Peak shaving means the ability of market participants to reduce electricity consumption from the grid at peak hours at the request of the system operator (Article 2(73) of the Regulation (EU) 2019/943 added by the Regulation of the European Parliament and the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design).

                       
                 
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14 December 2023

Reform of electricity market design: Council and Parliament reach deal

Text of the provisional agreement

Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design

 

 

 

quote

 

Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design, Text of the provisional agreement as of 14 December 2023

 

Article 2

(72) ‘peak hour’ means an hour where, based on the forecasts of transmission system operators and, where applicable, nominated electricity market operators, the gross electricity consumption or the gross consumption of electricity generated from sources other than renewable sources as referred to in Article 2(1) of Directive (EU) 2018/2001 of the European Parliament and of the Council or the day-ahead wholesale electricity price are expected to be the highest, taking cross-zonal exchanges into account

(74) ‘peak shaving product’ means a market-based product through which market participants can provide peak shaving to system operators

 

Article 7a

Peak shaving product  

1. Where a regional or Union-wide electricity price crisis is declared in accordance with Article 66a of Directive (EU) 2019/944, and without prejudice to Article 40(5) and (6) of thereof Member States may request system operators to propose the procurement of peak shaving products in order to achieve a reduction of electricity demand during peak hours. Such procurement shall be limited to the duration set out in the decision adopted pursuant to Article 66a (1) of Directive (EU) 2019/944. 

2. When requested pursuant to paragraph 1, system operators shall, after consulting stakeholders, submit a proposal setting out the dimensioning and conditions for the procurement and activation of the peak shaving product to the regulatory authority of the Member State concerned for its approval. 

2a. The concerned national regulatory authority shall assess the proposal in terms of achieving a reduction of electricity demand and impact on wholesale electricity price during peak hours. The assessment shall take into consideration the need for the peak shaving product not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak shaving products. Based on this assessment, the regulatory authority may request the system operator to amend the proposal. 

2b. The proposal for peak shaving product shall comply with the following requirements:  

(a) the dimensioning of the peak shaving product shall be based on an analysis of the need for an additional service to ensure security of supply without endangering grid stability, of its impact on the market and of its expected costs and benefits. The dimensioning shall take into account the forecast of demand, the forecast of electricity generated from renewable energy sources, the forecast of other sources of flexibility in the system, such as energy storage, and the wholesale price impact of the avoided dispatch. The dimensioning of the peak shaving product shall be limited to ensure that forecasted costs do not exceed the expected benefits of the product; 

(b) the procurement of a peak shaving product shall be based on objective, transparent, market-based , non-discriminatory criteria and be limited to demand response; It shall not exclude participating assets from accessing other markets; 

(c) the procurement of the peak shaving product shall take place using competitive bidding, which can be continuous, with selection based on the lowest cost of meeting pre-defined technical and environmental criteria and shall allow the effective participation of consumers, directly or through aggregation; 

(ca) the minimum bid size shall not be higher than 100 kW, including through aggregation;

(d) contracts for a peak shaving product shall not be concluded more than a week before its activation ;

(e) the activation of the peak shaving product shall not reduce cross-zonal capacity;  

(f) the activation of the peak shaving product shall take place before or within the day-ahead market and may be done based on a predefined electricity price; 

(g) the activation of peak shaving product shall not imply starting fossil fuelbased generation located behind the metering point, avoiding the increasing of greenhouse gas emissions.

3. The actual reduction of consumption resulting from the activation of a peak shaving product shall be measured against a baseline, reflecting the expected electricity consumption without the activation of the peak shaving product. Where a system operator procures a peak shaving product, it shall develop a baseline methodology in consultation with market participants and, where relevant, taking into account the Implementing Act adopted pursuant to Article 59.1.e, and submit it to the regulatory authority for its approval. 

4. Regulatory authorities shall approve the proposal of the system operators seeking to procure a peak shaving product and the baseline methodology submitted in accordance with paragraphs 2 and 3 or shall request the system operators to amend the proposal where it does not meet the requirements set out in these paragraphs. 

4a. By six months after the end of a crisis, the Agency shall assess the impact of using peak shaving products on the European electricity market, after consulting stakeholders. The assessment shall take into consideration the need for these products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak shaving products. The Agency may issue recommendations that national regulatory authorities shall take into account in their assessment pursuant to paragraph 2a. 

4b. By 30 June 2025, the Agency shall assess the impact of developing peak shaving products on the European electricity market under normal market circumstances, after consulting stakeholders. The assessment shall take into consideration the need for these products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak shaving products. Based on this assessment, the Commission may submit a legislative proposal to amend this Regulation in order to introduce peak shaving products outside electricity price crisis situations.



 

chronicle   Regulatory chronicle



14 December 2023

 

Reform of electricity market design: Council and Parliament reach deal

Text of the provisional agreement

Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design

 

 

IMG 0744   Documentation 

 

 

Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design, Article 2 (72-74)

 

 

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Demand side services (DSR)

 

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