EU/Competition: Energy

Newsletter 9/2020

The European Union Agency for the Cooperation of Energy Regulators (ACER) published 17.08.20 four decisions​ in line with the Regulation establishing a Guideline on Electricity Balancing, creating a single Sweden/Denmark/Finland balancing capacity market for the procurement and exchange of automatic frequency restoration reserves. By procuring balancing capacity, Transmission System Operators (TSOs) acquire the option to activate a generation or demand facility to balancing the electricity system in real time. By organising this common procurement and exchange of balancing capacity, the TSOs increase competition between providers reducing the overall cost for TSOs. The four decisions cover: (i) Decision 22-2020 establishes a market-based allocation process of cross-zonal capacity for the exchange of balancing capacity. Particularly, the methodology regulates the amount of cross-zonal capacity to be made available for the exchange of balancing capacity. This allocation is based on a forecast of the day ahead (DA) market prices’ differences and actual balancing capacity bids. (ii) Decision 21-2020 establishes a methodology for the application of an allocation process of cross-zonal capacity for the exchange of balancing capacity. This methodology allows TSOs to apply the first methodology in procurement process of balancing capacity defined in the third decision. This decision defines the pre-conditions when TSOs are allowed to start exchanging balancing capacity which – most notably – is that cross-zonal capacity needs to be calculated pursuant the approved CCM methodology for the DA timeframe. (iii) Decision 19-2020 sets out harmonised rules for the procurement and exchange of balancing capacity. This methodology implements the common procurement of balancing capacity for the automatic Frequency Restoration Reserves (aFRR) on the LFC Block. (iv) Decision 20-2020 decides on the exemption to TSOs for not allowing balancing service providers to transfer their obligations to provided balancing capacity. This exemption allows TSOs to only allow transfer of balancing capacity after the procurement process within bidding zones but not across bidding zones borders. The decisions are addressed to Fingrid (Finland), Svenska kraftnät (Sweden) and Energinet (Denmark). Visit the decisions here.

One of the aims of the European Green Deal is to increase the EU’s climate ambition so that greenhouse gas emissions can be reduced by at least 50% and towards 55% by 2030. The European Green Deal communication has identified a series of climate, energy and environmental legislation that needs to be reviewed and revised in order to achieve such increased ambition, including the Renewable Energy Directive (2018/2001/EU) and the Energy Efficiency Directive (2012/27/EU and 2018/2002/EU). As the first step in this process, the Commission published 04.08.20 roadmaps for the review of both directives to inform stakeholders of what the goals of this initiative are and which policy options are being considered, and opened a seven-week period for public feedback. For renewables, the roadmap is in the form of an inception impact assessment. It will assess whether the EU renewable energy target should be raised and whether other parts of the directive would need to be modified. For energy efficiency, a combined evaluation roadmap and inception impact assessment is foreseen. Visit the renewables directive consultation here and the energy efficiency consultation here.

The UK Brexit transition phase ends 31.12.20, and there are no current indication that the transition phase will be extended. Through 2020, the UK has – from an internal market perspective – been a complete member of all provisions and schemes similarly to that of an EU member state. However, if the UK leaves the EU 31.12.20 with no new trade agreement, the “hard Brexit” discussed in 2018-2019 will, in practice, occur 31.12.20 – – and the UK will trade on WTO terms as of 01.01.21. The EU/UK negotiations on a new trade agreement have not been suspended, however, all major (sensitive) issues seem still to be on the table. The Commission’s chief negotiator, Michel Barnier, had the following observation mid August “…too often this week, it felt as if we were going backwards more than forwards… Today, at this stage, an agreement between the United Kingdom and the European Union seems unlikely.” In other words, a 31.12.20 “hard Brexit” seems likely. The Commission published an updated “Brexit Readiness” checklist in August 2020. The new guidance reflects the status of the negotiations – and that an ambitious trade agreement is impossible – by stating that “…changes are inevitable, regardless of the outcome of the ongoing EU-UK negotiations, and risk compounding the pressure that businesses are already under due to the COVID-19 outbreak”. The checklist provides an overview of the main areas of change that will take place in any event as of 01.01.21. The basic checklist can be visited here, and the sectoral stakeholder ‘readiness notices’ published by the Commission services (all updated in 2020) can be visited here.

Disclosure requirements have been imposed on all grocery store chains in Norway in respect of acquisitions relating to the distribution and sale of groceries, regardless of the general threshold in Norwegian rules on merger control. The reason for imposing such requirements is that also smaller acquisitions falling below merger notification thresholds, may cause harm to competition at the local or national level. Norgesgruppen acquired 16.01.18 the premises of a grocery store at Sædalssvingene in Bergen, Norway. Both then and now, Coop operates a grocery store at that location. According to the disclosure requirements, Norgesgruppen should have informed the Competition Authority of the acquisition within three working days after the conclusion of the agreement. The acquisition was, however, only notified to the Authority on 17.04.18. Consequently, Norgesgruppen was fined MNOK 20 in a decision of 27.08.20.