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Frequently Asked Questions

1. What scenarios are considered in ERAA 2021?

ERAA 2021 assesses the target years 2025 and 2030. Expected reductions in coal and nuclear capacity over the coming years make Target Year (TY) 2025 a pivotal year to assess their impact on system adequacy. TY2030 gives a longer-term perspective, with a 10-year horizon.

The ERAA report considers several different scenarios. A scenario is the outcome of a specific set of assumptions and data, applied to a target year, and run through a set of models (methodologies) to give a picture of the future. By using these different scenarios, we can gauge the impact of certain policy, regulatory or economic measures (e.g. capacity mechanisms), and compare results found through different methodologies. The ERAA has four reference scenarios for 2025, and two for 2030:

 Central ScenariosOther ScenariosProof of Concept
Scenario NameWithout Capacity MechanismsWith Capacity MechanismsNational EstimatesNational Estimates with Low Thermal CapacityFlow-Based
Target Years20252025, 20302025
Economic Viability AssessmentYesYessimplified viability checksimplified viability checkYes: without Capacity Mechanism scenario

For 2025 especially, two scenarios give a new picture of how electricity supply will evolve. ENTSO-E has developed, and applied at the European level for the first time, a methodology to understand whether generation capacity will be economically viable in the future. This Economic Viability Assessment (EVA) is presented in scenarios with and without capacity mechanisms. In the future, the EVA will be applied to more target years, building on the learnings gathered from developing it for our 2025 scenario.

The ERAA complements the EVA with two national reference scenarios: the ‘National Estimates’ and ‘National Estimates – Low Thermal’. These additional scenarios reflect the national estimates of TSOs with respect to installed capacities in both target years, with the latter expressing the uncertainty identified by TSOs in the commissioning and decommissioning of several assets.

The ERAA builds on the scenarios set out in the latest available Member States’ National Energy and Climate Plans (NECPs). These plans set out the trajectory for Member States to achieve their national energy and climate objectives for 2030, in line with the 2018 Governance Regulation.3 As such, these plans are aligned with the objective of a 40% reduction of GHGs by 2030; ERAA 2022 will be aligned with the EU’s new objective of a 55% GHG reduction target by 2030 as per the EU Climate Law.

One of the innovative tools piloted in ERAA 2021, which will be more widely applied in future editions, is the ‘Flow-Based Market Coupling”. This is already increasingly applied in actual markets today. The ERAA seeks to apply these methods at wide regional scale in future time frames to mimic the dynamics of large interconnected systems and reflect critical constraints. This looks at how our electricity network and infrastructure could impact the way electricity markets trade energy across the continent. Because it must consider a significant range of variables it is an enormously complex model which has never been applied at this scale.

3 Regulation (EU) 2018/1999

2. What are the findings of ERAA 2021?

ERAA 2021 shows that with planning, coordination and, where necessary, targeted measures to address adequacy concerns, Europe’s power system can provide secure electricity even in the face of an unprecedented transition. Nonetheless, systems face adequacy challenges which must be managed proactively.

In the absence of action by policy makers and market players, ERAA points towards substantial adequacy challenges in 2025. With more resources in the system that operate at low marginal cost, more generation capacity may become uneconomical to operate or invest in as it cannot recover investment costs. This can be managed partially with new tools, which allow supply to react to demand more dynamically and vice versa. Some policy makers may seek to look into capacity mechanisms to ensure sufficient viable capacity and system adequacy.

This is borne out by the EVA scenario for 2025 without capacity mechanisms, which shows regional risks, and the EVA scenario with existing capacity mechanisms. The latter scenario is designed to meet reliability standards in countries that apply such mechanisms.

In the longer term, i.e., target year 2030, the National Estimates scenarios show important risks on the economic viability of the assumed thermal generation fleet. The qualitative approach used in this edition for 2030 shall be considered as a first step. Refining in next ERAA editions will allow for better view on the long-term assessment. Therefore, a one-on-one quantitative comparison with the 2025 results is not valid. In addition, there will always be even more uncertainty for long term than for midterm, thus those results should be seen in a different perspective.

3. How have stakeholders contributed to the ERAA 2021?

ENTSO-E has sought to involve a wide range of stakeholders from the start of the ERAA 2021 process, with substantial consultation during the development of our underlying methodologies. The Electricity Coordination Group, comprising experts from EU Member States, was further instrumental to informing the production of the ERAA. They specifically advised on assumptions, fed back on data inputs and commented on preliminary results.

ENTSO-E gave stakeholders the opportunity to provide feedback for the next ERAA reports during the public consultation on ERAA 2021 (see stakeholders interactions page).