Europe’s Agency for the Co-Ordination of Energy Regulators (ACER) has sent back proposals for a interlinked modeling of European gas and electricity markets, saying that “In the Agency’s view, the model is largely inadequate.” It said more work was needed by Europe’s gas and electricity transmission operators associations (Entso-e and Entso-g) before the model could be used to produce ten-year development plans for the European energy market. Such plans are produced every two years and part of the aim of the project was to link the plans for gas and electricity.

ACER said the proposed model was missing “fundamental elements” and it should not be used, as planned, for cost-benefit analysis.

Sending the draft back, the Agency said there were few benefits in representing the physical aspects of electricity and gas networks together, as assets like electrical and gas transmission grids, storage and regasification facilities, “operate on different physical laws and thus have low interdependence”. But it was crucial to model electricity and gas markets together, because they are interdependent, “particularly due to the interaction between the price formation processes for gas and electricity”.

The regulators said consideration should be given as to whether the following interlinkages are relevant and should be included in a new model:

• the interaction of the price formation process for the gas and electricity sectors;
• the interaction (potential competition and synergies) of electricity and gas infrastructure developments;
• the cross-sectoral influence of gas and electricity projects.

See the ACER response