Executive Summary

The ENTSO-E Winter Outlook report provides an assessment of the security of the electricity supply for the upcoming winter season across Europe.

• The report shows higher adequacy risk compared to previous winters. The main system stress is identified in Ireland, France, Southern Sweden, Finland, Malta and Cyprus systems.

• The electricity system remains highly dependent on gas, yet favourable weather conditions may relieve this reliance for the power system.

• There are some additional risks identified for the winter that could materialize and have a substantial impact on the adequacy situation, especially if they coincide. Close follow-up is needed on the uncertainties around nuclear availability in France, Sweden and Finland, as well as coal supply in Germany and Poland.

• European States have taken specific measures to prepare for winter (gas storage accumulation, extension or returns of some power plants, fuel switching, ambition to reduce electricity consumption) as well as cutting the electricity demand peaks by 5% as mandated by EU legislation to address high energy prices. All these measures will decrease the adequacy risk significantly.

• Electricity TSOs are taking measures at national level and tightly coordinating and monitoring at regional and pan-European levels via short-term adequacy forecasts and operational cooperation between TSOs and Regional Coordination Centres.

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Your Questions, Our Answers

• What is the Winter Outlook?

  ENTSO-E’s Seasonal Outlooks investigate at pan-European level the security of electricity supply ahead of each winter and summer period. They are released twice a year with a Summer Outlook in June and a Winter Outlook in December. The role of the Outlooks is to identify when and where system adequacy – the balance between supply and demand for electricity – is at risk. Outlooks are not forecasts of the future. Rather, they identify potential vulnerabilities for the upcoming season which can be addressed proactively with preparation or mitigation measures.
  
  The Outlooks are the product of cooperation between 39 European electricity TSOs. Because of their pan-European scope, the Outlooks complement the analysis carried out in national and regional assessments, which provide a more detailed picture of adequacy at local level. They promote cooperation across Europe and between regional and national stakeholders.
  
  Performing the Seasonal Outlooks (Seasonal Adequacy Assessments) is one of ENTSO-E’s legal mandates as specified in the Clean Energy Package and as defined in Article 9 of the Risk Preparedness Regulation (Regulation (EU) 2019/941). ENTSO-E performs this assessment to inform national authorities, TSOs and relevant stakeholders of the potential risks related to the security of electricity supply in the coming season. The Seasonal Outlooks reflect the implementation of the methodology as developed by ENTSO-E as per Article 8 of the Risk Preparedness Regulation and as approved by ACER on 6 March 2020. Earlier Seasonal Outlooks (published before 2020) follow another deterministic approach.

• How are electricity TSOs preparing to maintain security of supply?

  Cross-border cooperation and close coordination at all levels will be key this winter to ensure that balance is maintained between supply and demand in the European power system. Appropriate mitigation measures and strategies especially at national level will be important to help in constrained situations for the power system. TSOs’ national analysis regarding short-term adequacy risks and potential stress situations use as a reference the pan-European methodology but may incorporate higher granularity and local sensitivities to provide a more detailed view of the local situation.
  
  At regional level, TSOs coordinate via established short-term adequacy forecasts and processes which aim to help optimize the operational cooperation between TSOs and Regional Coordination Centres (RCCs) in case of scarcity situations. On the basis of latest TSO data, RCCs perform regional adequacy assessments from week-ahead to day-ahead to detect situations where a lack of electricity adequacy could occur, taking into account cross-border exchanges and operational security limits. Concerned TSOs can then take measures and coordinate as necessary to reduce adequacy risks in the respective timeframe. A good level of exchange capacity is also a crucial resource. TSOs will coordinate to maximize exchange capacities regionally through close coordination and cooperation within relevant RCCs.
  
  TSOs are also closely coordinating at pan-European level within ENTSO-E. ENTSO-E diligently monitors the evolution of the adequacy situation and will release regular updates throughout the winter. Regular exchanges are also taking place with the European Commission, EU Member States and other relevant stakeholders. Coordination between National Risk Preparedness Plans is ensured through regular exchanges in the Electricity Coordination Group and the Gas Coordination Group.

• Which scenarios are being investigated for this coming winter?

  The Winter Outlook is not a forecast, and the situation can evolve closer to real-time. That is why it is necessary to consider different situations impacting how electricity supply and demand might evolve throughout the winter. The Winter Outlook 2022-2023 investigates a reference scenario and four sensitivities, each in a probabilistic methodology, and all together providing an overview of how the situation might unfold in Europe.
  
  The reference scenario pictures ‘best estimate’ projections from December 2022 to March 2023, based on electricity TSOs’ data collection. It considers confirmed national mitigation measures and estimates of hydro reservoir levels, for which projections show mainly low levels in Southern Europe and in Southern Norway. Our study also considers planned maintenance of power plants, in particular the actual lower nuclear availability compared to other years as expected now in France.
  
  To account for significant uncertainties, a combined sensitivity investigates what the situation could be in case additional stress occurs in the system. These is identified based on joint TSO input, and extensively discussed with the European Commission and national authorities via the Electricity Coordination Group. Compared to the best estimate reference scenario, it includes:

  • prolonged unavailability of nuclear plants in France, Sweden and Finland, and, at the same time
  • further constraints on the availability of fossil fuels (coal in Poland and Germany)

  An additional sensitivity investigates the impact of reduced demand for electricity:

  • with the reduction of gross electricity consumption by 10%, and
  • with the reduction of demand by 5% at peak hours.

  These two measures entered into force on 8 October 2022 in the Regulation (EU) 2022/1854 for an emergency intervention to address high energy prices.

• How does the Winter Outlook consider gas shortage?

  Each scenario and sensitivity is assessed for critical dependency on gas supply at country level and on a weekly basis, taking into account various climatic patterns. ENTSO-E assesses the impacts of the interdependency between the gas and the power system by identifying the Critical Gas Volume (CGV) in each scenario. CGV refers to the lowest volumes of gas absolutely needed for electricity generation using all market resources even in the most adverse combination of climate conditions and outages. With this analysis, ENTSO-E estimates how much gas may be needed to maintain electricity adequacy in each country and for each week of the coming winter. Gas is always considered last in the merit order both in the reference scenario and in the sensitivities assessed. In a market context this means gas generation is the price setter in the wholesale market, but what is most important for an adequacy analysis this means the analysis inherently assumes all other resources are deployed first in the market before calling on gas power generation.
  
  The findings show that gas remains important to maintain adequacy of the power system in Europe this winter and in the absence of new measures and investments also in coming years. The volume of gas expected to be necessary for electricity generation over the coming winter corresponds to about a third of the total gas storage level in Europe, in line with previous winters.
  
  This winter 2022/2023 assessment does not consider any savings of gas generation for the sake of saving gas for winter 2023/2024. Adequacy assessments for the next winter 2023/2024 will depend on multiple factors, including how cold the coming winter is, how successful are demand reduction measures and to what extent Europe can refill its gas reserves and further diversify supply.

• Does the Winter Outlook consider preventive measures taken by the EU and national authorities?

  Our study considers confirmed national mitigation measures as for instance the switch from gas to other fuels, the reopening of recently decommissioned or mothballed units, the life extension of units which were expected to be decommissioned during the winter, the return to reserve of some units and the optimization of maintenance schedules.
  
  Regarding EU measures, the Winter Outlook analyses the impact of the 10% gross electricity demand reduction and the potential benefit of a 5% peak hour savings across Europe specified in *Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices. Findings show that adequacy risks and Critical Gas Volumes in the power system could be relieved substantially if 10% of the electricity consumption was saved on average across Europe. Saving even 5% of electricity consumption at peak hours has also significant benefits to reduce the risks for the power system adequacy during the winter.

• Does the Winter Outlook consider the probability and impact of a very cold winter?

  The Winter Outlook considers multiple possibilities regarding weather and temperature, which can impact generation (e.g. more or less wind) and consumption of electricity (e.g. residential heating). Our simulations are performed for multiple so-called ‘climate years’. These cover 34 past winter patterns to capture sufficient spread of possible winter scenarios. In these historical climate data, the temperatures were detrended to account for climate change. This allows us to take into consideration a variety of weather conditions, from a mild winter (less likely to see adequacy risks) to a very cold one (more likely to see adequacy risks). The results presented in the Winter Outlook are an average of many different possible weather conditions.

• What are non-market resources?

  Non-market resources can include generation, demand-side-response and storage resources, among others depending on the country. They are normally dedicated to ensuring grid security and stability, as well as transmission reliability margins used for coping with variability of power flow. As such, they are kept outside the market but can be called upon in the event of a supply shortage to ensure security of supply.
  
  The reference scenario and sensitivities consider all resources available to supply demand in a market-based approach. This means that non-market resources are not yet deployed. However, when our simulations identify an adequacy risk in a country, ENTSO-E carries out another simulation taking into account the additional contribution of non-market resources when they exist at national level. These resources can also help mitigate risks in other countries.

• What are operational mitigation measures?

  After all market and non-market resources are exhausted, TSOs trigger available operational mitigation measures to avoid a controlled shedding of demand. The main mitigation measure is voltage reduction. It consists in a light drop in voltage for a few hours and results in reduced consumption while keeping all consumers supplied. As a last resort, TSOs might curtail load locally in a preventive way to secure the system. Such operational mitigation measures are not assessed in an adequacy study.

• How does this Winter Outlook compare to previous Winter Outlooks

  As expected based on more stressed situation in the input data, the results show more vulnerabilities compared to previous winters. The Winter Outlook 2022/2023 is based on the same methodology as the previous two editions, with some improvements. Methodological improvements include a better representation of gas consumption and of exchange capacities between countries. Furthermore, an early assessment was anticipated two months earlier than usual, while a refined assessment was performed as a second step.
  
  Additionally, considering the current energy situation, additional insights were analysed, including Critical Gas Volumes and several sensitivities focusing on specific risks identified jointly with electricity TSOs, the European Commission and the Electricity Coordination Group.

• How does this Winter Outlook compare to national assessments?

  The ENTSO-E Winter Outlook is developed by ENTSO-E member TSOs and continuously coordinated with national studies. Especially input assumptions are regularly reviewed to ensure consistent views on demand assumptions, plant availabilities and other key parameters. For example, this Outlook highlights the impact of lower nuclear plant availability in France and assumptions on availability in the ENTSO-E reference case are aligned with the central scenario of the national RTE study published in mid-September.
  
  Results can slightly deviate as some scenario inputs are centrally constructed at ENTSO-E level. National adequacy studies aim to capture as best as possible interconnectivity at least at regional level, while the ENTSO-E Outlook covers the full interconnected ENTSO-E system as well as some neighbouring systems (e.g. Great Britain and Turkey).
  
  It is especially important to take into account that national studies may use different sensitivities or focus more on extreme cases. One example is the German ‘Extraordinary analyses winter 2022/2023’ where the national assessment covers multiple stress elements coinciding such as lower nuclear availability in neighbouring systems, coal/lignite supply constraints, increasing demand as well as a cold winter. In addition, a national study (as is the case for the German stress analyses) can take more details into account such as internal transmission bottlenecks, as the ENTSO-E seasonal outlook is not considering internal transmission limitations within a bidding zone. The ENTSO-E Outlook maintains a probabilistic approach covering many climatic scenarios (not only a cold spell) and assesses additional risk drivers separately in a set of sensitivities. Work on the Outlook continues in coming weeks, and the option of a stress test to complement the available ENTSO-E sensitivities is considered.

• On what methodology is the Winter Outlook based?

  The Winter Outlook is based on the Methodology for Short-term and Seasonal Adequacy Assessments developed by ENTSO-E in line with the Clean Energy for all Europeans package and the Regulation on Risk Preparedness in the Electricity Sector (EU) 2019/941 and approved by ACER.
  
  ENTSO-E’s seasonal adequacy assessment uses the well-proven, state-of-the-art, sequential, hourly Monte Carlo probabilistic approach in which a set of possible scenarios for each variable is constructed to assess adequacy risks under various conditions for the analysed timeframe. Under the Monte Carlo probabilistic approach, for each of the scenarios, an adequacy assessment is performed on the seasonal time horizon, resulting in an overall probabilistic assessment of pan-European resource adequacy that can not only identify whether the adequacy risks exist under various deterministic scenarios but also construct a high number of consistent pan-European scenarios and identify realistic adequacy risk. A Pan-European Climate Database maintained by ENTSO-E ensures high data quality and consistency across Europe. It is based on 34 winters of historical climate data, on which the temperatures were detrended to account for climate change.

• What are Loss of Load Expectation and Expected Energy Not Served?

  Each of the scenario and sensitivity undergoes a probabilistic assessment to identify adequacy risks, expressed in Loss of Load Expectation/Probability and Expected Energy Not Served.
  
  The Loss of load expectation (LOLE) is an estimate of how many hours supply would not meet demand and can be checked against national reliability standards to confirm whether the adequacy situation is acceptable. It is important to understand that any LOLE value is essentially a risk assessment and an economic trade-off to be evaluated by policy makers and regulators at national level. A non-zero LOLE value is by no means an actual prediction of outage, because exceptional measures can always be taken.
  
  Loss of load probability (weekly LOLP) represents a probability that lack of supply in a respective scenario could be expected for at least 1 hour and for any amount (even 1 MW). Weekly LOLP under normal market conditions represents the probability that system operators would need to look for non-market resources.
  
  Expected energy not served (EENS) means the expected amount of energy not being served to consumers during the period considered, due to system capacity shortages or unexpected outages of assets.

• How are ENTSO-E neighbouring countries considered in the Winter Outlook?

  The interconnected system is a key resource for wider system adequacy. ENTSO-E’s Winter Outlook gives results for all ENTSO-E member systems. Data inputs and assumptions from neighbouring interconnected countries are also integrated into the modelling. As in every Outlook, data is collected for Turkey and included in the assessment as a market zone. The system of Great Britain is strongly interconnected in the North Sea region and a dedicated collaboration is set up with National Grid ESO to exchange data and align the ENTSO-E Outlook and the recently published National Grid ESO Outlook. Other neighbouring systems are modelled in a simplified manner by fixed flows or assuming zero flows for the purpose of identifying adequacy risks.