Electricity Market Directive 2019/944

Full title: Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (recast) Part of: Clean Energy Package Published (OJ): 14 June 2019. Entered into force: ~4 July 2019 (20 days after publication, per Art. 73). Transposition deadline for Member States: generally by 31 December 2020 (Art. 71(1)). Consolidated version: 12 October 2025

Summary

The Electricity Market Directive (EMD) establishes common rules for the generation, transmission, distribution, energy storage, and supply of electricity in the EU. It is the primary legislative framework defining the roles of market participants, system operators, and regulators. For the wiki’s purposes, it is the legal foundation for DSO flexibility procurement, active customer rights, aggregation, and the market-based approach to grid management.

Key provisions for flexibility

Definitions (Article 2)

The Directive establishes legally binding definitions that shape the flexibility landscape:

• Active customer (Art. 2(8)): a final customer who consumes, stores, or sells self-generated electricity generated within its own premises (or, where a Member State permits, other premises) — provided this is not the customer’s primary commercial or professional activity — or participates in flexibility or energy efficiency schemes — the legal recognition of prosumers
• Aggregation (Art. 2(18)): combining multiple customer loads or generated electricity for sale, purchase, or auction in any electricity market
• Independent aggregator (Art. 2(19)): an aggregator not affiliated with the customer’s supplier — a critical role for flexibility markets
• Demand Response (Art. 2(20)): change of electricity load by final customers from normal consumption patterns in response to market signals, incentive payments, or bids in organized markets

Active customers (Article 15)

Final customers have the right to act as active customers without disproportionate barriers. Active customers are entitled to:

• Operate directly or through aggregation
• Sell self-generated electricity
• Participate in flexibility schemes and energy efficiency schemes (Art. 15(2)(c))
• Not face double charges for stored electricity or when providing flexibility services to system operators (Art. 15(5)(b))
• Provide multiple services simultaneously from storage, if technically feasible (Art. 15(5)(d))

Aggregation (Article 13)

Customers can conclude an aggregation contract without their supplier’s consent (Art. 13(2)) — this text isn’t limited to independent aggregators specifically (that distinction is defined separately at Art. 2(19) and used elsewhere, e.g. Art. 17(3)(e)). This removes a key barrier: historically, suppliers could block customers from participating in flexibility markets through third-party aggregators. Member States must ensure non-discriminatory treatment — no technical/administrative barriers or discriminatory charges based on having an aggregation contract.

Citizen energy communities (Article 2(11); enabling framework at Article 16)

A new legal entity type: voluntary, locally controlled organizations that can engage in generation, distribution, supply, consumption, aggregation, storage, energy efficiency, or EV charging (Art. 2(11)(c)). Article 16 separately requires Member States to provide an “enabling regulatory framework” for these communities (open/voluntary participation, DSO cooperation on facilitating transfers, non-discriminatory charges, exit rights via Art. 12) — not itself the definitional article. Relevant for community-level flexibility participation.

DSO tasks (Article 31)

The DSO’s role is fundamentally reframed:

• Must act as a neutral market facilitator (Art. 31(5))
• Must procure non-frequency ancillary services via transparent, non-discriminatory, market-based procedures (Art. 31(7)), unless the regulator has assessed market-based provision as not economically efficient and has granted a derogation; the obligation doesn’t apply to fully integrated network components
• Must ensure effective participation of all qualified market participants including renewables, DR, storage, and aggregators (Art. 31(8))
• Must cooperate with TSOs for effective market participation of distribution-connected resources (Art. 31(9))

Incentives for flexibility in distribution networks (Article 32)

The central article for DSO flexibility. Member States must:

1. Provide a regulatory framework allowing and incentivizing DSOs to procure flexibility services, including Congestion Management, from distributed generation, demand response, or energy storage (Art. 32(1))
2. DSOs must procure flexibility via transparent, non-discriminatory, market-based procedures unless the regulator finds this uneconomic, would cause severe market distortions, or would lead to higher congestion (Art. 32(1))
3. DSOs and regulators must establish specifications for flexibility services and standardized market products, in a transparent and participatory process (Art. 32(2))
4. DSOs must publish network development plans at least every two years, showing medium- and long-term flexibility needs, planned investments, and the use of demand response, energy efficiency, energy storage, or other resources as an alternative to system expansion (Art. 32(3)) — Member States may exempt integrated undertakings serving fewer than 100,000 connected customers, or small isolated systems, from this obligation (Art. 32(5))

This article is the EU legal basis for local flexibility markets and the requirement that DSOs procure flexibility through markets rather than direct control.

DSO ownership of energy storage (Article 36)

DSOs shall not own, develop, manage, or operate energy storage facilities (Art. 36(1)). Derogations are possible only if:

• The storage is a fully integrated network component (e.g., capacitor, flywheel for grid stability), or
• No market party can deliver the service cost-effectively after an open tendering process

This separation ensures that flexibility services, including storage, develop as competitive markets rather than regulated monopoly services. Regulators must review this every five years.

Electromobility (Article 33)

Similar ownership unbundling for EV charging: DSOs generally cannot own recharging points (with derogations if the market fails to deliver). This ensures EV flexibility potential (smart charging, V2G) develops as a market service.

Relevance to the wiki

This Directive is the legal backbone for the wiki’s core topic. Specifically:

1. Article 32 mandates the market-based approach to DSO flexibility that the wiki documents — it’s the EU law behind why DSOs must procure flexibility through markets rather than just building more grid or using direct control
2. The aggregation framework (Arts. 13, 15) creates the legal space for flexibility market participants to exist — independent aggregators can bundle customer loads for market participation without supplier consent
3. The storage ownership ban (Art. 36) shapes the Swedish flexibility market structure — DSOs like E.ON Energidistribution cannot own batteries but must procure flexibility from market participants
4. The network development plan requirement (Art. 32(3)) explains why DSOs must publish flexibility needs — this transparency obligation drives the entire flexibility procurement chain
5. Villkorade Avtal sit in an interesting position relative to this Directive: they are rules-based, not market-based, which Art. 32(1) permits only when market-based procurement is uneconomic, would cause distortions, or would lead to higher congestion — the Directive clearly prefers market-based flexibility

Swedish transposition

Sweden transposed the Directive primarily through amendments to the Electricity Act (ellagen). The Swedish Energy Markets Inspectorate (Ei) is the regulatory authority referenced throughout the Directive. Key transposition questions are now addressed in Distribution System Operator, Flexibility Market, Energy Storage, and Distribution Network Development Plan.