Directive (EU) 2024/1711 of the European Parliament and of the Council of 13 June 2024 amending Directives (EU) 2018/2001 and (EU) 2019/944 as regards improving the Union’s electricity market design (Text with EEA relevance)
Directive (EU) 2024/1711 of the European Parliament and of the Councilof 13 June 2024amending Directives (EU) 2018/2001 and (EU) 2019/944 as regards improving the Union’s electricity market design(Text with EEA relevance)THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) thereof,Having regard to the proposal from the European Commission,After transmission of the draft legislative act to the national parliaments,Having regard to the opinion of the European Economic and Social CommitteeOJ C 293, 18.8.2023, p. 112.,Having regard to the opinion of the Committee of the RegionsOJ C, C/2023/253, 26.10.2023, ELI: http://data.europa.eu/eli/C/2023/253/oj.,Acting in accordance with the ordinary legislative procedurePosition of the European Parliament of 11 April 2024 (not yet published in the Official Journal) and decision of the Council of 21 May 2024.,Whereas:(1)Very high prices and volatility in electricity markets have been observed since September 2021. As set out by the European Union Agency for the Cooperation of Energy Regulators (ACER) in its final assessment of the EU wholesale electricity market design of April 2022, this is mainly a consequence of the high price of gas, which is used as an input to generate electricity.(2)The escalation of the Russian war of aggression against Ukraine, which is a Contracting Party of the Energy Community TreatyOJ L 198, 22.7.2006, p. 18., and the related international sanctions since February 2022 have led to a gas crisis, have disrupted global energy markets, have exacerbated the problem of high gas prices, and have had a significant knock-on impact on electricity prices. The Russian war of aggression against Ukraine has also caused uncertainty on the supply of other commodities, such as hard coal and crude oil, used by power-generating installations. That uncertainty has resulted in a substantial additional increase in the volatility of electricity prices. The reduced availability of several nuclear reactors and the low hydropower output have further amplified the increase in electricity prices.(3)As a response to that situation, the Commission, in its communication of 13 October 2021 on "Tackling rising energy prices: a toolbox for action and support", proposed a toolbox of measures that the Union and its Member States may use to address the immediate impact of high energy prices on household customers and businesses, including income support, tax breaks, energy savings and storage measures and to strengthen resilience to future price shocks. In its communication of 8 March 2022 on "REPowerEU: Joint European Action for more affordable, secure and sustainable energy", the Commission outlined a series of additional measures to strengthen the toolbox and to respond to rising energy prices. On 23 March 2022, the Commission also established a temporary State aid framework to allow certain subsidies to soften the impact of high energy prices.(4)In its communication of 18 May 2022 the Commission presented its "REPowerEU plan", which introduced additional measures focusing on energy savings, diversification of energy supplies, increased energy efficiency target and accelerated roll-out of renewable energy aiming to reduce the Union’s dependence on Russian fossil fuels, including a proposal to increase the Union’s 2030 target for gross final consumption of renewable energy to 45 %. Furthermore, the communication of the Commission of 18 May 2022 on "Short-Term Energy Market Interventions and Long-Term Improvements to the Electricity Market Design — a course for action", in addition to setting out additional short-term measures to tackle high energy prices, identified potential areas for improving the electricity market design and announced the intention to assess those areas with a view to changing the legislative framework.(5)In order to address, urgently, the energy price crisis and security concerns and to tackle the price hikes for citizens, the Union adopted several legal acts, including Regulation (EU) 2022/1032 of the European Parliament and of the CouncilRegulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage (OJ L 173, 30.6.2022, p. 17)., which established a strong gas storage regime and Council Regulation (EU) 2022/1369Council Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas (OJ L 206, 8.8.2022, p. 1)., which provided for effective demand reduction measures for gas and electricity, Council Regulation (EU) 2022/1854Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (OJ L 261 I, 7.10.2022, p. 1)., which established price limiting regimes to avoid windfall profits in both gas and electricity markets, and Council Regulation (EU) 2022/2577Council Regulation (EU) 2022/2577 of 22 December 2022 laying down a framework to accelerate the deployment of renewable energy (OJ L 335, 29.12.2022, p. 36)., which established measures to accelerate the permit-granting procedures for renewable energy installations.(6)A well-integrated energy market, which builds on Regulations (EU) 2018/1999Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1)., (EU) 2019/942Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (OJ L 158, 14.6.2019, p. 22). and (EU) 2019/943Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (OJ L 158, 14.6.2019, p. 54). of the European Parliament and of the Council, and Directives (EU) 2018/2001Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82)., (EU) 2018/2002Directive (EU) 2018/2002 of the European Parliament and of the Council of 11 December 2018 amending Directive 2012/27/EU on energy efficiency (OJ L 328, 21.12.2018, p. 210). and (EU) 2019/944Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, p. 125). of the European Parliament and of the Council, together commonly referred to as the Clean energy for all Europeans package, adopted in 2018 and 2019, allows the Union to reap the economic benefits of a single energy market in all circumstances, ensuring security of supply and sustaining the decarbonisation process to achieve the Union’s climate neutrality objective. Cross-border interconnectivity also ensures a safer, more reliable and more efficient operation of power systems, and better resilience to short-term price shocks.(7)Strengthening the internal energy market and achieving the climate and energy transition objectives require a substantial upgrade of the Union’s electricity network to be able to host vast increases of renewable generation capacity, with weather-dependent variability in generation amounts and changing electricity flow patterns across the Union, and to be able to address new demand such as electric vehicles and heat pumps. Investment in grids, within and across borders, is crucial to the proper functioning of the internal electricity market, including security of supply. Such investment is necessary to integrate renewable energy and demand in a context where they are located further apart than in the past and, ultimately, to deliver on the Union climate and energy targets. Therefore, any reform of the Union’s electricity market should contribute to a more integrated European electricity network, with a view to ensuring that each Member State reaches a level of electricity interconnectivity in accordance with the electricity interconnection target for 2030 of at least 15 % pursuant to Article 4, point (d)(1), of Regulation (EU) 2018/1999, that that interconnection capacity is used as much as possible for cross-border trade and that the Union’s electricity network and connectivity infrastructure are built or upgraded, such as the Union projects of common interest established pursuant to Regulation (EU) 2022/869 of the European Parliament and of the CouncilRegulation (EU) 2022/869 of the European Parliament and of the Council of 30 May 2022 on guidelines for trans-European energy infrastructure, amending Regulations (EC) No 715/2009, (EU) 2019/942 and (EU) 2019/943 and Directives 2009/73/EC and (EU) 2019/944, and repealing Regulation (EU) No 347/2013 (OJ L 152, 3.6.2022, p. 45).. Adequate connectivity should be provided to all Union citizens and undertakings as this can result in major opportunities for them to participate in the energy transition and the digital transformation of the Union. Special consideration should be given to the outermost regions referred to in Article 349 of the Treaty on the Functioning of the European Union (TFEU), which recognises their specific constraints and provides for the adoption of specific measures in their regard.(8)The current electricity market design has, inter alia, helped the emergence of new and innovative products, services and measures on retail electricity markets, supporting energy efficiency and the uptake of renewable energy and enhancing choice to help consumers reduce their energy bills including through small-scale generation installations and emerging services for providing demand response. Building on and seizing the potential of the digitalisation of the energy system, such as active participation by consumers, is a key element of future electricity markets and systems in the Union. At the same time, there is a need to respect consumer choices and to allow consumers to benefit from a variety of contractual offers, and to shield household customers from high prices during an energy crisis. Energy system integration is intended to be the planning and operation of the energy system as a whole, across multiple energy carriers, infrastructures, and consumption sectors, by creating stronger links between them, in synergy with each other and supported by digitalisation with the objective of delivering secure, affordable, reliable and sustainable energy.(9)In the context of the energy crisis, the current electricity market design has revealed a number of shortcomings and unexpected consequences linked to the impact of high and volatile fossil fuel prices on short-term electricity markets, which expose households and undertakings to significant price spikes and resulting effects on their electricity bills.(10)A faster deployment of renewable energy and clean flexible technologies constitutes the most sustainable and cost-effective way of structurally reducing the demand for fossil fuels for electricity generation and enabling direct consumption of electricity through the electrification of energy demand and energy system integration. Due to their low operational costs, renewable sources can have a positive impact on electricity prices across the Union and reduce the consumption of fossil fuels.(11)The changes to the electricity market design should ensure that the benefits from increasing renewable power deployment, and the energy transition as a whole, are brought to consumers, including the most vulnerable ones, and ultimately shield them from energy crises and avoid more household customers falling into an energy poverty trap. Those changes should mitigate the impact of high fossil fuel prices, in particular that of gas, on electricity prices, aiming to allow household customers and undertakings to reap the benefits of affordable and secure energy from sustainable renewable and low carbon sources in the longer term, as well as of energy efficient solutions in reducing overall energy costs, which may reduce the need for power grid and generation capacity expansion.(12)The reform of the electricity market design aims to achieve affordable and competitive electricity prices for all consumers. As such, that reform should benefit not only household customers but also the competitiveness of the Union’s industries by facilitating the investment in clean technology that they require to meet their net zero transition paths. The energy transition in the Union needs to be supported by a strong clean technology manufacturing basis. Those reforms will support the affordable electrification of industry and the Union’s position as a global leader in terms of research and innovation in clean energy technologies.(13)The connection of new generation and demand installations to the grid, in particular renewable energy plants, often faces delays in grid connection procedures. One of the reasons for such delays is the lack of available grid capacity at the location chosen by the investor, which entails a need for grid extensions or reinforcements to connect the installations to the system in a safe manner. A new requirement for electricity system operators, both at transmission and distribution levels, to publish and update information on the capacity available for new connections in their areas of operation would give investors easier access to information of grid capacity availability within the system and thereby accelerate decision-making which, in turn, would accelerate the required deployment of renewable energy. That information should be updated on a regular basis, at least quarterly, by distribution system operators. While Member States should be able to decide not to apply that requirement to electricity undertakings which serve less than 100000 connected customers or which serve small isolated systems, they should encourage those undertakings to provide system users with that information once a year and should promote cooperation between distribution system operators for that purpose. Distribution system operators should also publish the criteria used to determine the available grid capacities, such as existing demand and generation capacities, the assumptions made for assessing the possible further integration of additional system users, the relevant information on possible energy curtailment, and the expectation of upcoming relevant network developments.(14)Furthermore, to tackle the problem of lengthy reply times on requests for connection to the grid, distribution system operators should provide clear and transparent information to system users about the status and treatment of their connection requests. Distribution system operators should provide such information within three months of the date of submission of the request and should update it on a regular basis, at least quarterly.(15)In areas where electricity grids have limited or no network capacity, network users requesting grid connection should be able to benefit from establishing a non-firm, flexible connection agreement. That connection agreement would, for example, take into account energy storage or limit the times in which a generation power plant can inject electricity to the grid or the capacity that can be exported, enabling its partial connection. System operators should offer the possibility of establishing flexible connection agreements in such areas. The regulatory authority or another competent authority where a Member State has so provided, should develop frameworks for system operators to establish such flexible connections, ensuring that network reinforcements that provide the structural solutions are prioritised, connection agreements are made firm as soon as the networks are ready, flexible connections are enabled as a permanent solution for areas where network reinforcement is not efficient and, to the extent possible, give visibility to the network users requesting grid connection on the expected curtailment levels under the flexible connection agreement.(16)During the energy crisis, consumers were exposed to extremely volatile wholesale energy prices and had limited opportunities to engage in the energy market. Consequently, many household customers have been facing financial difficulties and have been unable to pay their bills. Vulnerable customers and customers affected by energy poverty were hit hardest, but middle-income household customers were also exposed to such difficulties. High energy prices could also have a negative impact on the health, well-being and overall quality of life of consumers. It is therefore important to improve consumer rights and protection, allowing consumers to benefit from the energy transition, decouple their electricity bills from short-term price movements on energy markets and rebalance the risk between suppliers and consumers.(17)Consumers should have access to a wide range of offers so that they can choose a contract that corresponds to their needs. However, suppliers have reduced their offers, fixed-term, fixed-price electricity supply contracts have become scarce, and the choice of offers has become limited. Consumers should always have the possibility to opt for an affordable fixed-price, fixed-term electricity supply contract and suppliers should not be able to unilaterally modify contractual terms and conditions or to terminate the contract before it reaches its maturity. Nevertheless, dynamic price contracts remain essential and an increasing penetration of renewable energy sources can help consumers to reduce their energy bills. Member States should be able to exempt suppliers with more than 200000 final customers who offer only dynamic price contracts from the obligation to offer fixed-term, fixed-price electricity supply contracts, provided that such an exemption does not have a negative impact on competition and retains sufficient choice of fixed-term, fixed-price electricity supply contracts.(18)When suppliers do not ensure that their electricity portfolio is sufficiently hedged, changes in wholesale electricity prices can leave them financially at risk and can result in their failure and their passing on costs to consumers and other network users. Hence, suppliers should be appropriately hedged when offering fixed-term, fixed-price electricity supply contracts. An appropriate hedging strategy should take into account the suppliers’ access to its own generation and its capitalisation as well as its exposure to changes in wholesale market prices, the size of the supplier or the market structure. The existence of appropriate hedging strategies can be ensured by general rules overseen without undertaking a specific review of the positions or strategies of individual suppliers. Stress tests and reporting requirements on suppliers could be tools by which to assess supplier hedging strategies.(19)Consumers should be able to choose the supplier which offers them the price and service which best suits their needs. Advances in metering and sub-metering technology combined with information and communication technology make it technically possible to have multiple suppliers for individual premises. Customers should be able to choose a separate supplier in particular for electricity to power appliances such as heat pumps or electric vehicles which have a particularly high consumption or which also have the capability to shift their electricity consumption automatically in response to price signals. To that end, customers should be allowed to have more than one metering and billing point covered by the single connection point for their premises, allowing different appliances to be metered and supplied separately. Metering points should be clearly distinguished from each other and should comply with applicable technical rules. The rules for the allocation of the associated costs should be determined by the Member States. Some smart metering systems are able to directly cover more than one metering point and therefore enable customers to have more than one electricity supply contract or energy sharing agreement at the same time. Suppliers should have balancing responsibility only for metering and billing points to which they supply. Moreover, by enabling the use of dedicated measurement solutions, attached to or embedded in appliances with flexible, controllable loads, final customers can participate in other incentive-based demand response schemes that provide flexibility services on the electricity market and to transmission system operators and distribution system operators. Overall, such arrangements should be compatible with energy sharing and should contribute to the increased uptake of demand response and to consumer empowerment, thereby allowing customers to have more control over their energy use and bills, while providing the electricity system with additional flexibility in order to cope with supply and demand fluctuations.(20)Due to the increasing complexity of energy offers and different marketing practices, consumers often find it difficult to fully understand the implications of suppliers’ offers or the contract that they sign. In particular, there is often a lack of clarity on how the price is set, the conditions for the renewal of a contract, the consequences of terminating a contract or the reasons for changing terms and conditions by the supplier. Therefore, suppliers or market participants engaged in aggregation should provide the key information about energy offers to consumers in a concise and easily understandable manner prior to the conclusion or extension of a contract.(21)To ensure continuity of supply for consumers, particularly in cases of supplier failure, Member States should have in place a supplier-of-last-resort regime. It should be possible to appoint the supplier of last resort either before or at the moment of supplier failure. Such a supplier of last resort may be treated as a provider of universal service. A supplier of last resort might be the sales division of a vertically integrated undertaking which also performs distribution functions, provided that it meets the unbundling requirements of Directive (EU) 2019/944. However, this does not imply an obligation of Member States to supply at a certain fixed minimum price. Where a Member State obliges a supplier of last resort to supply electricity to a customer who does not receive market-based offers, the conditions set out in Article 5 of Directive (EU) 2019/944 apply and the obligation can involve a regulated price only to the extent that the customer is entitled to benefit from regulated prices. When assessing whether offers received by non-household customers are market-based, Member States should take into account the individual commercial and technical circumstances. Where, before 16 July 2024, a Member State has already appointed a supplier of last resort through a fair, transparent and non-discriminatory procedure, it is not necessary to launch a new procedure for appointing the supplier of last resort.(22)Energy sharing can create resilience to the effects of high and volatile wholesale market prices on consumers’ energy bills, empowers a wider group of consumers that do not otherwise have the option of becoming an active customer due to financial or spatial constraints, such as vulnerable customers and customers affected by energy poverty, and leads to increased uptake of renewable energy by mobilising additional private capital investment and diversifying remuneration pathways. With the integration of appropriate price signals and storage facilities, electricity sharing can contribute to laying the foundation to help tap into the flexibility potential of smaller consumers. The provisions on energy sharing laid down in this Directive complement the provisions concerning self-consumption laid down in Article 21 of Directive (EU) 2018/2001 and in Article 15 of Directive (EU) 2019/944, in particular with respect to collective self-consumption.(23)Active customers that own, lease or rent a storage or generation facility should have the right to share excess production for a price or free of charge and to empower other consumers to become active customers, or to share the renewable energy generated or stored by jointly leased, rented or owned facilities, of up to 6 MW capacity, directly or through a third-party organiser. In the case of customers participating in energy sharing schemes larger than small and medium-sized enterprises, the size of the installed capacity of the generation facility associated to the energy sharing scheme should be of a maximum of 6 MW and the energy sharing should take place within a local or limited geographical area, as defined by Member States. Any payment for the sharing of excess production for a price can either be settled directly between active customers or automated through a peer-to-peer trading platform. Energy sharing arrangements are either based on private contractual agreement between active customers or organised through a legal entity. A legal entity that incorporates the criteria of a renewable energy community as defined in Article 2, point (16), of Directive (EU) 2018/2001 or a citizen energy community as defined in Article 2, point (11), of Directive (EU) 2019/944 could share with their members electricity generated from facilities they have in full ownership. The protection and empowerment framework for energy sharing should pay particular attention to vulnerable customers and customers affected by energy poverty.(24)Energy sharing operationalises the collective consumption of self-generated or stored electricity injected into the public grid by more than one jointly acting active customers. Member States should put in place the appropriate IT infrastructure to allow for the administrative matching within a certain time frame of customer’s total metered consumption with self-generated or stored renewable energy which is deducted from the total consumption for the purpose of calculating the energy component of the energy bill issued by the supplier and thereby reducing the customer’s bill. The output of those facilities should be distributed among the aggregated consumer load profiles based on static, variable or dynamic calculation methods that can be pre-defined or agreed upon by the active customers. Active customers engaged in energy sharing are financially responsible for the imbalances that they cause, without prejudice to the possibility for active customers to delegate their balancing responsibilities to other market participants. All consumer rights and obligations set out in Directive (EU) 2019/944 apply to final customers involved in energy sharing schemes. However, households with an installed capacity up to 10,8 kW for single households and up to 50 kW for multi-apartment blocks should not be required to comply with supplier obligations. Member States should be able to adjust those thresholds to reflect national circumstances, up to 30 kW for single households and to between 40 kW and 100 kW for multi-apartment blocks.(25)Plug-in mini-solar systems could, together with other systems and technologies, contribute to the increased uptake of renewable energy and citizen engagement in the energy transition. Member States should be able to promote the introduction of those systems to reduce the administrative and technical burden. Regulatory authorities should be able to set the network tariffs for the injection of electricity coming from plug-in mini-solar systems or to establish the methodology for calculating those tariffs. Depending on the situation in a Member State, it would be possible for the tariffs to be very low or even zero, while being cost-reflective, transparent and non-discriminatory.(26)Vulnerable customers and customers affected by energy poverty should be adequately protected from electricity disconnections and should, as well, not be put in a position that forces them to disconnect. Member States should therefore ensure that vulnerable customers and customers affected by energy poverty are fully protected from electricity disconnections, by taking the appropriate measures, including the prohibition of disconnections or other equivalent actions. There are multiple tools and good practices available to Member States which include, but are not limited to, year-round or seasonal disconnection prohibitions, debt prevention and sustainable solutions to support customers in hardship paying for their energy bills. The role of suppliers and all relevant national authorities to identify appropriate measures, in both the short and the long term, which should be made available to vulnerable customers and customers affected by energy poverty to manage their energy use and costs remains essential, and suppliers and relevant national authorities should cooperate closely with social security authorities.(27)Consumers have the right to use complaint procedures managed by their suppliers as well as out-of-court dispute settlement procedures, in order to benefit from the effective enforcement of their rights and not to be disadvantaged in the case of disagreements with suppliers, in particular regarding bills or the amount due. Where customers use those procedures, suppliers should not terminate contracts on the basis of the facts which are still in dispute. Suppliers and customers should continue to meet their contractual rights and obligations, in particular to supply electricity and to pay for that electricity, and complaint procedures should not become the ground for abuses that allow customers not to honour their contractual obligations, including paying their bills. Member States should put in place appropriate measures to avoid that those complaint or out-of-court dispute settlement procedures are used in a distorted way.(28)Public interventions in price setting for the supply of electricity would constitute, in principle, a market-distortive measure. Such interventions should therefore be carried out only where appropriate and as public service obligations and should be subject to specific conditions. Under this Directive, regulated prices are possible for vulnerable customers and customers affected by energy poverty, including below costs, and, as a transition measure, for household customers and microenterprises whether or not there is an electricity price crisis. During an electricity price crisis, when wholesale and retail electricity prices increase significantly, Member States should be allowed to temporarily extend the application of regulated prices to small enterprises and medium-sized enterprises. As regards household customers and small enterprises and medium-sized enterprises, Member States should, exceptionally and temporarily, be allowed to set regulated prices below cost during an electricity price crisis provided that this does not create distortions between suppliers and that suppliers are compensated for the costs of supplying below cost. However, it is necessary to ensure that such price regulation is targeted and does not create incentives to increase consumption. Therefore, such exceptional and temporary extension of price regulation should be limited to 80 % of median household consumption for household customers and to 70 % of the previous year’s consumption for small enterprises and medium-sized enterprises. The Council should be able, acting on a proposal from the Commission, by means of an implementing decision, to declare a regional or Union-wide electricity price crisis. The assessment of whether such an electricity price crisis exists should be based on a comparison with prices in times of normal market operation and therefore should exclude the impact of previous electricity price crises declared pursuant to this Directive. Such implementing decision should also specify the period of validity of the declaration of an electricity price crisis, during which the temporary extension of regulated prices applies. That period should not be longer than one year. Where the conditions for that electricity price crisis declaration continue to be fulfilled, it should be possible for the Council, acting on a proposal from the Commission, to extend the period of validity of the implementing decision. The conferral of implementing powers on the Council is justified given the significant horizontal implications for Member States of a decision declaring an electricity price crisis and thereby to trigger the extended possibilities for public interventions in price setting for the supply of electricity. Such implications are significant in terms both of the number of customers concerned and of the importance of the categories of such customers. The conferral of implementing powers on the Council also adequately takes into account the political nature of such a decision declaring an electricity price crisis, which requires a delicate balancing of different policy considerations central to Member States’ decision to implement price-setting for energy. In the case of vulnerable customers and customers affected by energy poverty, the price regulation applied by Member States could cover 100 % of the price in accordance with Article 5 of Directive (EU) 2019/944. In any event, the declaration of a regional or Union-wide electricity price crisis should ensure a level playing field across all Member States affected by the decision so that the internal market is not unduly distorted.(29)Member States should be able to provide support, in compliance with Articles 107 and 108 TFEU, for additional electricity costs of industrial customers in times of electricity crisis and exceptionally severe increases of prices.(30)Since Estonia, Latvia and Lithuania are not yet synchronised with the Union electricity system, they face very specific challenges when organising balancing markets and the market-based procurement of ancillary services. While progress towards synchronisation is ongoing, one of the critical prerequisites for stable synchronous system operation is the availability of sufficient balancing capacity reserves for frequency regulation. However, being dependent on the Russian synchronous area for frequency management, the Baltic States were not yet in the position to develop their own functioning balancing market. The Russian war of aggression against Ukraine has substantially increased the risk for security of supply resulting from the absence of own balancing markets. Estonia, Latvia and Lithuania should therefore be exempt from the requirements of certain provisions of Article 40(4) and Article 54(2) of Directive (EU) 2019/944 insofar as that is necessary to ensure system security for a transitional period. The transitional periods for Estonia, Latvia and Lithuania should be phased out as soon as possible after the synchronisation, and should be used to develop the appropriate market instruments that offer short-term balancing reserves and other indispensable ancillary services, and should be limited to the time necessary for that process.(31)Considering that the Cypriot transmission system is not connected to that of any other Member State, Cyprus faces very specific challenges when organising balancing markets and the market-based procurement of ancillary services. Cyprus should therefore be exempt from the requirements of Article 40(4) and Article 54(2) of Directive (EU) 2019/944 insofar as that is necessary to ensure system security for a transitional period, namely until the Cypriot transmission system is connected to that of other Member States via interconnectors.(32)This Directive establishes a legal basis for the processing of personal data in accordance with Regulation (EU) 2016/679 of the European Parliament and of the CouncilRegulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).. Member States should ensure that all principles and obligations relating to processing of personal data laid down in Regulation (EU) 2016/679 are met, including on data minimisation. Where the objective of this Directive can be achieved without the processing of personal data, data controllers should rely on anonymised and aggregated data.(33)To the extent that any of the measures provided for in this Directive constitute State aid, the provisions concerning such measures are without prejudice to the application of Articles 107 and 108 TFEU. The Commission is competent to assess the compatibility of State aid with the internal market.(34)Directives (EU) 2018/2001 and (EU) 2019/944 and should therefore be amended accordingly.(35)Since the objective of this Directive, namely to improve the design of the integrated electricity market, in particular to prevent unduly high electricity prices, cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve that objective,HAVE ADOPTED THIS DIRECTIVE: