Flex›Source - Electricity Market Design Reform Regulation (EU 2024/1747)

Source - Electricity Market Design Reform Regulation (EU 2024/1747)

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. In force 16 July 2024. Directly applicable in all member states; no transposition required.

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Context

Adopted together with Directive 2024/1711 as the EU’s response to the 2021–2022 energy price crisis and the structural challenge of integrating large volumes of variable renewable generation. The Regulation amends Regulation 2019/943 (the primary electricity market regulation) and the ACER Regulation (2019/942). The Commission proposal was presented in March 2023; provisional agreement reached December 2023; adoption May 2024.

New definitions added to Regulation 2019/943 (Art. 2)

TermDefinition
Flexibility (Art. 2(79))“The ability of an electricity system to adjust to the variability of generation and consumption patterns and to grid availability, across relevant market timeframes” — first time “flexibility” has an official EU legal definition
PPA (Art. 2(77))“A contract under which a natural or legal person agrees to purchase electricity from an electricity producer on a market basis”
Two-way contract for difference (Art. 2(76))“A contract between a power-generating facility operator and a counterpart, usually a public entity, that provides both minimum remuneration protection and a limit to excess remuneration”
Peak-shaving product (Art. 2(73-74))“A market-based product by means of which market participants can provide peak shaving to system operators”
Dedicated measurement device (Art. 2(78))“A device linked to or embedded in an asset that provides demand response or flexibility services on the electricity market or to system operators”
Peak hour (Art. 2(72))Defined for peak-shaving product activation purposes

Chapter IIIa — Specific investment incentives (Arts. 19a–19h)

The most important new provisions for the wiki:

Art. 19a — Power Purchase Agreements

Member states must promote PPA uptake and remove unjustified barriers. They must ensure instruments to reduce buyer-default financial risk (e.g., state-backed guarantee schemes at market prices) are accessible to customers facing PPA entry barriers. Support schemes for renewables may allow projects to reserve a share of output for PPAs. ACER must publish annual PPA market assessment.

Art. 19b — PPA templates

ACER must assess whether voluntary PPA templates are needed (by 17 October 2024) and develop them if so.

Art. 19d — Two-way CfDs mandatory for new low-carbon investment

Direct public support for new wind, solar, geothermal, run-of-river hydro, and nuclear must be structured as two-way contracts for difference or equivalent schemes — from 17 July 2027 (17 July 2029 for offshore hybrid projects). Revenue above the strike price must be redistributed to final customers. Voluntary participation in the CfD mechanism; penalty clauses required for early termination.

Art. 19e — Flexibility Needs Assessment (the legal basis for the FNA)

This article creates the mandatory national flexibility needs assessment now being implemented via the FNAM methodology. Key requirements:

  • Frequency: every 2 years; covers at least the next 5–10 years
  • Responsible body: the regulatory authority or another designated authority/entity
  • ENTSO-E and EU DSO Entity: jointly develop the type and format of data, and the analytical methodology; submitted to ACER for approval
  • ACER approval deadline: by 17 April 2025 (methodology)
  • Report contents: seasonal/daily/hourly flexibility needs; potential of demand response and storage; barriers and mitigation; digitalisation contribution; cross-border flexibility potential
  • Submission: to Commission and ACER; published; ACER issues cross-border analysis within 12 months

This article is the direct parent regulation for the Flexibility Need Assessment (FNA) and the FNAM methodology approved by ACER Decision 05-2025. The Swedish implementation is described in Source - FNA Överenskommelse Svenskt genomförande 2026 (2025).

Art. 19f — Indicative national objective for non-fossil flexibility

Within 6 months of the first FNA report, each member state must define an indicative national objective for non-fossil flexibility, including specific contributions from demand response and energy storage. Reflected in NECPs (national energy and climate plans).

Art. 19g–h — Non-fossil flexibility support schemes

Where investment in non-fossil flexibility is insufficient to meet the indicative objective, member states may apply support schemes consisting of capacity payments for non-fossil flexibility (demand response, storage). Design principles: no excess over what is needed; new investment only; competitive, transparent, voluntary; no fossil fuel start-behind-the-meter; minimum market participation required; penalties for non-compliance.

Short-term market reforms

Art. 7a — Peak-shaving product

During an EU/regional electricity price crisis (declared by Council), member states may instruct system operators to procure a peak-shaving demand response product. Requirements: min bid ≤100 kW (including aggregation); procurement via competitive bidding; activation before or within day-ahead timeframe; no fossil generation behind the meter; contracts max 1 week before activation; ACER to assess impact within 6 months.

Art. 7b — Dedicated measurement device

TSOs, DSOs, and aggregators may use dedicated measurement devices (embedded in flexibility assets) for observability and settlement of flexibility services even where smart meters are not installed. Subject to customer consent; member states establish validation rules. This removes a key barrier to non-smart-meter flexibility participation.

Art. 8 — Intraday gate closure and minimum bid size

  • Intraday cross-zonal gate closure shortened to 30 minutes from real time from 1 January 2026 (with TSO derogation possible to 2029)
  • Minimum bid size for day-ahead and intraday: ≤100 kW — enables small-scale demand response, storage, and renewables to participate directly (or through aggregation)
  • Day-ahead moved to 15-minute product intervals (implemented 30 September 2025)

Tariff and grid reforms

Art. 18 — Network tariff methodologies

Tariff methodologies must now explicitly:

  • “Support the use of flexibility services and enable the use of flexible connections” (Art. 18(2)(c)) — direct regulatory anchor for TOTEX-style DSO incentives
  • Facilitate energy storage, demand response, and related research
  • Include anticipatory investment; performance targets for efficiency and smart grids

Art. 50(4a) — TSO grid capacity publication

TSOs must publish capacity available for new connections monthly, with high spatial granularity. Companion to DSO obligation under Directive Art. 31.

ACER role expansions

  • ACER must approve the ENTSO-E/EU DSO Entity joint methodology for the FNA (Art. 5(9) of ACER Regulation)
  • ACER issues annual report on PPA markets
  • ACER issues Union-level analysis of national FNA reports with cross-border recommendations

Capacity mechanism reforms

  • Capacity mechanisms no longer considered measures of last resort; Commission may approve for up to 10 years
  • Baltic states (Estonia, Latvia, Lithuania) exempt from some balancing market requirements until synchronisation with Continental Europe
  • Streamlining process report due from Commission by 17 January 2025

Review clause

Commission to review the Regulation and submit comprehensive report by 30 June 2026, with legislative proposal if appropriate. Report to assess short-term market effectiveness and the PPA market.

Relevance to wiki topics

  • Flexibility Need Assessment: Art. 19e is the primary EU legal basis; the FNAM methodology and Swedish FNA 2026 process are direct implementations of this article
  • Flexibility: Art. 2(79) provides the first codified EU legal definition of “flexibility”
  • Power Purchase Agreement: Arts. 19a–19b establish the EU framework for PPA promotion; member states must remove barriers and ensure guarantee schemes
  • Electricity Market Design Reform 2024: this regulation is one half of the reform package
  • Balancing Markets: minimum bid 100 kW; 30-min intraday gate closure from Jan 2026; 15-min day-ahead from Sep 2025
  • Villkorade Avtal: Art. 18(2)(c) provides the tariff-level regulatory basis for DSO incentives to use flexible connections
  • Clean Energy Package: this Regulation amends the CEP’s core instruments (2019/943 and 2019/942)