed for the NC DR belong in existing legal frameworks.

The recommendation was adopted after public consultation (September–October 2024), a stakeholder workshop (November 2024), and consultation with the AEWG (ACER’s Electricity Working Group of national regulatory authorities, January–February 2025). The Board of Regulators gave a favourable opinion on 5 March 2025.

What ACER recommends

Four parallel legal actions:

ACER also notes it may be more appropriate to adopt the NC DR as a guideline rather than a network code, given the heavy use of “terms and conditions or methodologies” approaches (subject to regulatory approval) rather than prescriptive rules.

Key differences from the ENTSO-E/EU DSO Entity proposal

Structural redistribution

The most significant change: ACER splits provisions across four instruments rather than one comprehensive NC DR. This means aggregation rules, balancing market access, and grid prequalification are governed by existing (amended) regulations rather than a new standalone code. The logic: these topics already have regulatory homes, and adding them to a new code creates duplication and legal uncertainty.

DSO flexibility procurement

ACER retains the market-based default with derogations, but the procedure for non-market derogations was highly contentious:

• Member States with many small DSOs find the proposed procedures impractical
• Some NRAs want derogation decisions at Member State level rather than EU-level
• ACER’s AEWG suggested differentiating derogation procedures by product category (e.g., simpler for voltage control than for congestion management)

Minimum bid size

No consensus among national regulators. Views range from 0.1 MW to 1 MW. This parameter is critical: a lower minimum enables small-scale DER (rooftop solar, home batteries, EV chargers) to participate; a higher minimum favors larger industrial loads and aggregators. ACER’s AEWG suggested this should be handled through terms and conditions rather than fixed in regulation text, given the lengthy amendment procedure.

Aggregation / financial transfers

The compensation mechanism for how aggregation affects the customer’s original BRP was flagged as contentious. Disagreement on whether settlement should be limited to BRPs or extend more broadly to other market participants.

Harmonisation vs national flexibility

A fundamental tension runs through the recommendation: EU-wide harmonisation versus room for national approaches. Many Member States are at very different stages of flexibility market development. ACER’s AEWG recommended a stepwise approach — start with broad principles, refine based on implementation experience, rather than overspecifying details now.

Contested issues

The recommendation reveals several unresolved tensions:

1. Scope: multiple NRAs argued the NC DR is too extensive and bureaucratic, wanting voltage control, storage ownership, and DNDP provisions excluded
2. Minimum bid size: 0.1 MW vs 1 MW — order-of-magnitude disagreement among regulators
3. Market-based derogations: small DSOs find procedures impractical; tension between EU-level and national-level decision-making
4. Baseline methodology: fundamental disagreements about whether baselines are needed at all, and about metering approaches (smart meters vs dedicated devices)
5. Counter-activation: how to close trade positions after activating local services and flexible connection agreements — raised as unresolved by individual NRAs
6. Storage ownership by system operators: some NRAs want these provisions excluded from NC DR scope entirely, seeing conflict with existing EU legislation

Timeline and process

Relevance to the wiki

This recommendation is crucial because it reveals where EU flexibility regulation is actually heading — the final regulation will likely incorporate ACER’s positions more than the original ENTSO-E/EU DSO Entity draft:

1. Sweden will need to develop national terms and conditions across multiple domains (aggregation, baselining, flexibility register, local market design, TSO-DSO coordination) — substantial regulatory work for Ei
2. The market-based default with practical derogations is likely to survive — this shapes how Swedish DSOs can continue using Villkorade Avtal (as a derogation from market-based procurement)
3. The minimum bid size debate (0.1–1 MW) directly affects Swedish prosumer/DER participation — a 1 MW floor would exclude most household-level flexibility
4. The stepwise harmonisation approach means Sweden will have room to develop national solutions initially, with EU-wide convergence over time
5. ACER’s redistribution across four instruments means Swedish actors will need to track changes to multiple regulations, not just the NC DR
6. The tension between scope and practicality suggests the final regulation may be narrower than the ENTSO-E/EU DSO Entity proposal — focused on the most essential harmonisation rather than comprehensive coverage