Regulation (EU) 2024/1747 of the European Parliament and of the Council of 13 June 2024 amending Regulations (EU) 2019/942 and (EU) 2019/943 as regards improving the Union’s electricity market design (Text with EEA relevance)

‘9 Paragraphs 6, 7 and 8 of this Article shall also apply to the single allocation platform established in accordance with Regulation (EU) 2016/1719.’

‘9 ACER shall approve and where necessary amend the joint proposal from the ENTSO for Electricity and the EU DSO entity regarding the type of data and format and the methodology related to the analysis to be provided as regards the flexibility needs pursuant to Article 19e(6) of Regulation (EU) 2019/943.’

‘9 ACER shall submit opinions to the regulatory authority concerned and to the Commission pursuant to Article 8(1b) and Article 16(3) of Regulation (EU) 2019/943.’

‘5 ACER shall issue a report pursuant to Article 19e(7) of Regulation (EU) 2019/943 analysing the national reports on the estimated flexibility needs and providing recommendations on issues of cross-border relevance regarding the findings of the regulatory authority or another authority or entity designated by a Member State.’.

‘1 Transmission system operators and NEMOs shall jointly organise the management of the integrated day-ahead and intraday markets in accordance with Regulation (EU) 2015/1222. Transmission system operators and NEMOs shall cooperate at Union level or, where more appropriate, at a regional level in order to maximise the efficiency and effectiveness of Union electricity day-ahead and intraday trading. The obligation to cooperate shall be without prejudice to the application of Union competition law. In their functions relating to electricity trading, transmission system operators and NEMOs shall be subject to regulatory oversight by the regulatory authorities pursuant to Article 59 of Directive (EU) 2019/944 and by ACER pursuant to Articles 4 and 8 of Regulation (EU) 2019/942 and shall be subject to transparency obligations and effective supervision against market manipulation as laid down in the relevant provisions of Regulation (EU) No 1227/2011.’

1 Where a regional or Union-wide electricity price crisis is declared in accordance with Article 66a of Directive (EU) 2019/944, Member States may request system operators to propose the procurement of peak-shaving products in order to achieve a reduction of electricity demand during peak hours. Such procurement shall be limited to the duration set out in the implementing decision adopted pursuant to Article 66a(1) of Directive (EU) 2019/944.

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

3 The regulatory authority concerned shall assess the proposal for a peak-shaving product referred to in paragraph 2 as regards achieving a reduction of electricity demand and the impact on wholesale electricity price during peak hours. That assessment shall take into account the need for the peak-shaving product not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. On the basis of that assessment, the regulatory authority may request the system operator to amend its proposal.

4 The proposal for a peak-shaving product referred to in paragraph 2 shall comply with the following requirements: (a) the dimensioning of the peak-shaving product shall: (i) be based on an analysis of the need for an additional service to ensure security of supply without endangering grid stability, of its impact on the market and of its expected costs and benefits; (ii) take into account the forecast of demand, the forecast of electricity generated from renewable energy, the forecast of other sources of flexibility in the system, such as energy storage, and the wholesale price impact of the avoided dispatch; and (iii) be limited to ensure that forecasted costs do not exceed the expected benefits of the peak-shaving product; (b) the procurement of a peak-shaving product shall be based on objective, transparent, market-based and non-discriminatory criteria, shall be limited to demand response and shall not exclude participating assets from accessing other markets; (c) the procurement of the peak-shaving product shall take place using competitive bidding, which can be continuous, with selection based on the lowest cost of meeting pre-defined technical and environmental criteria and shall allow the effective participation of consumers, directly or through aggregation; (d) the minimum bid size shall not be higher than 100 kW, including through aggregation; (e) contracts for a peak-shaving product shall not be concluded more than a week before its activation; (f) the activation of the peak-shaving product shall not reduce cross-zonal capacity; (g) the activation of the peak-shaving product shall take place before or within the day-ahead market time frame and may be done on the basis of a pre-defined electricity price; (h) the activation of the peak-shaving product shall not imply starting fossil fuel-based generation located behind the metering point, in order to avoid increasing greenhouse gas emissions.

5 The actual reduction of consumption resulting from the activation of a peak-shaving product shall be measured against a baseline, reflecting the expected electricity consumption without the activation of the peak-shaving product. Where a system operator procures a peak-shaving product, that operator shall develop a baseline methodology after consulting market participants, shall, where relevant, take into account the implementing acts adopted pursuant to Article 59(1), point (e), and shall submit it to the regulatory authority concerned for its approval.

6 The regulatory authority concerned shall approve the proposal of the system operators seeking to procure a peak-shaving product and the baseline methodology submitted in accordance with paragraphs 2 and 5 or shall request the system operators to amend the proposal or the baseline methodology where that proposal or that methodology does not meet the requirements laid down in paragraphs 2, 4 and 5.

7 By six months after the end of a regional or Union-wide electricity price crisis as referred to in paragraph 1, ACER shall, after consulting stakeholders, assess the impact of using peak-shaving products on the Union electricity market. That assessment shall take into account the need for peak-shaving products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. ACER may issue recommendations that regulatory authorities shall take into account in their assessment pursuant to paragraph 3.

8 By 30 June 2025, ACER shall, after consulting stakeholders, assess the impact of developing peak-shaving products on the Union electricity market under normal market circumstances. That assessment shall take into account the need for peak-shaving products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. On the basis of that assessment, the Commission may submit a legislative proposal to amend this Regulation in order to introduce peak-shaving products outside regional or Union-wide electricity price crisis situations.

1 Without prejudice to Article 19 of Directive (EU) 2019/944, transmission system operators, distribution system operators and relevant market participants, including independent aggregators, may use, upon the consent of the final customer, data from dedicated measurement devices for the observability and settlement of demand response and flexibility services, including from energy storage facilities. For the purposes of this Article, the use of data from dedicated measurement devices shall comply with Articles 23 and 24 of Directive (EU) 2019/944 and other relevant Union law, including data protection and privacy law, in particular Regulation (EU) 2016/679 of the European Parliament and of the Council . Where such data are used for research purposes, information shall be aggregated and anonymised.

2 Where a final customer does not have a smart meter installed or where the smart meter of a final customer does not deliver the necessary data to provide demand response or flexibility services, including through an independent aggregator, transmission system operators and distribution system operators shall accept the data from a dedicated measurement device, where available, for the settlement of demand response and flexibility services, including energy storage, and shall not discriminate against that final customer in their procurement of flexibility services. That obligation shall apply subject to compliance with the rules and requirements established by the Member States pursuant to paragraph 3.

3 Member States shall establish the rules and requirements for a dedicated measurement device data validation process to check and ensure the quality and consistency of the relevant data, and interoperability, in accordance with Articles 23 and 24 of Directive (EU) 2019/944 and other relevant Union law.

1 In accordance with Regulation (EU) 2016/1719, transmission system operators shall issue long-term transmission rights or have equivalent measures in place to allow market participants, including owners of power-generating facilities using renewable energy, to hedge price risks, unless an assessment of the forward market on the bidding zone borders performed by the competent regulatory authorities shows that there are sufficient hedging opportunities in the bidding zones concerned.

2 Long-term transmission rights shall be allocated, on a regular basis, in a transparent, market based and non-discriminatory manner through a single allocation platform. The frequency of allocation and the maturities of the long-term cross-zonal capacity shall support the efficient functioning of the Union’s forward markets.

3 The design of the Union’s forward markets shall comprise the necessary tools to improve the ability of market participants to hedge price risks in the internal electricity market.

4 By 17 January 2026, the Commission shall, after consulting relevant stakeholders, carry out an assessment of the impact of possible measures to achieve the objective referred to in paragraph 3. That impact assessment shall, inter alia, cover: (a) possible changes to the frequency of allocation for long-term transmission rights; (b) possible changes to the maturities of long-term transmission rights, in particular maturities extended up to at least three years; (c) possible changes to the nature of long-term transmission rights; (d) ways to strengthen the secondary market; and (e) the possible introduction of regional virtual hubs for the forward markets.

5 As regards regional virtual hubs for the forward markets, the impact assessment carried out pursuant to paragraph 4 shall cover the following: (a) the adequate geographical scope of the regional virtual hubs, including the bidding zones that would constitute those hubs and specific situations of bidding zones belonging to two or more virtual hubs, aiming to maximise the price correlation between the reference prices and the prices of the bidding zones constituting regional virtual hubs; (b) the level of electricity interconnectivity of Member States, in particular of those Member States below the electricity interconnection targets for 2020 and 2030 laid down in Article 4, point (d)(1), of Regulation (EU) 2018/1999 of the European Parliament and of the Council ; (c) the methodology for the calculation of the reference prices for the regional virtual hubs for the forward markets, aiming to maximise the price correlation between the reference price and the prices of the bidding zones constituting a regional virtual hub; (d) the possibility for bidding zones to form part of more than one regional virtual hub; (e) the ways to maximise trading opportunities for hedging products referencing the regional virtual hubs for the forward markets as well as for long term transmission rights from bidding zones to regional virtual hubs; (f) the ways to ensure that the single allocation platform referred to in paragraph 2 offers allocation and facilitates the trading of long-term transmission rights; (g) the implications of pre-existing intergovernmental agreements and rights thereunder.

6 On the basis of the outcome of the impact assessment referred to in paragraph 4 of this Article, the Commission shall, by 17 July 2026, adopt an implementing act to further specify measures and tools to achieve the objectives referred to in in paragraph 3 of this Article and the precise features of those measures and tools. That implementing act shall be adopted in accordance with the examination procedure referred to Article 67(2).

7 The single allocation platform established in accordance with Regulation (EU) 2016/1719 shall act as an entity offering allocation and facilitating the trading of long-term transmission rights on behalf of transmission system operators. It shall have a legal form as referred to in Annex II to Directive (EU) 2017/1132 of the European Parliament and of the Council .

8 Where a competent regulatory authority considers that there are insufficient hedging opportunities available for market participants, it may, after consulting the competent authorities designated pursuant to Article 67 of Directive 2014/65/EU of the European Parliament and of the Council where the forward markets concern financial instruments as defined in Article 4(1), point (15), of that Directive, require power exchanges or transmission system operators to implement additional measures, such as market-making activities, to improve the liquidity of the forward markets.

9 Subject to compliance with Union competition law and with Regulations (EU) No 648/2012 and (EU) No 600/2014 of the European Parliament and of the Council and Directive 2014/65/EU, market operators may develop forward hedging products, including long-term forward hedging products, to provide market participants, including owners of power-generating facilities using renewable energy sources, with appropriate possibilities for hedging financial risks against price fluctuations. Member States shall not require that such hedging activity may be limited to trades within a Member State or bidding zone.

1 Without prejudice to Directive (EU) 2018/2001, Member States shall promote the uptake of PPAs, including by removing unjustified barriers and disproportionate or discriminatory procedures or charges, with a view to providing price predictability and reaching the objectives set out in their integrated national energy and climate plans with respect to the decarbonisation dimension referred to in Article 4, point (a), of Regulation (EU) 2018/1999, including with respect to renewable energy, while preserving competitive and liquid electricity markets and cross-border trade.

2 When carrying out the review of this Regulation in accordance with Article 69(2), the Commission, after consulting relevant stakeholders, shall assess the potential and viability of one or several Union market platforms for PPAs, to be used on a voluntary basis, including the interaction of those potential platforms with other existing electricity market platforms and the pooling of demand for PPAs through aggregation.

3 Member States shall ensure, in a coordinated manner, that instruments, such as guarantee schemes at market prices, to reduce the financial risks associated to offtaker payment default in the framework of PPAs are in place and accessible to customers that face entry barriers to the PPA market and that are not in financial difficulty. Such instruments may include, inter alia, state-backed guarantee schemes at market prices, private guarantees, or facilities pooling demand for PPAs, in accordance with relevant Union law. To that end, Member States shall ensure appropriate coordination, including with relevant Union-level facilities. Member States may determine the categories of customers that are targeted by those instruments, applying non-discriminatory criteria between and within the categories of customers.

4 Without prejudice to Articles 107 and 108 TFEU, if a guarantee scheme for PPAs is backed by the Member State, it shall include provisions to avoid lowering the liquidity in electricity markets and shall not provide support to the purchase of generation from fossil fuels. Member States may decide to limit those guarantee schemes to the exclusive support of the purchase of electricity from new renewable energy generation in accordance with the Member State’s decarbonisation policies, including in particular where the market for renewables PPAs as defined in Article 2, point (17), of Directive (EU) 2018/2001 is not sufficiently developed.

5 Support schemes for electricity from renewable sources shall allow the participation of projects which reserve part of the electricity for sale through a renewable PPA or other market-based arrangements, provided that such participation does not negatively affect competition in the market, in particular where the two parties involved in that PPA are controlled by the same entity.

6 In the design of the support schemes referred to in paragraph 5, Member States shall endeavour to make use of evaluation criteria to incentivise bidders to facilitate the access of customers that face entry barriers to the PPA market, provided that this does not negatively affect competition in the market.

7 PPAs shall specify the bidding zone of delivery and the responsibility for securing cross-zonal transmission rights in the case of a change of bidding zone in accordance with Article 14.

8 PPAs shall specify the terms and conditions under which customers and producers may exit from PPAs, such as any applicable exit fees and notice periods, in accordance with Union competition law.

9 Member States, when designing measures directly affecting PPAs, shall respect possible legitimate expectations and shall take into account the effect of those measures on existing and future PPAs.

10 By 31 January 2026 and every two years thereafter, the Commission shall assess whether barriers persist, and whether there is sufficient transparency, in the PPA markets. The Commission may draw up specific guidance on removal of barriers in the PPA markets, including disproportionate or discriminatory procedures or charges.

1 ACER shall publish an annual assessment on the PPA market at Union and Member State level as part of its annual report published pursuant to Article 15(2) of Regulation (EU) 2019/942.

2 By 17 October 2024, ACER shall assess, in close coordination with the relevant institutions and stakeholders, the need to develop and issue voluntary templates for PPAs, adapted to the needs of the different categories of counterparties. Where the assessment concludes that there is a need to develop and issue such voluntary templates for PPAs, ACER, together with the NEMOs, and after consulting the relevant stakeholders, shall develop such templates, taking into account the following: (a) the use of those contract templates shall be voluntary for the contracting parties; (b) the contract templates shall, inter alia: (i) offer a variety of contract durations; (ii) provide a variety of price formulas; (iii) consider the offtaker’s load profile and the generator’s generation profile.

The Commission shall assess whether measures at Union level can contribute to the achievement of the Member States collective endeavour of an additional 2,5 % share of energy from renewable sources in the Union’s gross final consumption of energy in 2030 pursuant to Directive (EU) 2018/2001, complementing national measures. The Commission shall analyse the possibility to use the Union renewable energy financing mechanism established pursuant to Article 33 of Regulation (EU) 2018/1999 to organise Union-level renewable energy auctions in line with the relevant regulatory framework.

1 Direct price support schemes for investment in new power-generating facilities for the generation of electricity from the sources listed in paragraph 4 shall take the form of two-way contracts for difference or equivalent schemes with the same effects. The first subparagraph shall apply to contracts under direct price support schemes for investment in new generation concluded on or after 17 July 2027, or, in the case of offshore hybrid asset projects connected to two or more bidding zones, 17 July 2029. The participation of market participants in direct price support schemes in the form of two-way contracts for difference and in equivalent schemes with the same effects shall be voluntary.

2 All direct price support schemes in the form of two-way contracts for difference and equivalent schemes with the same effects shall be designed to: (a) preserve incentives for the power-generating facility to operate and participate efficiently in the electricity markets, in particular to reflect market circumstances; (b) prevent any distortive effect of the support scheme on the operation, dispatch and maintenance decisions of the power-generating facility or on bidding behaviour in day-ahead, intraday, ancillary services and balancing markets; (c) ensure that the level of the minimum remuneration protection and of the upward limit to excess remuneration are aligned with the cost of the new investment and the market revenues, to guarantee the long-term economic viability of the power-generating facility while avoiding overcompensation; (d) avoid undue distortions to competition and trade in the internal market, in particular by determining remuneration amounts through an open, clear, transparent and non-discriminatory competitive bidding process; where no such competitive bidding process can be conducted, two-way contracts for difference or equivalent schemes with the same effects, and the applicable strike prices, shall be designed to ensure that the distribution of revenues to undertakings does not create undue distortions to competition and trade in the internal market; (e) avoid distortions to competition and trade in the internal market resulting from the distribution of revenues to undertakings; (f) include penalty clauses applicable in the case of undue unilateral early termination of the contract.

3 In the assessment of two-way contracts for difference or equivalent schemes with the same effects under Articles 107 and 108 TFEU, the Commission shall ensure compliance with the design principles pursuant to paragraph 2.

4 Paragraph 1 shall apply to investment in new generation of electricity from the following sources: (a) wind energy; (b) solar energy; (c) geothermal energy; (d) hydropower without reservoir; (e) nuclear energy.

5 Any revenues, or the equivalent in financial value of those revenues, arising from direct price support schemes in the form of two-way contracts for difference and equivalent schemes with the same effects referred to in paragraph 1 shall be distributed to final customers. Notwithstanding the first subparagraph, the revenues, or the equivalent in financial value of those revenues, may also be used to finance the costs of the direct price support schemes or investment to reduce electricity costs for final customers. The distribution of revenues to final customers shall be designed to maintain incentives to reduce their consumption or shift it to periods when electricity prices are low and not to undermine competition between electricity suppliers.

6 In accordance with Article 4(3), third subparagraph, of Directive (EU) 2018/2001, Member States may exempt small-scale renewables installations and demonstration projects from the obligation under paragraph 1 of this Article.

1 No later than one year after the approval by ACER of the methodology pursuant to paragraph 6, and every two years thereafter, the regulatory authority or another authority or entity designated by a Member State, shall adopt a report on the estimated flexibility needs for a period of at least the next 5 to 10 years at national level, in view of the need to cost effectively achieve security and reliability of supply and decarbonise the electricity system, taking into account the integration of variable renewable energy sources and the different sectors, as well as the interconnected nature of the electricity market, including interconnection targets and potential availability of cross-border flexibility. The report referred to in the first subparagraph shall: (a) be consistent with the European resource adequacy assessment and national resource adequacy assessments conducted pursuant to Articles 23 and 24; (b) be based on the data and analyses provided by the transmission system operators and distribution system operators of each Member State pursuant to paragraph 3 and using the common methodology pursuant to paragraph 4 and, where duly justified, additional data and analysis. Where the Member State has designated a transmission system operator or another entity for the purpose of adopting the report referred to in the first subparagraph, the regulatory authority shall approve or amend the report.

2 The report referred to in paragraph 1 shall at least: (a) evaluate the different types of flexibility needs, at least on a seasonal, daily and hourly basis, to integrate electricity generated from renewable sources in the electricity system, inter alia, different assumptions in respect to electricity market prices, generation and demand; (b) consider the potential of non-fossil flexibility resources such as demand response and energy storage, including aggregation and interconnection, to fulfil the flexibility needs, both at transmission and distribution levels; (c) evaluate the barriers for flexibility in the market and propose relevant mitigation measures and incentives, including the removal of regulatory barriers and possible improvements to markets and system operation services or products; (d) evaluate the contribution of digitalisation of electricity transmission and distribution networks; and (e) take into account sources of flexibility that are expected to be available in other Member States.

3 The transmission system operators and distribution system operators of each Member State shall provide the data and analyses that are needed for the preparation of the report referred to in paragraph 1 to the regulatory authority or another authority or entity designated pursuant to paragraph 1. Where duly justified, the regulatory authority or another authority or entity designated pursuant to paragraph 1 may request the transmission system operators and distribution system operators concerned to provide additional input to the report, in addition to the requirements referred to in paragraph 4. The electricity transmission system operators or the electricity distribution system operators concerned shall, together with operators of natural gas systems and of hydrogen systems, coordinate the gathering of the relevant information where necessary for the purposes of this Article.

4 The ENTSO for Electricity and the EU DSO entity shall coordinate the work of transmission system operators and distribution system operators as regards the data and analyses to be provided in accordance with paragraph 3. In particular, they shall: (a) define the type and format of data that transmission system operators and distribution system operators are to provide to the regulatory authorities or another authority or entity designated pursuant to paragraph 1; (b) develop a methodology for the analysis by transmission system operators and distribution system operators of the flexibility needs, taking into account at least: (i) all available sources of flexibility in a cost-efficient manner in the different timeframes, including in other Member States; (ii) planned investment in interconnection and flexibility at transmission and distribution level; and (iii) the need to decarbonise the electricity system in order to meet the Union’s 2030 targets for energy and climate, as defined in Article 2, point (11), of Regulation (EU) 2018/1999, and its 2050 climate neutrality objective laid down in Article 2 of Regulation (EU) 2021/1119, in compliance with the Paris Agreement adopted under the United Nations Framework Convention on Climate Change . The methodology referred to in point (b) of the first subparagraph shall contain guiding criteria on how to assess the capability of the different sources of flexibility to cover the flexibility needs.

5 The ENTSO for Electricity and the EU DSO entity shall cooperate closely with each other as regards the coordination of transmission system operators and distribution system operators as regards the provision of data and analyses pursuant to paragraph 4.

6 By 17 April 2025, the ENTSO for Electricity and the EU DSO entity shall jointly submit to ACER a proposal regarding the type of data and format to be submitted to a regulatory authority or another authority or entity designated pursuant to paragraph 1, and the methodology for the analysis of the flexibility needs referred to in paragraph 4. Within three months of receipt of the proposal, ACER shall either approve the proposal or amend it. In the latter case, ACER shall consult the Electricity Coordination Group, the ENTSO for Electricity and the EU DSO entity before adopting the amendments. The adopted proposal shall be published on ACER’s website.

7 The regulatory authority or another authority or entity designated pursuant to paragraph 1, shall submit the reports referred to in paragraph 1 to the Commission and to ACER and shall publish them. Within 12 months of receipt of the reports, ACER shall issue a report analysing them and providing recommendations on issues of cross-border relevance regarding the findings of the regulatory authority or another authority or entity designated pursuant to paragraph 1, including recommendations on removing barriers to the entry of non-fossil flexibility resources. Among the issues of cross-border relevance, ACER shall assess: (a) how better to integrate the flexibility needs analysis referred to in paragraph 1 of this Article with the methodology for the European resource adequacy assessment in accordance with Article 23 and the methodology for the Union-wide ten year network development plan, ensuring consistency between them; (b) the estimated flexibility needs in the electricity system at Union level and its projected economically available potential for a period of the next 5 to 10 years taking into account the national reports; (c) the potential introduction of further measure to unleash flexibility potential in the electricity markets and system operation. The results of the analysis referred to in the second subparagraph, point (a) may be taken into account in further revisions of the methodologies referred to in that point in accordance with the relevant Union legal acts. The European Scientific Advisory Board on Climate Change may, on its own initiative, provide input to ACER on how to ensure compliance with the Union’s 2030 targets for energy and climate and its 2050 climate neutrality objective.

8 ENTSO for Electricity shall update the Union-wide network development plan to include the results of the national reports of flexibility needs referred to in paragraph 1. Those reports shall be considered by transmission system operators and distribution system operators in their network development plans.

No later than six months after the submission of the report pursuant to Article 19e(1) of this Regulation, each Member State shall define, on the basis of that report, an indicative national objective for non-fossil flexibility, including the respective specific contributions of both demand response and energy storage to that objective. Member States may achieve that objective by realising the identified potential of non-fossil flexibility, via the removal of identified market barriers or via the non-fossil flexibility support schemes referred to in Article 19g of this Regulation. That indicative national objective, including the respective specific contributions of demand response and energy storage to that objective, as well as measures to achieve it shall also be reflected in Member States’ integrated national energy and climate plans as regards the dimension “Internal Energy Market” in accordance with Articles 3, 4 and 7 of Regulation (EU) 2018/1999 and in their integrated national energy and climate progress reports in accordance with Article 17 of that Regulation. Member States may define provisional indicative national objectives until the report is adopted pursuant to Article 19e(1) of this Regulation. Following the assessment carried out in accordance with Article 9 of Regulation (EU) 2018/1999, the Commission, after receiving the national indicative objective defined and communicated by the Member States in accordance with paragraph 1 of this Article, shall submit a report to the European Parliament and to the Council assessing the national reports. On the basis of the conclusions of the report elaborated with the first information communicated by Member States, the Commission may draw up a Union strategy on flexibility, with a particular focus on demand response and energy storage, to facilitate their deployment, which is consistent with the Union’s 2030 targets for energy and climate and the 2050 climate-neutrality objective. That Union strategy on flexibility may be accompanied, where appropriate, by a legislative proposal.

1 Where investment in non-fossil flexibility is insufficient to achieve the indicative national objective or, where relevant, provisional indicative national objectives defined pursuant to Article 19f, Member States may apply non-fossil flexibility support schemes consisting of payments for the available capacity of non-fossil flexibility without prejudice to Articles 12 and 13. Member States which apply a capacity mechanism shall consider to make the necessary adaptations in the design of the capacity mechanisms to promote the participation of non-fossil flexibility such as demand side response and energy storage, without prejudice to the possibility for those Member States to use the non-fossil flexibility support schemes referred to in this paragraph.

2 The possibility for Member States to apply non-fossil flexibility support measures pursuant to paragraph 1 of this Article shall not preclude Member States from addressing their indicative national objectives defined pursuant to Article 19f by other means.

Non-fossil flexibility support schemes applied by Member States in accordance with Article 19g(1) shall: (a) not go beyond what is necessary to achieve the indicative national objective, or where relevant the provisional indicative national objective, defined pursuant to Article 19f in a cost-effective manner; (b) be limited to new investment in non-fossil flexibility resources such as demand side response and energy storage; (c) endeavour to take into consideration locational criteria to ensure that investments in new capacity take place in optimal locations; (d) not imply starting fossil fuel-based generation located behind the metering point; (e) select capacity providers by means of an open, transparent, competitive, voluntary, non-discriminatory and cost-effective process; (f) prevent undue distortions to the efficient functioning of electricity markets including preserving efficient operation incentives and price signals and the exposure to price variation and market risk; (g) provide incentives for the integration in the electricity markets in a market-based and market-responsive way, while avoiding unnecessary distortions of electricity markets as well as taking into account possible system integration costs and grid congestion and stability; (h) set out a minimum level of participation in the electricity markets in terms of activated energy, which takes into account the technical specificities of the asset delivering the flexibility; (i) apply appropriate penalties to capacity providers which do not respect the minimum level of participation in the electricity markets referred to in point (h), or which do not follow efficient operation incentives and price signals referred to in point (f); (j) promote the opening to the cross-border participation of those resources that are capable of providing the required technical performance, where a cost-benefit analysis is positive.

This Regulation shall be without prejudice to the application of Regulations (EU) No 648/2012 and (EU) No 600/2014 and of Directive 2014/65/EU as regards activities of market participants or market operators involving financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU.’

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.