Progress in EU electricity market integration in 2025: stability through flexibility and completed projects

ACER’s 2025 Wholesale Electricity Market Monitoring Report reviews the progress made in integrating EU electricity markets. It examines futures markets, day-ahead, intraday, and balancing markets, and identifies areas where rules and projects are delayed.

This year’s edition also highlights the price volatility caused by weather conditions, which occurs when unusually low renewable energy production coincides with higher-than-normal demand.

What trends does ACER identify for 2024?

• EU market integration brings benefits and helps mitigate high electricity prices.
• Price volatility indicates that greater flexibility is needed.
• Long-term markets remain illiquid, limiting investment signals.
• Cross-border integration reduces costs, but project delays continue.
• Balancing integration has brought €1.6 billion in welfare gains.
• Futures markets lack depth; power purchase agreements (PPAs) are growing but vary significantly in their structure.
• Day-ahead market integration is consolidating, while intraday markets are developing.

What are ACER’s recommendations?

ACER identifies several priorities that are key to sustainability:

• Increasing flexibility through investments in demand response, storage, and back-up generation.
• Accelerating the implementation of delayed cross-border projects by completing interconnections in a timely manner and adopting capacity allocation based on intraday market flows.
• Expanding the participation of transmission system operators (TSOs) in balancing platforms to reduce costs and instability and ensure more efficient system balancing.
• Strengthening forward markets with more active long-term trading and well-designed PPAs and contracts for difference (CfDs).
• Moving to intraday flow-based allocation to ensure efficient capacity use and reduce congestion costs.
• Improving monitoring and enforcement to ensure consistent application of rules and benefits for consumers.

ACER has also updated the interactive dashboards for electricity markets with the latest data up to the third quarter of 2025. The next update will be in January 2026.

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Key highlights from the report

State of play and key trends

In 2024–2025, the European market is showing resilience but also continued price volatility. Key findings include:

• Forward markets remain shallow – liquidity is low and hedging opportunities rarely extend beyond a two-year horizon. This limits investment and stable price signals for new RES projects.
• Day-ahead and intraday markets continue to integrate successfully, supporting competition and price convergence, but extreme weather events – winter Dunkelflaute and summer heat waves – lead to sharp price spikes (up to €1,000/MWh in South-East Europe).
• Balancing markets have delivered over €1.6 billion in annual benefits from integration through the Picasso and MARI platforms, but there is still potential to expand operator participation and make better use of cross-border capacity.

Identified problems and limitations

ACER highlights three structural problems:

1. Delays in key cross-integration projects – incomplete or late implementation of European rules leads to lost benefits and uneven development between regions.
2. Insufficient system flexibility – the lack of storage, demand response, and flexible capacity exacerbates the effect of time mismatches between generation and consumption.
3. Insufficient transparency and weak operational coordination – technical incidents demonstrate the system’s dependence on reliable IT and coordination mechanisms.

Examples and practices

• Italy is introducing the first regulated long-term PPA platform with a state guarantee through GME, which aims to standardise, increase transparency and reduce risk for investors.
• Spain and France are building a new 2 GW interconnector, which would increase price convergence and flexibility across different wind profiles.
• Greece is examined in a case study of extreme prices, where high temperatures, low water reserves, and limited interconnection capacity lead to evening peaks of around EUR 1,000/MWh.
• The Nordic and Baltic countries demonstrate the benefits of flow-based integration and the synchronisation of the Baltic with continental Europe (February 2025) – a key milestone in energy independence from Russia.

Key conclusions

• Flexibility is the central challenge for the European electricity system – both technical and market-based.
• Integration brings demonstrable socio-economic benefits, but incomplete implementation of reforms delays the effects for consumers.
• Transparent and well-designed contracts (CfD, PPA) are crucial to avoid distortions and negative prices.
• The operational readiness of system operators and trust in market rules remain the basis for stable and affordable electricity.

Recommendations

1. Accelerate investments in flexibility – batteries, demand response, dispatchable capacity. These resources help absorb climate fluctuations and reduce consumers’ exposure to price volatility.
2. Complete market coupling projects and introduce flow-based capacity calculation/ allocation (when calculating and allocating cross-border capacity, take into account actual electricity flows (or potential flows) through the transmission network and their interaction with network constraints — not just fixed or average limits) for all time periods.
3. Expanding the integration of balancing markets with full TSO participation in the Picasso and MARI platforms. Incomplete or delayed implementation continues to hamper reforms and the associated welfare benefits.
4. Expanding the integration of balancing markets. Balancing energy exchange and imbalance clearing platforms, as well as the Nordic balancing capacity market, delivered over €1.6 billion in benefits in 2024. Broader participation by transmission system operators could further reduce price volatility and incidents and bring even greater benefits to the EU and market participants.
5. Improving cross-border trading capacity and adapting maintenance plans to critical hours. It is crucial that cross-border capacity be increased and, in particular, that transmission system operators maintain available capacity during critical hours. Redistribution and maintenance planning must be adapted to the needs of the system.
6. Harmonisation of long-term products – PPAs, CfDs and futures to reinforce each other. Improvements are needed in the long-term allocation of cross-zonal capacity to more effectively support the market for standard electricity futures products. The design of PPAs, contracts for difference, and futures should be aligned so that these products support each other. Transparent PPA platforms can support smaller participants and improve price formation.
7. Improve real-time monitoring and transparency to prevent manipulation and manage crises. Indicators and monitoring should track both physical constraints and stakeholder actions in real time. Increased transparency can help prevent market manipulation.