ERSE held a debate on the new regulatory period for 2026-2029 and presented the Regulatory Atlas of the Electricity Sector

ERSE held a debate on the new regulatory period for 2026-2029 and presented the Regulatory Atlas of the Electricity Sector

17/02/2025

ERSE - the Energy Services Regulatory Authority - held the seminar "Analysis of the Electricity Sector and Outlook for the New Regulatory Period 2026-2029" on 12 February at the Grand Auditorium of the Congress Centre of the Instituto Superior Técnico, in Lisbon, where it presented the "Regulatory Atlas of the Electricity Sector" and collected contributions for the future public consultation on the new regulatory period.

The event, attended by around 250 participants and more than 20 speakers, was opened by the Minister of Environment and Energy, Maria da Graça Carvalho, and the President of ERSE, Pedro Verdelho.

As part of this initiative, ERSE has also published the "Regulatory Atlas of the Electricity Sector", a publication that provides a physical and economic characterisation of the electricity sector and ERSE's regulatory actions in recent years, with a particular focus on the period 2019 to 2023. This document, which precedes the public consultation on the new regulatory period starting in 2026, is, according to the President of ERSE, an important tool that helps to bridge the information asymmetry that exists between the various stakeholders in the sector, namely between supply-side agents and demand-side agents, allowing them to participate in the public consultation with the same data on the entire value chain of the electricity sector.

The aim of the seminar was, in the words of the President of ERSE, "a pre-consultation" with all interested parties, so that the proposal submitted for public consultation is "not closed" and can take account of the concerns of agents.

In the first panel, moderated by Ricardo Loureiro, ERSE’s member of the board, and dedicated to Networks, network operators expressed the need for greater investment in transmission and distribution networks, both in terms of reinforcement and modernisation, in order to connect distributed renewable generation and new consumption, inherent in the National Energy and Climate Plan - PNEC 2030. At stake is the need to meet the challenges of the energy transition, with concerns about the need for predictability that allows investment cycles to be leveraged and returns on capital that make it viable to finance investments in networks. The added value of flexibility as an alternative to traditional network investment was discussed, such as: (i) the contracting of flexibility services; (ii) flexible connection agreement; (iii) Dynamic Line Rating.

Concerns have also been raised about the need for incentives to promote innovation and cyber security. However, the network operators of the Autonomous Regions of the Azores and Madeira warned about the specific nature of their electricity systems and the need for caution by the regulator when setting efficiency targets.

The second panel, dedicated to Production and Wholesale Markets and moderated by the Chairman of the ERSE Advisory Council, Mário Paulo, discussed the viability of the current market design, arguing that the marginal price is still the best tool to optimise daily dispatch and ensure the integration of renewables. However, the volatility of prices in the day-ahead market and the reduced liquidity and depth of the forward markets were highlighted, and an increase in the supply of forward contracts and more effective risk hedging were advocated as a priority. It was also considered that the new market design instruments - capacity mechanisms, Power Purchase Agreements (PPAs) and Bidirectional Contracts for Difference (CfDs) - should be implemented rapidly to ensure the proper functioning of the market. The need for greater flexibility in the electricity system, storage and the dynamisation of the balancing markets were other issues advocated for the smooth functioning of the wholesale market.

In the third panel, dedicated to Consumers and the Retail Market, moderated by Manuela Moniz, Chair of the ERSE Tariff Council, consumer and supplier representatives agreed on the need to put consumers at the centre of concerns in terms of protecting their rights and increasing their education and energy literacy. In the context of an increasingly complex market, with a wide variety of players and offers and multiple services, the need to empower the consumer to be more at the centre of action as an active consumer capable of providing services to the network and in the balancing market was mentioned. Among the concerns raised by the various stakeholders were the financing of the social tariff, the functioning of the regulated market, but also the price signals of time-of-use tariffs and the need to ensure that the energy market remains competitive and efficient, ensuring that the energy transition is carried out at an affordable cost for all consumers (industrial and residential).

The fourth and final panel, moderated by the President of New Energy Solutions, Jorge Vasconcelos, the first President of ERSE, adressed issues related to Emerging Issues and Challenges for the energy sector, with a focus on the fulfilment of the PNEC 2030 targets, with challenges related to licensing, netwoks reinforcement and storage. Another of the topics addressed as a fundamental instrument for the energy transition and for compliance with the PNEC was PPAs (Power Purchase Agreements), and the implementation of the Electronic Platform for Registration and Bilateral Energy Contracting was announced later this year, with the aim of promoting this type of contracts, which is still underrepresented in Portugal. ERSE will carry out the economic regulation of this activity. Distributed generation, in particular collective self-consumption and renewable energy communities, was also presented as fundamental to unblocking and accelerating the energy transition, with enormous potential as a business model for private consumers and the public sector.

Closing the seminar, Isabel Apolinário, ERSE's member of the board, highlighted the many challenges that ERSE will face with the new regulatory period 2026-2029 and the importance of dialogue between the regulator and all the sector's stakeholders before preparing for this new regulatory period. He also considered that regulation must be able to create the right regulatory framework for a more complex reality, with a multiplicity of players, considering new technical solutions, new business models, new commercial and contractual relationships, removing all barriers to participation in the energy markets.