text: OJ L158, 14.6.2019, p. 22. 2 OJ L series, 15.7.2024. 3 OJ L 72, 17.3.2017.

text: Recommendation No 02/2024

text: Policy paper on the revision of the network code on capacity allocation mechanisms in gas transmission systems (‘CAM NC revision’), available at: https://www.acer.europa.eu/sites/default/files/documents/Official_documents/Public_consultations/PC_2024_G _03/CAM_NC_revision_policy_paper_2024.pdf. 5 ACER Special Congestion Report, available at: https://acer.europa.eu/sites/default/files/documents/Publications/ACER_Special_Report_Congestion2023.pdf. 6 https://www.gasncfunc.eu/gas-func/issues/01/2020/view. 7 https://energy.ec.europa.eu/topics/markets-and-consumers/hydrogen-and-decarbonised-gas-market_en. 8 Public consultation on the Capacity Allocation Mechanisms Network Code: achievements and the way forward (scoping consultation), available at: https://www.acer.europa.eu/documents/publicconsultations/pc2023g09-public-consultation-capacity-allocation-mechanisms-network-code-achievements-andway-forward.

text: Recommendation No 02/2024

text: Evaluation Report on scoping consultation: https://www.acer.europa.eu/sites/default/files/documents/Official_documents/Public_consultations/PC_2023_G _09/PC_2023_G_09_CAM_Scoping_EoR.pdf. 10 Early public consultation on amending the network code on capacity allocation mechanisms in gas transmission systems (policy consultation), available at: https://www.acer.europa.eu/documents/public-consultations/pc2024g03. 11 Evaluation Report on the policy consultation: https://www.acer.europa.eu/sites/default/files/2024-09/PC_2024_G_03_CAM_Policy_EoR.pdf. 12 Final public consultation on amending the network code on capacity allocation mechanisms in gas transmission systems (proposals consultation), available at: https://www.acer.europa.eu/documents/public-consultations/pc2024g09-public-consultation-amending-networkcode-capacity-allocation-mechanisms-gas-transmission-systems. 13 Evaluation Report on the proposals consultation: https://www.acer.europa.eu/sites/default/files/documents/Official_documents/Public_consultations/PC_2024_G _09/PC_2024_G_09_CAM_NC_Evaluation_of_Responses.pdf.

text: Recommendation No 02/2024

text: This Regulation entered into force on the twentieth day following that of its publication in the Official Journal of the European Union and will apply from 5 February 2025.

text: Recommendation No 02/2024

text: Recommendation No 02/2024

text: Evaluation Report on scoping consultation, available at: https://www.acer.europa.eu/sites/default/files/documents/Official_documents/Public_consultations/PC_2023_G _09/PC_2023_G_09_CAM_Scoping_EoR.pdf. 16 Evaluation Report on the policy consultation, available at: https://www.acer.europa.eu/sites/default/files/2024- 09/PC_2024_G_03_CAM_Policy_EoR.pdf. 17 Evaluation Report on the proposals consultation, available at: https://www.acer.europa.eu/sites/default/files/documents/Official_documents/Public_consultations/PC_2024_G _09/PC_2024_G_09_CAM_NC_Evaluation_of_Responses.pdf.

text: Recommendation No 02/2024

text: Judgment of the General Court of 16 March 2022, MEKH vs ACER, case

text: and

text: , EU:T:2022:138, available at: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:62019TJ0684.

text: Recommendation No 02/2024

text: Partial restoration may focus on the non-binding demand assessment (

text: Article 26

text: ) and coordinated project design by concerned transmission system operators (

text: Article 27

text: ) while considering removing the links with provisions that would not be restored.

text: Recommendation No 02/2024

text: Recommendation No 02/2024

text: Table 1. Articles for which amendments to CAM NC regulation are proposed

text: Article Proposed amendment

text: Article 1

text: No amendment proposed.

text: Article 2

text: ACER invites the legal services of the European Commission to finalise the formulation of the scope of application with respect to entry points from and exit points to third countries to ensure its full alignment with Article 70 of the recast gas Regulation. ACER finds unnecessary the addition of optionality for applying CAM NC to other types of network points as NRAs can refer to or copy the CAM NC rules when adopting their respective national rules. ACER finds unnecessary the inclusion of conditional capacity in the scope of CAM NC as proposed by a stakeholder. Conditional capacity is a subset of firm capacity (and technical capacity is the maximum firm capacity that can be made available to the market).

text: Amendment proposed with respect to paragraphs (1) and (5).

text: Article 3

text: ACER invites the Commission’s legal services to ensure the legal clarity and consistent crossreferencing of definitions in lower-level network codes and guidelines. ACER considers that no definition is needed for ‘initial auction’ as the Annual yearly capacity auction, the Quarterly capacity auctions and the Monthly capacity auctions are fully defined in

text: Articles 11

text: to 13, respectively.

text: Amendment proposed with respect to paragraph (15) and adding a definition for ‘additional auction’.

text: Article 4

text: ACER assessed that: “the principle of cooperation between TSOs at times of maintenance” is already incorporated in the current Article 4 of the CAM NC and considers this stakeholder suggestion does not require action.

text: No amendment proposed.

text: Article 5

text: No amendment proposed.

text: ACER agrees that structural changes in the gas system or in gas supply and demand are the

text: Article 6

text: primary trigger of capacity re-calculation, while information on those changes is collected through consultation of network users, including through the TYNDP process and the demand assessments. ACER believes a 2-year period for reviewing the assumptions underlying the capacity calculation is making explicit and transparent an expected current practice. ACER furthermore notes that a review of capacity calculation assumptions does not automatically lead to a full re-calculation. The review may simply confirm that assumptions are still valid. ACER finds it reasonable and proportionate to require consultation of network users when assessing future gas flows as these stakeholders are the best placed to inform TSOs about how they intend to use the network. Future gas flows are an essential element to consider in the capacity calculation and maximisation process, in particular when re-calculation may concern a reduction of technical capacity. ACER considers that planned reduction of capacity is a matter of capacity calculation and maximisation already covered under the provisions of Article 6 of the CAM NC. ACER does not move forward the separate new article that was proposed by a stakeholder.

text: Recommendation No 02/2024

text: Amendment proposed with respect to paragraphs (1) to (3) and new (5) to (7).

text: Article 7

text: No amendment proposed.

text: Article 7

text: A ensures proper coordination between NRAs when deciding to apply an implicit

text: Article 7

text: A allocation mechanism following a joint assessment of the expected effects. While ACER deems that NRAs consult relevant stakeholders as part of their normal decision processes, it modifies its proposal to include an explicit reference to consultation of stakeholders.

text: Amendment proposed with respect to explicit coordination and consultation requirements for national regulatory authorities before deciding on the application of an implicit allocation mechanisms.

text: Article 8

text: The introduction of mandatory additional offer of firm capacity via UPA to allocate unsold firm capacity is largely supported and is the result of extensive consultations. Allocation rules should be applied at all Interconnections Points (IPs) and at either side of borders, optionality, as requested by a stakeholder, would not be consistent with this idea. ACER evaluated a stakeholder proposal to re-introduce First-Come First-Served (FCFS) and concluded that it would be a step back. ACER had assessed the possibility of higher levels of capacity set-aside and concluded the current rule provides that flexibility already to regulatory authorities. ACER noted that transmission system operators and network users indicate that lower minimum set-aside percentages could be considered. The downward adjustment of the EU-wide minimum level requires further investigation.

text: No amendment proposed at this stage beyond improving editorial consistency. ACER recommends further consideration and investigation of the appropriate minimum level of capacity to be set aside.

text: Article 9

text: No amendment proposed.

text: Article 10

text: No amendment proposed.

text: Article 11

text: ACER evaluated the stakeholder proposal of longer forward capacity allocation and concluded 15 years remains a reasonable horizon for selling forward capacity products. ACER expects very few benefits from changing the time window during which auctions are to be organised. ACER rejects the stakeholder proposal to enable the modification of auction times in accordance with the parameter modification procedure. ACER finds useful to make the notification periods for publishing the available capacities modifiable as it will allow more auction opportunities to be organised if the market conditions require so. ACER proposes a few editorial improvements.

text: Amendment proposed with respect to paragraphs (2), (4), (6), (8) and (11).

text: Article 12

text: ACER’s proposed reduction in the notification period of quarterly capacity levels is consistent with the introduction of additional auctions for yearly capacity and the notification period is modifiable. ACER rejects the stakeholder proposal to delete its amendment. ACER expects very few benefits from changing the time window during which auctions are to be organised. ACER rejects the stakeholder proposal to enable the modification of auction times in accordance with the parameter modification procedure.

text: Recommendation No 02/2024

text: Amendment proposed with respect to the title and paragraphs (1) to (6) and (9).

text: ACER finds the deletion of ‘rolling’ in the title has little impact. ACER recommends using the

text: Article 13

text: same naming convention for the quarterly and monthly capacity auctions of Articles

text: and

text: , respectively as their offer and auctioning modalities are proposed to be aligned. ACER expects very few benefits from changing the time window during which auctions are to be organised. ACER rejects the stakeholder proposal to enable the modification of auction times in accordance with the parameter modification procedure.

text: Article 13

text: A ACER proposed the introduction of additional auctions to enable the re-offering of unsold firm capacity of yearly, quarterly and monthly standard products.

text: ACER considers the UPA time-efficient and expects few benefits from changing the auction times, therefore, ACER does not move forward the stakeholder suggestion to enable the modification of auction times. ACER finds beneficial to organise additional auctions early in the day and finds reasonable to organise additional auctions of yearly capacity and of quarterly capacity with the same timings considering they will not be organised on the same daybut. ACER considers the timings could be modified during comitology.

text: ACER acknowledges that for the determination of available capacity in an additional auction, any capacity set-aside shall be treated pursuant to

text: Article 8

text: . ACER does not have indications that aggregated information is not made available by booking platform operators in a reasonable timeframe and does not move forward the stakeholder suggestion to add a deadline in its amendment proposal as no such deadline exists for other comparable auctions.

text: Amendment proposed with respect to the introduction of additional auctions of firm capacity products with a duration of a month and longer.

text: Article 13

text: B ACER proposed the introduction of a capacity offer between the month-ahead and day-ahead timeframes as the market expressed an interest in it. Among the many possible implementations considered, a balance-of-the-month design was most favoured. ACER proposed a design for the auction of a balance-of-the-month strip of daily capacity products while referring to the considerations above on the possible introduction of a standard balance-of-the-month product. ACER notes that Point 2.2.4 of Annex I to

text: Regulation (EU) 2024/1789

text: requires TSOs to accept any surrender of firm capacity contracted by a network user “with the exception of capacity products with a duration of a day and shorter”. In the “BoM auction” option, the BoM sale allocates a strip of individual daily products to a network user. ACER signals this issue to the European Commission as a CMP related matter that necessitates further clarification. ACER considers the UPA time-efficient and expects few benefits from changing the auction times. ACER does not move forward the stakeholder suggestion to enable the modification of auction times of BoM auctions. ACER understands more time may be needed for network users to prepare the balance-of-themonth auction and includes a notification period of at least 1 hour for available capacities to be published and considers it may be revised during comitology. This proposal could be considered as well for the day-ahead auction should stakeholders deem that useful.

text: Amendment proposed with respect to the introduction of a ‘balance-of-the-month’ auction.

text: Recommendation No 02/2024

text: Article 14

text: ACER proposes a few editorial improvements.

text: ACER considers the UPA time-efficient and expects few benefits from changing the auction times. ACER does not move forward the stakeholder suggestion to enable the modification of auction times.

text: Amendment proposed with respect to paragraphs (3) and (10).

text: Article 15

text: ACER proposes a few editorial improvements and an earlier closing of the first auction round nd (‘WD24’) as requested by the market. The stakeholder proposal for including a 2 auction bidding round for WD24 is discarded based on the September Evaluation Report on the policy consultation.

text: Amendment proposed with respect to paragraphs (1) and (2).

text: Article 16

text: ACER proposes the use of the UPA algorithm for the additional auctions and balance-of-the month auctions as it is efficient and known to the market and already used for day-ahead and within-day capacity auctions. ACER proposes to make modifiable the duration of the auction rounds and the intervals between auction rounds, to enable a faster allocation process should the market conditions require so. ACER consulted on having all interruptible capacity auctions run under the UPA algorithm and concluded that stakeholders are split on this proposal and does not propose to change the default rule. However, the choice for the auction algorithm to be applied for allocating a specific product will be among the adjustable parameters in order to ensure the algorithm shall be adapted to market circumstances and shippers’ needs.

text: Amendment proposed with respect to paragraphs (2), (2A), (3), (3A) and (3B).

text: Article 17

text: ACER proposes a few editorial improvements and introduces the possibility for price steps to be modified at the end of each auction day for use as of the first auction round of the next auction day should transmission system operators assess the misalignment of the price step and the prevailing market conditions. This provision will increase the likelihood that ACA auction processes allocate capacity in due time.

text: Amendment proposed with respect to paragraphs (2), (9), (10) and (22).

text: ACER rejects the stakeholder proposal to move away from pay as cleared and considers a same

text: Article 18

text: capacity product should be allocated at the same price, reflecting its scarcity value, to all network users at a given point in time.

text: No amendment proposed.

text: Article 19

text: ACER takes note of the point by a stakeholder made to “limit possibility of transmission system operators to declare bundled capacity as available only on one side of the interconnection point during maintenance works”, but considers the comments better be addressed as part of the TSO transport contracts and TSO-TSO interconnection agreements and not to be included in this amendment process.

text: No amendment proposed.

text: The repetition of cataloguing main terms and conditions applicable to bundled contracts will

text: Article 20

text: allow ENTSOG to review and update its template taking into account the most recent market conditions as well as ACER's remarks in the Opinion 06/2018. ACER disagrees with the stakeholder assertion that this task implies a full harmonisation of contracts. Moreover, ACER noted several stakeholder comments touch on national terms and conditions, such as how maintenance is dealt with or the specific procedure for interrupting interruptible contracts.

text: Amendment proposed with respect paragraph (1).

text: The extension of the conversion mechanism to daily and within-day capacities requires further

text: Article 21

text: investigation.

text: Recommendation No 02/2024

text: No amendment proposed at this stage. ACER recommends further consideration and investigation of the possible extension of the conversion mechanism to daily and within-day capacities.

text: Article 22

text: No amendment proposed.

text: Article 23

text: No amendment proposed.

text: Article 24

text: No amendment proposed.

text: Article 25

text: Amendment proposed with respect to paragraph (2).

text: ACER notes that the proposed amendments of provisions pertaining to incremental capacity are

text: Article 26

text: subject to the partial or full restoration of these provisions. ACER proposes a few editorial improvements and proposes to task ENTSOG with the development of a template to facilitate the administrative work of transmission system operators. ACER emphasises that the obligation on TSOs to regularly assess market demand for new capacity is embedded in Article 10(4) of the recast gas Regulation. Market participants as well as regulatory authorities expect the outcome of that assessment to be reported on. ACER evaluated different options for launching the demand assessment process and concluded the frequency is subsidiary to raising the credibility of the non-binding demand indications expressed by network users. ACER considers that the approval by the regulatory authority shall ensure that fees cover efficiently incurred costs of activities initiated on the basis of the non-binding demand indications. ACER proposes to introduce the possibility to charge a deposit at the time a shipper submits a non-binding demand indication. That deposit shall be returned to shippers whose non-binding demand indication was confirmed with the placement of a matching bid in the binding phase and also in case the incremental process ends with a positive economic test at least for one offer level. ACER finds reasonable the stakeholder proposal to include a proportionate reimbursement in case of downward adjusted bids and the proposal to disregard non-binding demand indication if the deposit is not paid in time by the relevant shipper. ACER considers necessary that fees and deposits meant to raise credibility of non-binding demand indications for incremental capacity are approved by regulatory authorities and does not move forward the different proposal made on that aspect.

text: Amendment proposed with respect to paragraphs (1), (8), (9A), (9B), (11), (11A), (12)(b), (12)(c), (12)(d) and (13).

text: Article 27

text: No amendment proposed. ACER proposed the inclusion of the energy-efficiency-first principle as an element of

text: Article 28

text: consideration when evaluating an incremental capacity proposal.

text: Article 29

text: No amendment proposed.

text: Article 30

text: No amendment proposed.

text: Article 31

text: Deletion of article proposed.

text: Article 32

text: ACER emphasises that the objective of the proposed amendments is to align the market rules with the lessons from the 2022 gas market crisis.

text: Recommendation No 02/2024

text: ACER proposed to clarify the application of the maximisation principle to interruptible capacity while considering congestion, probability of interruption and system integrity. ACER concluded on the basis of the public consultations that the market prefers to keep ACA for interruptible capacity and rejects the proposal to apply UPA for all interruptible auctions. The auction algorithm may be modified in accordance with the parameter modification procedure. ACER agrees with the stakeholder comment that the notification period must be aligned with the introduction of additional auctions of remaining firm capacity. It may be modified through the parameter modification procedure.

text: Amendment proposed with respect to paragraphs (1), (3), (3A), (5) and (10).

text: Article 33

text: No amendment proposed.

text: Article 34

text: No amendment proposed.

text: Article 35

text: No amendment proposed.

text: Article 36

text: No amendment proposed.

text: Article 37

text: ACER proposed to extend the maximum validity of the appointment of a booking platform operator by a regulatory authority. ACER notes that transmission system operators enter into a contractual relation with the designated booking platform and that any early termination clauses and termination fees are part of that contractual relation. ACER may issue a recommendation on the selection criteria for appointing a booking platform.

text: Amendment proposed with respect to paragraphs (3) and (7).

text: As a lesson of the gas market crisis of 2022 and in light of the expected evolution of the gas

text: Article 37

text: A market following EU’s decarbonisation objectives, ACER proposes to have a quick modification process to modify non-essential technical CAM NC parameters and align them to changing market conditions. ACER asserts that modified parameters are to stay within the stated ranges and modifications shall occur on the basis of evaluation considering implementation costs and timelines. This procedure delivers flexibility to adjust parameters and react to market conditions faster than through the full amendment process, while ensuring the appropriate degree of harmonisation of cross-border rules, predictability of parameter ranges and stability by means of a robust process including assessment and consultation on the effectiveness of a considered modification. ACER considers its amendment proposal includes the necessary safeguards to ensure sufficient levels of predictability, stability and harmonisation of market rules in light of changing market conditions. ACER finds efficient the alignment of the publication of any modified parameters at the latest with the yearly publication of the auction calendar. ACER clarifies that a modified parameter remains in place until modified again following the process for parameter modification.

text: Amendment proposed with respect to introducing a quick procedure for modifying nonessential technical parameters of allocation processes and aligning them to changing market conditions.

text: Article 38

text: No amendment proposed.

text: Article 39

text: No amendment proposed.

text: Article 39

text: A ACER finds necessary to foresee transitional measures. ACER agrees with the stakeholder proposals to foresee a transition period for the changes requiring significant IT developments.

text: Amendment proposed with respect to the introduction of transitional measures.

text: Article 40

text: Not applicable.

text: Recommendation No 02/2024

text: Recommendation No 02/2024

text: Recommendation No 02/2024

identifier: ACER Recommendation No 02/2024

publisher: Europeiska unionens byrå för samarbete mellan energitillsynsmyndigheter

sprak: en

title: ACER Recommendation 02-2024 on reasoned proposals for amendments to the network code on capacity allocation mechanisms in gas transmission systems

serie: rekommendationer

text: PUBLIC

type: stycke

text: RECOMMENDATION No 02/2024 OF THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULATORS of 20 December 2024 on reasoned proposals for amendments to the

text: Commission Regulation (EU) 2017/459 of 16 March 2017

text: establishing a network code on capacity allocation mechanisms in gas transmission systems and repealing

text: Regulation (EU) No 984/2013

type: rubrik

text: THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULATORS, Having regard to

text: Regulation (EU) 2019/942

text: of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators , and, in particular,

text: Articles 3(1)

text: thereof, Having regard to

text: Regulation (EU) 2024/1789

text: on the internal markets for renewable gas, natural gas and hydrogen , and, in particular,

text: Articles 71(2)

text: (b) and 73(3) thereof, Having regard to the outcome of the public consultations, Having regard to the outcome of the consultation with ACER’s Gas Working Group, Having regard to the favourable opinion of the Board of Regulators of 18 December 2024, delivered pursuant to

text: Article 22(5) of Regulation (EU) 2019/942

text: , Whereas:

text: 1. INTRODUCTION

text: (1) In April 2024 the European Commission invited ACER to submit to the Commission by December 2024 reasoned proposals for amendments (the ‘reasoned proposals’) to the

text: Commission Regulation (EU) 2017/459

text: establishing a network code on Capacity Allocation Mechanisms in gas transmission system (hereafter: CAM NC) . ACER

text: (2) ACER acknowledges the importance of having European market rules that can readily align with the latest market developments, while guaranteeing that the decarbonisation targets set by the Green Deal can be met. As such, ACER recognises the need to revise the CAM NC which lays down details of the European market rules on the allocation of gas transmission capacity.

text: (3) In May 2024, ACER published a draft Policy Paper that reflected ACER’s considerations on the main areas of improvement to CAM NC following input received from stakeholders at the end of 2023 and the beginning of 2024.

text: (4) The Policy Paper mainly built on ACER’s Special Congestion Report (‘Addressing congestion in North-West European gas markets’) and the joint ACER-ENTSOG Solutions Note on the FUNC case 01/2020 (‘Greater flexibility to book firm capacity at IPs’) .

text: (5) Additionally, the ‘EU hydrogen and gas decarbonisation package’ (‘decarbonisation package’) introduced new regulatory elements to advance decarbonisation, enhance security of supply, and facilitate regional cooperation. CAM NC provisions are to be brought in alignment with this legislation.

text: 2. PROCEDURE

text: (6) From October 2023 until January 2024, ACER carried out a preliminary analysis to investigate what are the main achievements and potential improvements to the market rules for capacity allocation and to determine the scope of a potential revision of the CAM NC (‘scoping’). To this end, ACER conducted a public consultation from 14 November 2023 to 5 January 2024 inviting stakeholders to identify the topics that deserve being investigated towards improving the CAM NC rules (‘scoping consultation’). On 12 December 2023, ACER also organised an online workshop on the same topic.

text: (7) ACER shared its draft scoping conclusions with the European Commission, who in its response letter of 11 April 2024 asked ACER to submit proposals according to the process foreseen in the legislation for preparing amendments to network codes.

text: (8) Building on ACER’s scoping activity as well as on the Commission’s invitation to submit reasoned proposals on revising the CAM NC, ACER launched an early consultation with stakeholders from 8 May 2024 until 14 June 2024 based on ACER’s policy paper (‘policy consultation’). Through this consultation, ACER collected stakeholders’ views and concrete proposals to guide ACER in making amendment proposals on the CAM NC provisions. In addition, to further investigate these proposals, ACER organised a technical workshop with stakeholders (by invitation only) on 9 July 2024. ACER published its conclusions in the Evaluation Report on the policy consultation (Annex IV).

text: (9) Based on its evaluation of the inputs received, ACER prepared reasoned proposals for amendments and held a final public consultation from 26 September to 25 October 2024 (‘proposals consultation’) to ensure the proposed amendments effectively address market needs and deliver the expected improvements before finalising and submitting them to the European Commission. ACER published its conclusions on the proposals consultation in its Evaluation Report (Annex III).

text: (10) ACER’s Gas Working Group (hereafter: AGWG) was consulted between 19 November 2024 and 26 November 2024, and provided its advice on 26 November 2024.

text: (11) In its advice, the AGWG endorsed the draft ACER Recommendation on reasoned proposals for amendments to the CAM NC.

text: (12) On 18 December 2024, ACER’s Board of Regulators issued a favourable opinion, pursuant to

text: Article 22(5)

text: (a) of

text: Regulation (EU) 2019/942

text: , on the proposed amended CAM NC Regulation.

text: 3. LEGAL GROUNDS FOR THE PRESENT RECOMMENDATION

text: (13) The European Commission invited ACER to submit to the Commission by December 2024 reasoned proposals for amendments (the ‘reasoned proposals’) to CAM NC.

text: (14) The CAM NC is the network code, as referred to by

text: Article 71 of Regulation (EU) 2024/1789

text: on the internal markets for renewable gas, natural gas and hydrogen (hereafter: recast gas Regulation) , relating to the area of ‘capacity-allocation’ under

text: Article 71(2)

text: (b) of the recast gas Regulation. Capacity allocation rules include rules on ‘cooperation on maintenance procedures and capacity calculation affecting capacity allocation, the standardisation of capacity products and units including bundling, the allocation methodology including auction algorithms, sequence and procedures for existing, incremental, firm and interruptible capacity, and capacity booking platforms.’

text: (15) Article 73 of the recast gas Regulation defines a process for amendment of network codes within the areas listed in

text: Article 71(1)

text: and (2) thereof, with ACER having a formal role for the proposal of such amendments.

text: (16) According to the first sentence of Article 73(3) of the recast gas Regulation, ACER may make reasoned proposals to the Commission for amendments, explaining how such proposals are consistent with the objectives of the network codes set out in Article 70 of the same Regulation. Article 70(2) of the recast gas Regulation does not refer explicitly to objectives and states that the network codes shall (a) provide a minimum degree of harmonisation required to achieve the objectives of this Regulation, (b) take into account regional specificities, where appropriate, (c) not go beyond what is necessary for the purpose of point (a), and (d) apply to all interconnection points within the Union and entry points from and exit points to third countries from 5 August 2026. Instead, subsequently,

text: Article 71(4)

text: and (11) define objectives for the development of network codes, namely contribution to market integration, non-discrimination, effective competition, and the proper functioning of the market. Accordingly, the reference in Article 73(3) of the recast gas Regulation to the objectives of Article 70 of that Regulation should be read together with

text: Article 71(4)

text: and (11) of the same Regulation and in light of the objectives listed therein. Therefore, these objectives are also relevant for the amendments proposed in this Recommendation.

text: (17) According to the second sentence of Article 73(3) of the recast gas Regulation, where ACER considers an amendment proposal to be admissible and where it proposes amendments on its own initiative, ACER shall consult all stakeholders in accordance with

text: Article 14 of Regulation (EU) 2019/942

text: . Pursuant to

text: Article 14(1) of Regulation (EU) 2019/942

text: , ACER, in the process of proposing amendments of network codes

text: under

text: Article 73 of Regulation (EU) 2024/1789

text: , shall ‘extensively consult at an early stage market participants, transmission system operators, consumers, end-users and, where relevant, competition authorities, without prejudice to their respective competence, in an open and transparent manner, in particular when its tasks concern transmission system operators’.

text: (18) Finally, according to

text: Article 3(1) of Regulation (EU) 2019/942

text: , ACER may, upon a request of the European Parliament, the Council, or the Commission, or on its own initiative, provide an opinion or a recommendation to the European Parliament, the Council and the Commission on any of the issues relating to the purpose for which it has been established.

text: (19) As indicated by

text: Articles 71(2)

text: (b) and 73(3) of the recast gas Regulation, ACER’s contribution to the amendments of network codes concerns issues relating to a purpose for which ACER has been established.

text: 4. MAIN FINDINGS

text: (20) The proposals for amendments build on the lessons from the gas market crisis of 2022, the recast gas Directive and recast gas Regulation, both of 2024, and requests from market participants, putting forward three main changes to the rules.

text: (1) Focus on the efficient use of the gas system and a better monitoring of it. The analysis of what occurred during the crisis years showed that capacity calculation and offer was not sufficiently transparent and that monitoring whether capacity is maximised and adjusted to the market needs is difficult. With decarbonisation advancing and the role of gas further changing, such as declining consumption, the optimal use of assets will become more important. ACER recommends improved transparency on how capacity is maximised so it can be better monitored by regulatory and other competent authorities, making EU Member States better prepared for handling the next crisis as well as have better information on system capability in view of possible decommissioning or repurposing of gas pipelines. Enhanced coordination and consultation of concerned regulatory authorities, transmission system operators and network users will be essential when removing parts of the gas system, reducing capacity, to ensure continued access to the gas system and security of supply.

text: (2) More dynamic offer of capacity. The vast majority of stakeholders had asked already in 2020 for more dynamic rules that enable capacity trading (auctions) to come closer to commodity trading (continuous). The price volatility during the crisis and the changing supply routes, in particular the uptake of LNG, would have been easier to handle had there been more auction opportunities and more efficient capacity allocation processes. ACER recommends more auction opportunities (of existing products) and creating product timeframes between monthly and daily (which align more with the needs of LNG deliveries) and as such also contributing to security of supply.

text: (3) Enabling quick modification of non-essential technical rules to align them with evolving market conditions. While the current provisions of the CAM NC supported market functioning in general, the crisis made clear that more flexibility is needed to quickly modify some parameters without requiring the amendment of the CAM NC, so that the rules are adjusted to evolving market circumstances, including a next crisis. ACER recommends including flexibility for TSOs and NRAs to modify specific auction parameters (notably to speed up the capacity allocation processes) in view of changing market circumstances, while keeping the rules harmonised at all interconnection points and respecting the limitations of the mandates of ACER and ENTSOG.

text: (21) ACER maintained a continuous dialogue with stakeholders and reported its 15 16 conclusions on the scoping consultation , the early policy consultation and the consultation on its draft proposal in the respective evaluation reports.

text: (22) ACER found that amendments to the CAM NC would be required in the areas set out in paragraphs (28), (33) and (34) of this Recommendation. Consideration could be given to further investigate the areas set out in paragraphs (35) to (37). In line with the Commission’s request and taking into account the outcome of extensive consultation with the relevant stakeholders, ACER recommends the amendments included in Annex I to this Recommendation for the reasons detailed in Annex II explaining how such proposals are consistent with the objectives in Article 71(4) of the recast gas Regulation.

text: Consultation of the AGWG

text: (23) No comments were raised by NRAs following the end of the AGWG consultation period. During the 26 November 2024 AGWG meeting, no further comments were made, and no areas were identified where it was not possible to reach a consensus. In conclusion, the AGWG endorsed the ACER Recommendation on gas CAM NC amendment.

text: Amendment to CAM NC Regulation

text: 4.2.1. Considerations on the restoration of the incremental capacity provisions in CAM NC

text: (24) ACER provides below considerations and recommendations in support of the legal analysis by the European Commission on whether and to what extent rules on

text: incremental capacity leading to investment may be included within the CAM NC in the aftermath of the Judgment of the European Union General Court (‘Judgment’).

text: (25) With respect to the incremental capacity provisions, after reviewing the justifications for full, partial or no restoration, ACER concludes the following:

text: a. Arguments in support of not restoring the rules governing the incremental capacity process focus on the lack of effectiveness so far in leading to investment in interconnection capacity in the EU, as well as on the expected effectiveness of preserving such a process as interest in long term capacity has been low and is expected to remain low;

text: b. Arguments in support of fully restoring these rules focus on how they could be modified while not providing justification for having EU-wide harmonised rules and why incremental capacity investment could not happen without such rules;

text: c. Arguments in support of partially restoring the rules governing the incremental capacity process cite a need to ensure a structured and harmonized process for evaluating and adjusting the level of interconnectedness in Europe, for instance, by the introduction of a common template for expressing nonbinding interest.

text: (26) ACER notes that the arguments provided by stakeholders address mainly the design of incremental capacity rules and not the justification for having EU-wide harmonised rules for deciding on investment in incremental capacity.

text: (27) ACER notes that ENTSOG and most TSOs favour a full restoration with improvements as included in ACER’s proposed amendments, whereas shippers and traders express a mixed view between no restoration, partial restoration and full restoration. Regulatory authorities supported no restoration or partial restoration, questioning the effectiveness of the incremental capacity process while recognising the benefits of coordination between TSOs in the demand assessment steps and while preparing a project.

text: (28) Considering these elements, ACER recommends:

text: a. Not to restore the chapter with the provisions governing incremental capacity and to delete all further references to it in the other parts of the CAM NC. In addition, ACER could be tasked to issue a Recommendation to NRAs on how to organise coordinated national processes for incremental capacity.

text: b. In the case that the rules governing incremental capacity are restored partially or fully, ACER recommends carefully considering which elements of the process to be restored, and, in all cases, to reconsider ACER’s involvement in the process in cases of disagreement between NRAs in light of the Judgement. ACER additionally recommends amending the process with respect to the robustness of non-binding demand as detailed in the amendment proposals included in Annex I.

text: 4.2.2. Considerations on the introduction of a balance-of-the-month standard product with a dedicated price

text: (29) The assessment carried out by ACER has shown that stakeholders, and in particular market participants, call for being able to secure capacity products on timeframes between the monthly and daily maturities. The ‘balance-of-the-month’ timeframe has been identified as the most appropriate.

text: (30) ACER notes that while shippers express a preference for introducing a standard product for balance-of-the-month capacity, TSOs and national regulatory authorities express a preference for the solution that comprises a daily auction of a strip of daily capacities until the end of the month (‘balance-of-the-month auction of daily capacity products’) in view of having a more straightforward implementation process without the need to modify the Network code on harmonised tariff structures (‘TAR NC’) and at lower estimated implementation cost.

text: (31) With respect to the role of price in designing a balance-of-the-month offer, ACER concludes the following:

text: a. Shippers emphasise that the multiplier element in the price definition is an essential design element. The use of the daily tariff multiplier might make the balance-of-the-month auction (of a strip of daily capacity products) not competitive at the start of a given month when many days are included. While many implementations of a dedicated balance-of-the-month multiplier can be imagined, foremost, it should have a level that is between the levels of the monthly capacity and daily capacity multipliers.

text: b. With respect to the justification of a targeted amendment of the TAR NC, ACER finds that respondents who identified the price as an essential element of a balance-of-the-month capacity product did not raise many arguments on the urgency of setting a dedicated price and multiplier for a balance-of-the-month product. They indicate a willingness to wait, if necessary, for the introduction

text: of the capacity product until a dedicated tariff multiplier and price have been set.

text: (32) ACER emphasises that:

text: a. Without a dedicated multiplier and price, the balance-of-the-month auction of a package of daily products may not be appealing compared to other capacity products and therefore not effective in having a more dynamic capacity offering. The actual competitive disadvantage may be small if multipliers for monthly and daily products are not too different.

text: b. The alternative introduction of a balance-of-the-month product, with a dedicated tariff multiplier, has a higher implementation cost (IT development) and longer implementation time (amendment of TAR NC).

text: c. The offer of this possible standard product is conditional on first setting a dedicated price in the TAR NC that shall be based on a multiplier between the level of the monthly multiplier and the level of the daily multiplier.

text: d. The balance-of-the-month product is compatible with the current rules for capacity surrender as provided under the Guidelines on Congestion Management Procedures (‘CMP GL’), whereas this is uncertain in the case of a strip of daily products.

text: (33) Considering these elements, ACER recommends:

text: a. To foresee the introduction of a balance-of-the-month auction of a strip of daily products as detailed in Annex I; and

text: b. To foresee the option to introduce in the future, via targeted amendments of the CAM NC and TAR NC, a balance-of-the-month product if further justification from market participants is provided that the above option would be less effective.

text: 4.2.3. Amendments proposed to the CAM NC

text: (34) ACER proposes amendments to the provisions listed in Table 1.

text: 4.2.4. Points requiring further consideration and investigation

text: (35) ACER believes that, following the interest manifested by TSOs and network users, consideration could be given to lowering the minimum percentage of capacity to be set aside pursuant to

text: Articles 8(6)

text: to (8) of the CAM NC, or to allowing flexibility to lower the minimum percentage in the future. However, not having had the time to carry out an in-depth analysis on the issue and seeing that the introduction of such flexibility provision for modification in the CAM NC requires a legally robust process, ACER does not propose an amendment at this stage. Nevertheless, ACER invites the Commission to consider further investigation on this point:

text: a. Requesting ACER to assess the effectiveness of the current minimum level of capacity to be set aside;

text: b. Requesting ACER to investigate the design of a procedure for modifying the minimum level and recommended proportions of capacity to be set aside for different capacity products.

text: (36) ACER believes consideration could be given to include daily and within-day capacities under the conversion mechanism of Article 21(3) of the CAM NC in view of the changed market dynamic and a greater focus on shorter term capacity products. However, not having had the time to carry out an analysis on this issue, ACER does not propose an amendment at this stage. Nevertheless, ACER invites the European Commission to consider further investigation on this point:

text: a. Requesting ACER to assess the current practice with respect to the voluntary inclusion of daily and within-day capacities under the conversion mechanism;

text: b. Requesting ACER to issue a Recommendation to national regulatory authorities on extending the national conversion mechanism to daily and/or within-day capacities.

text: (37) ACER believes consideration could be given during the comitology process to the further specification of three technical CAM NC parameters, to set them in accordance with network users’ needs. These parameters are:

text: a. the exact auction timings for the proposed ‘additional auctions’ of

text: Article 13

text: A;

text: b. the exact notification period for publishing the available capacity for the proposed ‘balance-of-the-month auctions’ of

text: Article 13

text: B;

text: 4.2.5. Interactions with other network codes and guidelines

text: (38) As part of its analysis on the revision of the CAM NC, ACER noted possible interactions exist with other Network Codes and Guidelines to implement the proposed changes to the CAM NC.

text: (39) Interactions with the

text: Commission Regulation (EU) 2017/460 of 16 March 2017

text: establishing a network code on harmonised transmission tariff structures for gas (‘TAR NC’) may include:

text: a. Articles 13 and 14 of the TAR NC, in case balance-of-the-month standard products are to be introduced;

text: b. Chapter IX of TAR NC on incremental capacity.

text: (40) Interactions with Point 2.2 of Annex I of

text: Regulation (EU) 2024/1789

text: on the ‘guidelines on congestion management procedures in the event of contractual congestion’ (‘CMP GL’) include:

text: a. The rule on capacity ‘surrender’ could be clarified with respect to the introduction of balance-of-the-month auctions of a strip of daily capacity products,

text: HAS ADOPTED THIS RECOMMENDATION:

text: 1. ACER recommends amending the

text: establishing a network code on capacity allocation mechanisms in gas transmission systems, in accordance with Annex I on amended CAM NC Regulation, for reasons explained in Annex II on reasoning to proposed amendments to the CAM NC Regulation as well as in the Evaluation Report on the proposals consultation (Annex III) and the Evaluation Report on the policy consultation (Annex IV).

text: 2. ACER recommends deleting the provisions governing incremental capacity for the reasons contained in paragraphs (24) to (28) of this Recommendation. In case the comitology process concludes on the full or partial restoration of the provisions, ACER recommends amending the Regulation in accordance with Annex I and the considerations expressed in paragraphs (24) to (28) .

text: 3. ACER recommends foreseeing the possibility of the future introduction of balanceof-the-month standard products with a dedicated tariff multiplier and price for the reasons contained in paragraphs (29) to (33). A dedicated tariff multiplier and price have to be determined through an amendment of the

text: establishing a network code on harmonised transmission tariff structures for gas.

text: 4. ACER recommends further investigation to be carried out with respect to the points raised under paragraphs (35) to (37)c.

text: 5. ACER recommends consideration to be given to the interactions between the proposed amendments in this Recommendation and other legislative acts as raised in paragraphs (38) to (40).

text: This Recommendation is addressed to the European Commission. Done at Ljubljana, on 20 December 2024.

text: - SIGNED –

text: Fоr the Agency The Director

text: C. ZINGLERSEN

text: Annexes: Annex I – Amended CAM NC Regulation Annex II – Reasoning to proposed amendments to the CAM NC Regulation Annex III – Evaluation Report on the Public Consultation on amending the network code on capacity allocation mechanisms in gas transmission systems (26 September 2024 – 25 October 2024) (PC_2024_G_09) Annex IV – Evaluation Report on the Public Consultation on amending the network code on capacity allocation mechanisms in gas transmission systems (8 May 2024 – 14 June 2024) (PC_2024_G_03)

type: vagledning

utgivare: acer


text: OJ L158, 14.6.2019, p. 22. 2 OJ L 2024/1789, 15.7.2024.

text: Recommendation No 02/2025

text: ACER Public consultation on inter-temporal cost allocation mechanisms for financing hydrogen infrastructure. 4 Download the responses to the consultation and see the Evaluation of responses. 5 The Regulation requires hydrogen transmission network operators to cooperate at Union level through the European network of network operators for hydrogen (ENNOH). As ENNOH has not yet been officially established at the time of developing this Recommendation, ACER has engaged with future hydrogen network operators through voluntary pre-ENNOH cooperation.

text: Recommendation No 02/2025

text: Recommendation No 02/2025

text: Article 72 of the Regulation. 7 According to Article 57(3) of the Regulation, ENNOH shall consist of hydrogen transmission network operators certified pursuant to Article 71 of the Directive, which regulates the certification process to be implemented in the Member States. 8 OJ L, 2024/1788, 15.7.2024. 9 Member States must transpose the certification provisions by August 2026 (Article 94 of the Directive). The first priority list for the areas to be included in the hydrogen network codes will be established by the European Commission within one year of the establishment of ENNOH (Article 72(3) of the Regulation). 10 https://www.bundesnetzagentur.de/EN/RulingChambers/GBK/Level1/WANDA/start.html.

text: Recommendation No 02/2025

text: For example, market fragmentation might be the result of prolonged lead times and transitory periods for the implementation of network codes in certain jurisdictions to provide smooth transition to the new regulatory regime. 12 For example, heterogeneous application of the necessary risk mitigation measures among different cross-border routes may impact the competitiveness of more economic solutions.

text: Recommendation No 02/2025

text: Article 55 of the Directive. 14 According to

text: Article 78(1)

text: (ee) of the Directive regulatory authorities approve and amend the network development plans. 15 According to

text: Article 55(2)

text: (h) of the Directive the ten-year network development plan shall be in line with the national energy and climate plan and its updates. 16 See also relevant recommendations in ACER’s Opinion 05/2025 on ENTSOG’s draft hydrogen infrastructure gaps identification report.

text: Recommendation No 02/2025

text: This is similar to the approach currently considered in Denmark for the financing of the hydrogen network. 18 According to

text: Article 78(1)

text: c of the Directive regulatory authorities shall fix or approve, in accordance with transparent criteria, tariffs for hydrogen network access or their methodologies, or both.

text: Recommendation No 02/2025

text: Recommendation No 02/2025

text: Article 2(21) of the Directive defines hydrogen network as “a network of onshore and offshore pipelines used for the transport of hydrogen of a high grade of purity with a view to its delivery to customers, excluding supply”. 20 This should be examined in cases of e.g. geographically separate distribution networks to avoid cross-subsidisation. 21 In principle, the duration of the inter-temporal cost allocation should not exceed the economic lifetime of the network and in any case should have a repayment period not exceeding the technical lifetime of the network considering any network (re)investments. However, since the lifetime of different network elements may differ substantially, a good practice would be to set the duration of the mechanism so that substantial re-investments are unlikely to be necessary within its timeframe.

text: Recommendation No 02/2025

text: Recommendation No 02/2025

text: That may be done by considering the application of a volume-based charge for the separate recovery of those volume-based operating costs that should not form the part of the costs falling under the scope of an inter-temporal cost allocation.

text: Recommendation No 02/2025

text: For example, if there is persistent significant deviation of actual demand growth from forecasts for a subsequent number of years, or a significant increase of the deficit in the inter-temporal cost allocation account.

text: Recommendation No 02/2025

identifier: ACER Recommendation No 02/2025

title: ACER Recommendation 02-2025 on the methodologies for setting the inter-temporal cost allocation

text: PUBLIC

text: RECOMMENDATION No 02/2025 OF THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULATORS of 28 July 2025 on the methodologies for setting the inter-temporal cost allocation in accordance with

text: Article 5(3) of Regulation (EU) 2024/1789

text: on the internal markets for renewable gas, natural gas and hydrogen.

text: THE EUROPEAN UNION AGENCY FOR THE COOPERATION OF ENERGY REGULA- TORS, Having regard to

text: Regulation (EU) 2019/942

text: of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators , and, in particular,

text: Article 6

text: (9a) thereof, Having regard to

text: Regulation (EU) 2024/1789

text: of the European Parliament and of the Council of 13 June 2024 on the internal markets for renewable gas, natural gas and hydrogen , and, in particular,

text: Article 5(6)

text: thereof, Having regard to the outcome of the consultation with ACER’s Gas Working Group, Having regard to the favourable opinion of the Board of Regulators of 26 June 2025, delivered pursuant to

text: Article 22(5)

text: (a) of

text: Regulation (EU) 2019/942

text: , Whereas:

text: 1. INTRODUCTION

text: (1) Hydrogen is expected to play an important role toward the Union’s climate objectives and the overarching goal of climate-neutrality by 2050 by enabling the decarbonisation of hard to abate sectors. Establishing an integrated hydrogen network across the EU is deemed essential for the cost-effective delivery of renewable hydrogen to end users. However, the expansion of hydrogen use is anticipated to be a gradual process, subject to uncertainties primarily those arising from high production costs and the

text: uncertain pace of demand materialisation. Building infrastructure capable of accommodating future demand could result in a situation where, during the initial ramp-up phase, a limited number of users bear the burden of high network costs. This, in turn, could lead to prohibitively high tariffs in the early stages, potentially hindering the broader adoption of hydrogen.

text: (2) Recognising this challenge,

text: (the Regulation) makes it possible for Member States to allow hydrogen network operators to spread the recovery of the network costs over time via network access tariffs. This inter-temporal cost allocation aims to ensure that future users of the hydrogen network duly contribute to the initial investment. This promotes a fairer sharing of network costs between early and future users, resulting in more affordable tariffs for everyone.

text: (3) The inter-temporal cost allocation and its underlying methodology must be approved by the regulatory authorities. ACER is tasked under Article 5(6) of the Regulation as well as

text: Article 6

text: (9a) of

text: Regulation (EU) 2019/942

text: with issuing recommendations on these methodologies to the regulatory authorities and to the operators of transmission systems, distribution systems and hydrogen networks (for simplicity, collectively referred to as ‘network operators’).

text: (4) This Recommendation provides the first set of ACER’s recommendations on the methodologies for inter-temporal cost allocation and will be reviewed and updated at least every two years.

text: 2. PROCEDURE

text: (5) In developing this Recommendation, ACER actively involved a wide range of stakeholders through a public consultation and bilateral meetings and carried out an assessment supporting its recommendations.

text: (6) The public consultation , held between 10 and 31 March 2025, served to collect stakeholders’ views on the uses and design elements of inter-temporal cost allocation methodologies. The summary and the evaluation of responses have been published on ACER’s website .

text: (7) The bilateral meetings involved the regulatory authorities from Member States which are more advanced in developing hydrogen regulatory frameworks and future hydrogen network operators (through voluntary pre-ENNOH cooperation ).

text: (8) The inputs gathered through the public consultation and the bilateral exchanges were incorporated in ACER’s assessment accompanying this Recommendation (Annex).

text: (9) ACER’s assessment highlights the key challenges related to the development of hydrogen networks, in particular the risks associated with demand materialisation and cost recovery. ACER also reviews the existing and emerging approaches to inter-temporal cost allocation across EU Member States, and how these approaches aim to allocate costs effectively and mitigate associated risks. Additionally, ACER assesses the necessary preconditions for the functioning of inter-temporal cost allocation mechanisms, including governance structures and the roles of national regulatory frameworks.

text: (10) ACER’s Gas Working Group was consulted on the draft Recommendation between 27 May and 11 June 2025 and provided its advice on 13 June 2025.

text: 3. BROADER CONSIDERATIONS

text: Risks underpinning investments in hydrogen networks

text: (12) In its early development stage, the hydrogen sector is characterised by several uncertainties that affect the development of the new market. For hydrogen network investments the risks can be broadly categorised into two main types: price or market risk, and regulatory risk. A key challenge is the comparatively high cost of renewable hydrogen relative to carbon-intensive alternatives, which poses a significant uncertainty for stakeholders across the value chain. Despite some optimistic projections, there is high uncertainty regarding the potential for cost reductions. On the other hand, anticipation of future cost reductions often causes potential hydrogen users to delay adoption, particularly in the early stages of market development.

text: (13) The price risk discourages hydrogen users and producers from entering into long-term offtake agreements, which, in turn, exposes network operators to volume risk, making it more difficult to secure private capital for network development. At the same time, the absence or delayed roll-out of hydrogen networks increases uncertainty for producers and consumers, as reliable infrastructure is a prerequisite for scaling supply and demand. This cycle of uncertain demand, supply, and infrastructure challenges can hinder the development of the hydrogen market.

text: (14) Regulatory risks may also affect the development of the market, although stakeholders are impacted in different ways. For hydrogen users and suppliers, key sources of regulatory uncertainty include the implementation of the EU and national hydrogen-related targets and quotas and the ambiguity around low-carbon hydrogen. For hydrogen infrastructure operators, including hydrogen network operators (HNOs), regulatory uncertainty pertains to the eventual design of the national regulatory frameworks once the Directive is implemented by the Member States.

text: (15) Unlike electricity and natural gas networks, which have a broad demand base and an established market to provide sufficient assurance against volume risk for network operators, demand for hydrogen supplied via networks is only now being developed. As a result, HNOs cannot rely on a stable base of future network users to safeguard their investments. At the same time, relying only on limited binding capacity bookings, that may be currently available, can lead to underinvestment in hydrogen networks, thereby undermining the market ramp-up. To address this, Member States and public institutions may consider deploying appropriate financing instruments to mitigate investment risks and provide guarantees against volume risk. This is particularly relevant for cross-border networks as paragraph (20) further explains. The public financing measures can be complemented by the implementation of inter-temporal cost allocation mechanisms. While public financing and inter-temporal cost allocation are complementary tools that work in tandem, they are separate, and this Recommendation concerns only the latter.

text: A transitory regulatory period

text: (16) The European hydrogen network is still in early development. Building the necessary infrastructure and developing the EU network codes for hydrogen will require time. The European network of network operators for hydrogen (ENNOH), tasked with developing these codes, can only be officially established once its members are certified as hydrogen transmission network operators under national laws. The certification process depends on the transposition of the certification provisions from

text: Directive (EU) 2024/1788

text: (the Directive) into national legislation.

text: (17) Given the time needed for transposing the Directive and developing the EU network codes , it is unlikely that the first set of EU network codes for hydrogen will be in place before 2027. Infrastructure developments across Members States are also progressing at different paces. While several Member States plan to develop national hydrogen networks in the short term, discussions on cross-border hydrogen corridors are still in a preliminary phase. Regulatory frameworks for hydrogen network operation and financing, including mechanisms such as inter-temporal cost allocation, are under development in a few Member States.

text: (18) At present, the only inter-temporal cost allocation mechanism in place is the German WANDA scheme , which is complemented with significant State financing support.

text: Denmark is also developing a similar scheme, although with a different approach to complementary State financing. Austria, Belgium, and the Netherlands are also evaluating the options to develop national regulatory frameworks that support their respective hydrogen network development plans. The limited number and the early stage of implementation of inter-temporal cost allocation methodologies means that a comprehensive assessment of their effectiveness and the identification of best practices remain premature.

text: (19) Alongside financing measures, including inter-temporal cost allocation, both Germany and Denmark are currently developing national rules for network access and operation. These rules, however, may require future adjustments to ensure alignment with the forthcoming EU network codes. Notably, inter-temporal cost allocation methodologies are long-term mechanisms, potentially operating over extended periods of up to 30 years or more. The combination of national market rules that might need to adapt to the forthcoming EU network codes and the long-lasting inter-temporal cost allocation mechanism constitute a regulatory challenge. Careful consideration of this potential interaction is necessary to ensure sufficient flexibility and adaptability to the national market rules to accommodate future revisions. In Member States with interconnected hydrogen markets, close cooperation and coordination would be essential to create frameworks that facilitate cross-border trade and avoid future market fragmentation .

text: (20) Given the uncertain trajectory of hydrogen market development, investing in hydrogen networks entails significant challenges related to cost recovery and risk management, particularly for cross-border networks. For instance, uncertain demand in an importing country may undermine the financial viability of networks located in exporting or transit countries. On one hand, the mitigation of this risk may pose a significant burden over importing countries, slowing market . On the other hand, keeping such risk entirely over transit/exporting countries could make cross-border infrastructure initiatives not viable. The current cross-border cost allocation (CBCA) instruments alone might not be entirely adequate to address these complexities or to support multilateral agreements. CBCA typically involves ex-ante cost allocation that needs to be recovered through future tariffs. Using this instrument would thus still require mitigating the volume risk, which may require additional tools, possibly involving State-backed guarantees. A more harmonised EU-level approach to cost recovery and risk sharing between Member States and HNOs could facilitate the development of cross-border infrastructure.

text: Mitigating risks

text: (21) The uncertainties surrounding the future development of the hydrogen market imposes a significant volume risk on HNOs. These operators are expected to design and build networks to meet demand that may only materialise over a multi-decade horizon. It is therefore essential to prioritise risk minimisation through thorough assessments of infrastructure needs and the application of appropriate risk mitigation measures. Investment decisions in hydrogen networks should be guided by careful planning and grounded in reliable demand forecasts.

text: (22) In this context, the national network development planning process should align the requirements of the EU integrated network planning . Oversight of regulatory authorities over the ten-year network development plans (TYNDPs) can contribute to improving the quality of the analysis conducted by network operators and better link network planning process, cost recovery and market development . While policy targets as reflected in the national energy and climate plans (NECPs) should be considered in the network development plans , the inclusion of alternative demand scenarios would be beneficial . Moreover, the network planning methodology could be complemented by appropriate risk assessment (e.g. accounting for the different risks surrounding hydrogen production facilities or residential, transport and industrial demand). These assessments may support the prioritisation and planning of the network, potentially leading to adopting a more gradual network development process (e.g. based on a risk-impact analysis). Additionally, they could also be used to enhance the design of inter-temporal cost allocation methodologies, enabling the evaluation of their performance and effectiveness under diverse market and network development scenarios.

text: (23) The allocation of a reasonable amount of the volume risk to hydrogen network operators should also be considered to incentivise greater scrutiny of the proposed projects, better demand estimations, and more efficient network planning, development and operation. However, such decisions should not increase the overall network costs disproportionally and therefore the potential implications for network financing and the potential need for additional remuneration due to the higher risks should be thoroughly assessed.

text: (24) Considering the significant volume risk associated with the development of hydrogen networks, binding long-term commitments by network users are important to mitigate this risk. Various ways to encourage binding commitments could be examined; for

text: example, Member States could request that a minimum share of the network capacity is pre-booked with binding long-term commitments prior to the implementation of inter-temporal cost allocation and/or the provision of public funds or guarantees to further support the network development . An alternative could be to prioritise the application of inter-temporal cost allocation and/or additional support to network elements associated with off-take agreements between producers and users or with investment commitments by end-users to transition to the use of renewable or low-carbon hydrogen. Regulatory authorities could also examine whether incentives for longterm commitments via appropriate tariff structures set in accordance with Article 17 of the Regulation could mitigate the volume risk, especially in the early period (e.g. by applying discounted weights to longer-term capacity products reflecting the reductions in the direct risk for the HNO).

text: Governance

text: (25) Article 5(3) of the Regulation requires that the inter-temporal cost allocation and its underlying methodology is approved by the regulatory authority. The Regulation does not specify which national authority or entity should be responsible for developing the methodology. Assigning this task depends on the national frameworks and is outside the scope of this Recommendation. However, since regulatory authorities are already tasked with approving the methodology and considering that the methodology concerns the remuneration of hydrogen networks via regulated tariffs which these authorities also fix or approve , a potential approach could be to assign them the additional task of developing the methodology, in close cooperation with network operators and relevant stakeholders. Doing so would help ensure consistency, transparency and coherence within the regulatory framework.

text: (26) Due to the significant volume risks for the HNOs and the potential liquidity gaps that may arise before demand reaches sufficient levels, inter-temporal cost allocation may need to be complemented by additional State-funded support mechanisms. These two financing methods are interlinked; thus their design needs to be developed together. A timely and strong cooperation between all relevant parties is important to ensure that the inter-temporal cost allocation methodology will be developed in a structured and coherent manner, taking into account the design elements of any complementary support mechanism. While the design of any potential financing or de-risking schemes is ultimately determined by the Member States, their details impact the design and implementation of the inter-temporal cost allocation mechanism. The timely involvement of regulatory authorities in the design of such State support schemes will also ensure that they align with the general principles for network operation and cost recovery set out in the Regulation. Overlapping of roles and responsibilities, e.g. in

text: terms of tariff setting, should be avoided. Moreover, the interlinkage between the financing mechanisms and the inter-temporal cost allocation mechanism may complicate decision making related to potential revisions and changes in response to actual market developments. Clarity over such decision-making processes is important to improve implementation.

text: Concluding remarks

text: (27) ACER acknowledges that efforts to guide the development of inter-temporal cost allocation methodologies face a double challenge. First, there is a lack of established best practices that could be identified, generalised, and applied. Second, in the absence of EU network codes for hydrogen, there is currently no comprehensive EU regulatory framework to complement the Regulation and define the detailed market design to which inter-temporal cost allocation mechanisms could be aligned.

text: (28) Considering these constraints, ACER at this stage of the hydrogen market development prefers not to issue recommendations that attempt to prematurely harmonise the detailed design elements of inter-temporal cost allocation methodologies. This also concerns elements that might be regulated in the upcoming EU network codes for hydrogen, to avoid overregulation during this evolving period. Hence, in addition to raising awareness of the key challenges in designing these methodologies, this Recommendation primarily focuses on the high-level principles and approaches to intertemporal cost allocation. The biannual update of the Recommendation, as foreseen in the Regulation, will provide an opportunity to incorporate more detailed guidance as experience accumulates during this initial phase of the market evolution.

text: HAS ADOPTED THIS RECOMMENDATION:

text: 5. RECOMMENDATIONS REGARDING THE INTER-TEMPORAL COST AL- LOCATION METHODOLOGIES

text: Interaction with national market rules

text: (29) The specifics of the inter-temporal cost allocation are, to some degree, determined by national market rules, including network access rules and tariff structures. To ensure consistency and avoid significant changes to inter-temporal cost allocation methodologies resulting from any future development of national market rules, and insofar as

text: the national market rules for the hydrogen market will be developed by the regulatory authorities and the network operators, ACER recommends that they develop the inter-temporal cost allocation methodology and the relevant national market rules in a coordinated manner.

text: Scope of the inter-temporal cost allocation

text: (30) Member States may follow different approaches to develop their national hydrogen networks; they may opt for an accelerated core-network development or choose a

text: more gradual network expansion aligned with expressed market needs and hence subject to less volume risk. Therefore, inter-temporal cost allocation may be necessary for all or part of the network. To ensure regulatory certainty and oversight, ACER

text: recommends that the inter-temporal cost allocation methodology includes a requirement for regulatory approvals of the network elements subject to inter-temporal cost allocation, along with their respective costs.

text: (31) The definition of hydrogen networks includes both transmission and distribution networks . The characteristics of hydrogen distribution networks are expected to vary significantly between and within Member States. It is generally expected that distribution network operators can (and will) develop networks in a gradual manner mitigating the uncertainties related to the evolution of demand. However, a potential need for an inter-temporal cost allocation for distribution networks cannot be excluded. Distribution networks will be developed at different paces in different locations and will face different levels of uncertainties. While the differences between transmission and distribution networks may call for separate inter-temporal allocation schemes , coexistence of multiple schemes might increase complexity. ACER recommends

text: that regulatory authorities and network operators carefully examine the need for inter-temporal cost allocation in distributions networks. If such a need is identified, ACER recommends that separate schemes for transmission and for distribution networks, and potentially distinct schemes for different distribution networks, could be considered. Such decisions should be taken considering a balanced approach that weights cost-reflectivity, simplicity, and national specificities.

text: Duration

text: (32) The duration of the inter-temporal cost allocation, i.e. the time over which the costs of the network will be spread, is a key parameter of the methodology . The duration also defines the expected demand over which the costs will be distributed and impacts directly the estimated tariff level. The methodology may allow for flexibility to adjust the duration in case of significant deviation from initial assumptions on costs and demand that may not be handled by simply re-adjusting the tariff levels. Potential interlinks between the inter-temporal cost allocation mechanisms and the State support or guarantee schemes, for example in the case of claw back provisions, could however reduce this possibility. ACER recommends that the inter-temporal cost allocation

text: methodology includes rules governing the adjustment of the duration of the inter-temporal cost allocation, along with an established process for implementing such adjustments. These rules need to consider the interaction of the inter-temporal cost allocation with any complementary financing mechanisms.

text: Tariff design

text: 5.4.1. Tariff structure

text: (33) The inter-temporal cost allocation methodology may include specific rules for tariff structures and for the calculation of the relevant tariffs. It may also simply set the rules for the allocation of network costs across time and between the early and future users, while tariff structures are dealt with separately. Considering the transitory regulatory phase until the establishment of the EU network codes for hydrogen, ACER recom-

text: mends that the inter-temporal cost allocation methodology allows for flexibility

text: and adaptability with regards to the relevant tariff rules, to account for any potential revisions in view of future market needs and the EU network codes for hydrogen.

text: 5.4.2. Demand forecasts

text: (34) Inter-temporal cost allocation mechanisms rely on estimates of demand often spanning over multi-decade horizons. Large deviations between actual and forecast demand, especially in the later periods of the mechanism, may have high impact on the cost recovery or the level of tariffs. While in principle similar demand assumptions as those in the hydrogen network development plans could be used by regulatory authorities to set the tariffs based on inter-temporal cost allocation, the uncertainty pertaining to such assumptions is normally too high, as they mostly rely on policy targets. Such policy-related demand projections could result in unrealistic tariff levels that may prove inadequate to recover the costs, if demand does not materialise, increasing the possibility for corrective measures. If the demand profile is skewed towards the future, the room for corrective actions may be too narrow. On the other hand, considering only a very conservative demand profile, e.g. based only on binding long-term commitments and excluding any other potential demand growth, may result in unnecessarily high tariff levels. Demand projections should be carefully reviewed to avoid the impact of overinflated or too conservative demand expectations. When choosing the appropriate duration and demand evolution profile over which the cost will be distributed, regulatory authorities should make use of all information available such as binding long-term commitments, projects with final investment decisions or with secured (fully or partially) financing (such as PCI/PMI/IPCEI), and policy driven scenarios of demand evolution. ACER recommends that the demand projections used for the

text: purpose of the inter-temporal cost allocation should be carefully selected, following an assessment of the impact of different demand scenarios – including via sensitivity analysis – on the tariffs, on the allocation and recovery of costs, on the duration of the scheme, as well as on the effectiveness of any complementary support.

text: 5.4.3. Depreciation

text: (35) During the determination of the allowed revenue or approved costs different depreciation models can be considered. Progressive depreciation models allocate a larger portion of depreciation to later periods, which typically have higher expected utilisation. These models essentially function as a form of a less flexible inter-temporal cost allocation. ACER recommends that if regulatory authorities consider the application

text: of progressive depreciation models, they should carefully evaluate the cumulative impact on the volume risk and the financing of the network operators.

text: 5.4.4. Costs elements

text: (36) The inter-temporal cost allocation aims to spread costs duly between early and future network users, allowing for the recovery of both capital and operating expenditures at affordable tariff levels. Variable operating costs are highly uncertain as they depend mostly on the cost of energy used in the compressor stations. Moreover, if expectations of demand growth do not materialise, increasing the cost base of the inter-temporal cost allocation by including forecast costs of an overestimated demand will put additional burden to early network users. For similar reasons, cost of services related to the operation of the network such as balancing and user flexibility should not be part of the costs shifted over time by an inter-temporal cost allocation mechanism.

text: ACER suggests the inter-temporal cost allocation methodology is designed so that variable costs are collected closer to the time when they are incurred while balancing this objective against other critical considerations such as stability and predictability of the tariff and/or the relevance of the variable operating cost over the total costs.

text: (37) Estimation of network costs over its duration, including costs of establishing new pipelines or repurpose gas pipelines to hydrogen use, is an essential process of the intertemporal cost allocation methodology. These cost estimates can be highly uncertain especially for repurposed assets for which cost of retrofitting may be difficult to project. This uncertainty can lead to potentially volatile cost setting, which should be mitigated to the extent possible by ensuring alignment with actual costs, incorporating flexibility into the cost allocation design, and enhancing transparency of cost estimation especially through clear differentiation between new and repurposed assets.

text: ACER recommends that the network operators use detailed updates of cost estimates, separately for new and repurposed assets. These updates should be clearly communicated to regulatory authorities, allowing them to effectively identify any deviations between forecast and actual costs.

text: 5.4.5. Remuneration

text: (38) The total cost of the network includes the remuneration of investment, normally through the weighted average cost of capital (WACC). In the context of inter-temporal cost allocation, a specific remuneration related to the deficits accumulated in the early stages of the ramp-up (accounted for in an inter-temporal cost allocation account also referred to as debt account) may also be considered, if HNOs are exposed to additional financing risks stemming from this debt account. The level of remuneration is impacted by elements such as State support to de-risk the network investments and the overall policy framework supporting or promoting the production and use of hydrogen mitigating the volume risk. ACER recommends that regulatory authorities

text: set the level of remuneration based on the regulated asset base and, potentially, the inter-temporal cost allocation account, so that it reflects the real risk borne by the HNOs. Regulatory authorities should exclude from this remuneration (risk premia) the level of risks already mitigated by other measures such as State support.

text: 5.4.6. Reassessment of key parameters

text: (39) Inter-temporal cost allocation is based on expected costs and demand that may be highly uncertain. To ensure that resulting tariffs are appropriate and that full cost recovery is achieved, enhanced monitoring and regular reassessments of the key parameter are essential. These reassessments (e.g. regarding cost development for users) along with the outcomes of the periodically updated hydrogen infrastructure needs assessments, should be used to evaluate the progress of the inter-temporal cost allocation and, where necessary, trigger predefined corrective actions by the regulatory authority. To identify early enough any significant deviations that could jeopardise the expected inter-temporal allocation outcome, ACER recommends that the inter-

text: temporal cost allocation methodology includes monitoring of market developments and regular reassessment of the key parameters of the inter-temporal cost allocation. The methodology should also include clear and quantifiable condi-

text: tions triggering any corrective action .

text: Processes and transparency

text: (40) Given the market uncertainties and the long duration of the inter-temporal cost allocation mechanisms, a clear process plan indicating milestones, roles and responsibilities, and necessary communication between parties involved (e.g. in terms of data transfer between network operators and regulatory authorities), would allow to avoid overlapping processes and to anticipate the timing of key decisions (e.g. regarding the

text: revision of the tariffs). ACER recommends that the inter-temporal cost allocation

text: methodology includes a clear and transparent administrative processes identifying the roles and responsibilities of the involved parties and indicating clear timelines and milestones.

text: (41) ACER recommends that the inter-temporal cost allocation methodology ensures

text: that the underlying calculations are performed in a transparent manner. If the methodology includes specific rules for tariff structures and for the calculation of the relevant tariffs, these rules should align with the transparency requirement

text: for tariff setting in Article 17 of the Regulation. In anticipation of the relevant EU network codes for hydrogen, the transparency and public consultation provisions of the network code on harmonised transmission tariff structure for natural gas could serve as an example of good practice.

text: This Recommendation is addressed to transmission system operators, distribution system operators, hydrogen network operators and regulatory authorities.

text: Done at Ljubljana, on 28 July 2025.

text: - SIGNED -

text: Fоr the Agency The Director

text: C. ZINGLERSEN

text: Annexes:

text: Annex – ACER’s assessment