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1. Where a regional or Union-wide electricity price crisis is declared in accordance with Article 66a of Directive (EU) 2019/944, Member States may request system operators to propose the procurement of peak-shaving products in order to achieve a reduction of electricity demand during peak hours. Such procurement shall be limited to the duration set out in the implementing decision adopted pursuant to Article 66a(1) of Directive (EU) 2019/944.

2. Where a request is made pursuant to paragraph 1, system operators shall, after consulting stakeholders, submit a proposal setting out the dimensioning and conditions for the procurement and activation of the peak-shaving product to the regulatory authority of the Member State concerned for its approval.

3. The regulatory authority concerned shall assess the proposal for a peak-shaving product referred to in paragraph 2 as regards achieving a reduction of electricity demand and the impact on wholesale electricity price during peak hours. That assessment shall take into account the need for the peak-shaving product not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. On the basis of that assessment, the regulatory authority may request the system operator to amend its proposal.

4. The proposal for a peak-shaving product referred to in paragraph 2 shall comply with the following requirements:

(a) the dimensioning of the peak-shaving product shall:

(i) be based on an analysis of the need for an additional service to ensure security of supply without endangering grid stability, of its impact on the market and of its expected costs and benefits;

(ii) take into account the forecast of demand, the forecast of electricity generated from renewable energy, the forecast of other sources of flexibility in the system, such as energy storage, and the wholesale price impact of the avoided dispatch; and (iii) be limited to ensure that forecasted costs do not exceed the expected benefits of the peak-shaving product;

(b) the procurement of a peak-shaving product shall be based on objective, transparent, market-based and non-discriminatory criteria, shall be limited to demand response and shall not exclude participating assets from accessing other markets;

(c) the procurement of the peak-shaving product shall take place using competitive bidding, which can be continuous, with selection based on the lowest cost of meeting pre-defined technical and environmental criteria and shall allow the effective participation of consumers, directly or through aggregation;

(d) the minimum bid size shall not be higher than 100 kW, including through aggregation;

(e) contracts for a peak-shaving product shall not be concluded more than a week before its activation;

(f) the activation of the peak-shaving product shall not reduce cross-zonal capacity;

(g) the activation of the peak-shaving product shall take place before or within the day-ahead market time frame and may be done on the basis of a pre-defined electricity price;

(h) the activation of the peak-shaving product shall not imply starting fossil fuel-based generation located behind the metering point, in order to avoid increasing greenhouse gas emissions.

5. The actual reduction of consumption resulting from the activation of a peak-shaving product shall be measured against a baseline, reflecting the expected electricity consumption without the activation of the peak-shaving product. Where a system operator procures a peak-shaving product, that operator shall develop a baseline methodology after consulting market participants, shall, where relevant, take into account the implementing acts adopted pursuant to Article 59(1), point (e), and shall submit it to the regulatory authority concerned for its approval.

6. The regulatory authority concerned shall approve the proposal of the system operators seeking to procure a peak-shaving product and the baseline methodology submitted in accordance with paragraphs 2 and 5 or shall request the system operators to amend the proposal or the baseline methodology where that proposal or that methodology does not meet the requirements laid down in paragraphs 2, 4 and 5.

7. By six months after the end of a regional or Union-wide electricity price crisis as referred to in paragraph 1, ACER shall, after consulting stakeholders, assess the impact of using peak-shaving products on the Union electricity market. That assessment shall take into account the need for peak-shaving products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. ACER may issue recommendations that regulatory authorities shall take into account in their assessment pursuant to paragraph 3.

8. By 30 June 2025, ACER shall, after consulting stakeholders, assess the impact of developing peak-shaving products on the Union electricity market under normal market circumstances. That assessment shall take into account the need for peak-shaving products not to unduly distort the functioning of the electricity markets, and not to cause a redirection of demand response services towards peak-shaving products. On the basis of that assessment, the Commission may submit a legislative proposal to amend this Regulation in order to introduce peak-shaving products outside regional or Union-wide electricity price crisis situations.