Risk Preparedness Electricity Regulation

Introduction

Regulation (EU) 2019/941 on risk-preparedness in the electricity sector is a key component of the EU's 'Clean energy for all Europeans' package. It establishes a common framework of rules to prevent, prepare for, and manage electricity crises, replacing the older Directive 2005/89/EC. The regulation acknowledges that in an increasingly interconnected European electricity market, with a higher share of variable renewable energy sources, electricity crises can quickly spread across borders. Therefore, a purely national approach to energy security is no longer sufficient.

This regulation shifts the focus from national-level crisis management to a coordinated, regional approach built on principles of solidarity and transparency. It works in conjunction with other key energy legislation, such as Regulation (EU) 2019/943 (on the internal market for electricity) and Directive (EU) 2019/944 (common rules for the internal market), to ensure that market mechanisms are used as the primary tool for ensuring supply, with non-market interventions reserved as a last resort.

Main Goal

The primary objective is to ensure a coordinated and effective approach among EU Member States to safeguard the security of electricity supply. This involves creating common rules for identifying risks, developing robust risk-preparedness plans, and establishing clear procedures for cooperation and mutual assistance during an electricity crisis, thereby strengthening the resilience of the Union's electricity system and enhancing trust between Member States.

Who It Applies To

The regulation primarily applies to:

• EU Member States, who must designate a Competent Authority (a national governmental or regulatory body) responsible for implementing the regulation.
• The European Network of Transmission System Operators for Electricity (ENTSO-E), which is tasked with developing common methodologies for risk assessment.
• Regional Coordination Centres (RCCs), which play a key role in regional risk assessments and crisis management.
• Transmission System Operators (TSOs) and Distribution System Operators (DSOs), who are involved in the development and implementation of national plans.
• Electricity undertakings (producers, suppliers) and customer organizations, who must be consulted during the planning process.

Key Dates

• Entry into Force: 4 July 2019.
• Designation of Competent Authorities: By 5 January 2020.
• First Risk-Preparedness Plans: Member States were required to adopt and publish their first plans by 5 January 2022.
• Plan Updates: Plans must be updated every four years, unless circumstances warrant more frequent updates.

Exemptions

• A specific derogation applies to Cyprus. As long as it is not directly interconnected with another Member State's electricity grid, the provisions related to regional crisis scenarios, regional/bilateral measures in plans, and the mutual assistance mechanism do not apply.

Key Provisions

• Common Methodologies: ENTSO-E is required to develop common methodologies for identifying regional electricity crisis scenarios and for conducting short-term and seasonal adequacy assessments.
• Risk Identification: A two-level approach is established, with ENTSO-E identifying regional electricity crisis scenarios and each Member State then identifying national electricity crisis scenarios consistent with the regional view.
• Risk-Preparedness Plans: Each Member State must establish a detailed risk-preparedness plan based on the identified scenarios. These plans must include both national and agreed-upon regional/bilateral measures.
• Regional Cooperation: The regulation mandates cooperation within defined regions (based on RCCs). Member States must agree on regional measures, test their plans jointly, and coordinate during crises.
• Solidarity and Assistance: A mechanism for mutual assistance between Member States during a crisis is established, based on pre-agreed technical, legal, and financial arrangements, including rules for fair compensation.
• Market Primacy: The regulation stipulates that market-based measures must be exhausted before any non-market-based interventions (like forced load shedding) are used. Any such measures must be necessary, proportionate, non-discriminatory, and temporary.

Obligations & Requirements

• Member States must:
  • Designate a Competent Authority.
  • Identify national electricity crisis scenarios.
  • Develop, consult on, and regularly update a national Risk-Preparedness Plan.
  • Agree on regional and bilateral cooperation measures with neighboring states.
  • Periodically test the procedures in their plans through simulations.
  • Declare an electricity crisis when necessary and inform the Commission and other Member States.
  • Provide assistance to other Member States in a crisis, based on solidarity principles and pre-agreed terms.
  • Conduct an ex-post evaluation after a crisis.
• ENTSO-E must:
  • Develop and update methodologies for risk and adequacy assessments.
  • Identify regional electricity crisis scenarios.
  • Conduct and publish regular seasonal adequacy assessments (winter and summer).

Affected Products/Types/Actors/Processes

• Actors: National governments, energy regulators, ENTSO-E, Regional Coordination Centres, TSOs, DSOs, electricity producers, and large industrial consumers.
• Processes: National and regional energy security planning, electricity system risk assessment, cross-border electricity trading during emergencies, crisis management protocols, and inter-state cooperation mechanisms.

Penalties

• The regulation does not specify direct financial penalties for companies. Enforcement is managed at the EU level. The European Commission assesses the national risk-preparedness plans and can issue recommendations for review. If a Member State fails to comply with its obligations under the regulation, the Commission may initiate infringement procedures, which can ultimately lead to financial sanctions against the Member State.