Flexible connections in the new architecture of the EU electricity market

26 June 2024 | Knowledge, News, The Right Focus

Accelerating RES installations and reducing barriers to the realisation of new capacity connections are key challenges in the energy transition process. The European Union has adopted a package amending[1]  the system regulations for the internal electricity market, with the aim of increasing the flexibility of the energy system and adapt the grid infrastructure to the development of distributed RES. Flexible connection agreements are another alternative for projects that have been refused a connection and cannot obtain a commercial connection.

Why the electricity market needs an additional solution for RES connections

The EU energy system is to be made greener by RES and so-called decarbonised gases, and the economy is to be electrified.

Rapidly developing modern technologies and growing investor interest in renewable energy are colliding with outdated energy infrastructure[2] and refusals to connect ,[3] because operators’ development plans do not anticipate the demand for such large volumes of renewable energy.

Connection refusals and the obligation for operators to cooperate with applicants willing to co-finance the connection in the so-called commercial regime do not solve the problem. There is no uniform practice for connecting commercial RES without the risk of discrimination against investors, and sometimes the need for cooperation between operators prolongs the procedure, creates uncertainty and makes the investment unprofitable.

Flexible connection agreements as a so-called third alternative for RES connection

EU Member States will be required to implement regulations aimed at increasing the flexibility of grid operation and generation sources. Solutions such as energy sharing or peak shaving will be introduced.

The electricity system is to become flexible, meaning that it will have the ability to adjust to the variability of generation and consumption patterns and grid availability, across relevant market timeframes[4].

Also key is the introduction of a peak hour, i.e. an hour where, on the basis of the forecasts of transmission system operators, the gross consumption of electricity generated from sources other than renewable sources or the day-ahead wholesale electricity price is expected to be the highest, taking cross-zonal exchanges into account.

Importantly, a flexible connection agreement will be introduced[5], which means a set of agreed conditions for connecting electrical capacity to the grid that includes conditions to limit and control the electricity injection to and withdrawal from the transmission network or distribution network. The agreement will be able to be introduced on the basis of guidelines adopted by the regulatory authority[6] in this regard.

In areas where network capacity for new connections is limited or unavailable, the transmission system operator (TSOe) and distribution system operator (DSOe) will be able to offer flexible connection agreements.

The areas with limited or no capacity will be identified by the TSOe, who will be obliged to publish detailed information in this respect with high spatial granularity, respecting public security and data confidentiality (with monthly updates).[7]

The TSOe shall also be obliged to inform applicants about the status and treatment of connection requests (including information on flexible connection agreements to be provided within three months of the submission of the request). If a connection request is neither granted nor permanently rejected, the TSOe must update the information on the treatment of the request and on the possibilities for flexible connection at least on a quarterly basis.

This solution has the potential to ensure that investors whose connection requests are rejected in situations where the operator fails to negotiate a commercial connection can connect installations under a flexible connection agreement.

The conditions to be met by flexible connection agreements are:

  • No delaying of network reinforcements in identified areas
  • The possibility to convert from flexible to firm connection agreements if the network is developed on the basis of established criteria
  • The application of flexible connection agreements as a permanent solution where the regulatory authority considers that network development in a given area is not the most efficient solution

Flexible connection agreements will have to specify, in particular:

  • The maximum firm injection and withdrawal of electricity to and from the grid, and additional flexible injection and withdrawal capacity that can be connected and differentiated by time blocks throughout the year
  • The network charges applicable to both the firm and flexible injection and withdrawal capacities
  • The agreed duration of the flexible connection agreement and the expected date for granting connection to the entire requested firm capacity

System users connecting under a flexible connection agreement will be required to install a power control system certified by an authorised entity[8].

Entry into force of new regulations

The grid flexibility and flexible connection regulations set out in the package will partially enter into force 20 days after the publication of the Regulation in the Official Journal of the European Union. The remaining part of the rules, which are covered by the Directive, will be implemented within 6 months of the date of entry into force of the Directive (the same date as for the Regulation).

Any questions? Contact us

Wojciech Wrochna

Aleksandra Pinkas

 

[1] Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/942 and (EU) 2019/943 as regards improving the Union’s electricity market design and Directive of the European Parliament and of the Council amending Directives (EU) 2018/2001 and (EU) 2019/944 as regards improving the Union’s electricity market design (the package has been adopted by the EU Council and is awaiting the signature of the EU legislators)

[2]  Supreme Audit Office, Information on the results of the audit. Development of the electricity distribution network, 2024 – the report shows, among other things, that in 2021, 46% of 110 kV (HV) power lines were over 40 years old, half of which were over 50 years old. 

[3]  Bulletin 01/2023 of the Energy Regulatory Office, pp. 72-73 – more than 7,000 negative decisions were issued in 2022 alone, an increase of approximately 88% compared to the previous year

[4] Article 2(79) of Regulation 2019/943

[5] Article 6a of Directive 2019/944

[6] In Poland, the President of the Energy Regulatory Office

[7] Article 50(4a) of Regulation 2019/943

[8] The certification is likely to be made by Polskie Sieci Elektroenergetyczne.

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Contact us:

Wojciech Wrochna, LL.M.

Wojciech Wrochna, LL.M.

Partner, Head of Energy, Infrastructure & Environment Practices Group

+48 734 189 743

w.wrochna@kochanski.pl