examining the demand of natural gas storage in europe · 2018. 3. 6. · services portfolio...

Examining the Demand of

Natural Gas Storage in

Europe

Trends 2012-2030

Madjid Kübler

Manchester, June 07th 2012

Agenda

2 preenwi_20120607_fv.pptx

0

1 Development of the NWE gas storage market until 2030

0 Introduction of TEAM CONSULT

Introduction of TEAM CONSULT


Our customer base covers both: national & global players

REFERENCE LIST (EXCERPT)

0



Our team consists of highly qualified experts with several years of

experience in the energy industry

TEAM DEVELOPMENT

0

Heike Wunderlich

Project Manager

Madjid Kübler

Managing Director

Sybe Visser

Senior Advisor

Jürgen Kehrmann

Senior Advisor Sirko Pika

Project Manager

Bernhard Witschen

Senior Advisor Christoph Hankeln

Project Manager

Jens Völler

Consultant

Jan Meier

Senior Consultant

Todor Dimitrov

IT Applications

Michele Bundtzen

Apprentice

Christin Balzer

Internal Projects

Sandra Hartmann

Assistant of MD

Sven Ballentin

Econometrics

Dennis Korinth

Apprentice

Volker Franke

Project Manager

Armin Beilfuss

Senior Consultant

Georg Haas

Project Manager



A large number of projects with a variety of topics have kept us pretty busy

in the last 12 months

CONTENT OF RECENT ASSIGNMENTS

0

Gas-to-Power

Gas Storage

G2G-Competition / Gas-Strategy

Gas Procurement & Contracts

Sourcing of gas fired

power plants

Renegotiation of gas-to-

power contracts

Evaluation of a “merchant

plant” business model

Development of German &

European storage market

Strategy regarding further

development of flexibility

services portfolio

Evaluation of potential

storage enhancements

Support on price revision: Preparation of market data

Analysis of contracts

Negotiation strategy

Arbitration support

Re-design of procurement

strategy

Conduction of gas tender

process

Development of long-term

market scenarios

Competitor analysis regarding

strategy, volumes and margins

Attractiveness of selective

market segments

Design of market strategies

http://images.google.com/imgres?imgurl=http://www.nassaulibrary.org/MerrickTeenBlog/chess.jpg&imgrefurl=http://www.nassaulibrary.org/archives/MerrickTeenBlog/2007/08/&usg=__Sr1qXDlNwTTDMAdLm569l9vLo-w=&h=1024&w=819&sz=156&hl=de&start=3&um=1&tbnid=Ka1h6eNujy0lBM:&tbnh=150&tbnw=120&prev=/images?q=chess&imgsz=l&imgtbs=tz&imgtype=photo&ndsp=21&hl=de&rls=com.microsoft:*:IE-SearchBox&rlz=1I7GGIH_de&sa=N&um=1



TEAM CONSULT’s experts have been regularly invited as speakers &

chairmen of major industry events

TEAM CONSULT AT CONFERENCES & EXHIBITS

0

Madjid Kübler was chairman of the conference day two.

Bernhard Witschen presented TEAM CONSULT's position at

„Volatile gas prices and the consequences for gas

procurement“. Euroforum Konferenz Gasbeschaffung

22nd – 23rd February 2011 in Köln

8th - 10th February 2011 in Essen

Madjid Kübler chaired the stream “The future of gas: organized

withdrawal or technological advancement” and presented ”Not

the procurement but the demand is going to be the problem”

17th annual Flame 2011

9nd – 13th Mai 2011 in Amsterdam

Madjid Kübler has chaired the conference stream “European

Country Spotlight: Germany”

17th November 2010 in Brussels

Sybe Visser spoke about “Regulation & Market Structure: The

German Business Perspective”

Sirko Pika presented „Regulation and practice in the German

gas market” 11th May 2011 in Oldenburg

Agenda


1

1 Development of the NWE gas storage market until 2030

0 Introduction of TEAM CONSULT

Development of the NWE gas storage market until 2030


Where is the storage market heading at?

“E.ON Gas Storage sells minority stake in German storage facilities”

“VNG offers first gas storage capacity at Etzel”

“Bergermeer gas storage gets approval”

“OMV to start open season on 100Mm³ on sites”

“Centrica continues to assess Baird, Caythorpe project on hold”

“SSE and Statoil inaugurate Aldbrough storage extension”

“Fluxys to expand natural gas storage capacity”

HEADLINES ABOUT TODAY‘S TOPIC

1



The flexibility market is affected by a set of fundamental drivers

Change of flexibility

needs

Aspects of security of

supply

Development of demand

Changes of demand structure

Decrease of indigenous production

Changes of supply

structure

Weather conditions

Changes along the

value chain

DRIVERS FOR CHANGES OF FLEXIBILITY NEEDS

1



Our static forecast shows a structural excess supply for the NWE storage

market until 2030

1

Source: TEAM CONSULT Analysis Strategic stock = 5% of imports to NWE except from Norway

TEAM CONSULT‘S FORECAST UNTIL 2030



Overall storage capacities are necessary in a severe winter; who is willing to

pay for them throughout the rest of the time?

Source: Gas Storage Europe, TEAM CONSULT Analysis

STORAGE FILLING LEVELS IN GERMANY

1



The summer/winter spread is the traditional valuation parameter at traded

markets for seasonal flexibility; it is at low levels for more than two years

1

Source: ICIS Heren, TEAM CONSULT Analysis

DEVELOPMENT OF SUMMER/WINTER SPREAD AT TTF

Ø 6.0 Ø 5.7 Ø 2.9 Ø 2.9



Valuation of flexibility between traded markets and storage operators is struct-

ural; contract price negotiations in long-term storage contracts possible?

1

Ø S/W Spread in Q1/2012 at TTF

YEARLY STORAGE TARIFFS IN EUROPE 2012/13 (for bundled products)

Source: Storage Operators, TEAM CONSULT Analysis



Dynamic developments and actions of market participants can be drawn in a

theoretical approach

THEORETICAL MARKET EFFECTS

1

Time Time Time S

tora

ge

ba

lan

ce

Sto

rag

e b

ala

nc

e

Quantity

Pri

ce

Quantity Quantity

Pri

ce

Pri

ce

1a

S S1 S1 S1

S2

Current forecast

Supply increase

Cancellation of

projects

Avoidance of worsening

future situation

Market exit old

storages

Supply decrease

Ph

ys

ica

l s

tora

ge

ba

lan

ce

Th

eo

reti

cal m

ark

et

eff

ec

ts

1b

2a

2b

3a

3b



Outlook on decreasing indigenous production almost unchanged

1

Source: Statline, WEG, BMWi, Danish Energy Agency, Eurostat, National Grid, Oil & Gas UK; TEAM CONSULT Analysis *estimated figures

DOMESTIC PRODUCTION IN NORTH WEST EUROPE (NWE)*



Gas demand in traditional heating segments is decreasing, need for seasonal

flexibility going down as well; G2P increasing with uncertainty on flex needs

1

*In GCV = Gross Calorific Value Source: StaBuA, TEAM CONSULT Analysis

GERMAN GAS DEMAND BY SEGMENT: TC FORECAST (in TWh*)



In the next several years a large quantity of storage capacity is about to

become operational in Germany and the Netherlands

540

1.106

748

966982

2015/16 2016/17 2014/15 2013/14 2012/13

Germany:

Netherlands:

Zuidwending Cavern storage expansion: additional WGV of some 90 mcm per 2012/13 and

another 90 mcm per 2013/14

Bergermeer storage (new): some 4,100 mcm WGV announced start of operation around 2015

Norg & Grijpskerk (expansion): up to 9,000 mcm WGV start of operation not planned yet

Groningen field still and for the mid-future equipped with sufficient flexibility to meet customer's

flexibility requirements

Source:TEAM CONSULT Analysis

ADDITIONAL STORAGE CAPACITY IN GERMANY AND NETHERLANDS (data in mcm)

1

∑ Dutch WGV as is

5,300

∑ German WGV as is

23,400



The individual storage markets widely differ in market structure design and

regulatory framework

WGV/Gas

consumption

Competitive Status Storage access

regulation

Storage tariff

regulation

Relevance of

auctioning

Germany 25% Oligopoly (85%) Negotiated Negotiated Some

Czech

Republic 40%

Triopoly with dominant

player (>75%) Negotiated

Negotiated /

Auctioned Strong

Austria 40% Duopoly Negotiated Negotiated Some

Netherlands 10% No TPA available Negotiated Negotiated None

France 25% Duopoly with dominant

player (>75%) Regulated

Negotiated /

Auctioned Strong

Italy 20% Duopoly with dominant

player (>90%) Regulated Regulated None

DIFFERENT STORAGE MARKETS WITHIN EU

1



New infrastructure developments and further integration will lead to cross-

border opportunities & threats

CONVERGING EUROPEAN ENERGY MARKETS

Gate, Rotterdam

Zeebrugge

Dunkirk planned

(France)

LNG Terminal

MEGAL

Swinoujscie planned

(Poland) European energy markets

will converge with respect

to: Regulation

Infrastructure

New sourcing and supply

options across borders

emerge

Competition across

border increases

A storage portfolio spread

across regions offers new

marketing options

1

32.2 23.4

13.0 5.3

5.4 3.4

3.7 3.3

Current WGV in bcm

Probable WGV in 2030

UGS capacities


preenwi_20120607_fv.pptx

The shutdown of 8 nuclear plants in Germany in 2011 and the decommis-

sioning of the rest until 2022 will change Germany’s energy landscape

INSTALLED CAPACITY INCL. NUCL MORATORIUM INCL. NEW PLANTS** (Power Plants of Public Supply > 100 MW + Renewables)

Source: TEAM CONSULT Analysis * Coal, lignite, gas, oil and pumped water storage plants ** Incl. new power plants as announced (17.5 GW)

20

1



Renewable load will increase over time – starting in 2020 it can exceed total

German power demand in certain hours of the year

GERMAN LOAD DEMAND AND RENEWABLE SUPPLY (TC SIMULATION) (in MW)

1

Source: EEX, Entsoe; German Ministry of Environment (BMU), Fraunhofer Institute; TC Analysis

2010 2015

2020 2030



Without a storage system for excess renewable power, any power exceeding

demand would be wasted as capacities are taken off the grid

8760 Availability in hours/a

Distribution function of

power generation

Load- management

Grid extension

Demand curve

Grid capacity

Square = annual

power volume

Installed ( )

and available

capacity of

renewables

(Wind & PV)

1

1. Power demand

2. Load management reaches

its limits

3. Limits to grid extension

4. Overproduction: Removal of

RE capacities from the grid

5. Transformation of excess

power into SNG to balance

peaks = full use of

renewable power

Source: DVGW Innovationsoffensive, E.ON Ruhrgas

Illustrative

POTENTIAL OF GAS INFRASTRUCTURE TO ABSORB EXCESS POWER

1

2

3

4

5



Marketing of capacities becomes more complex, products need to be vend-

ible & fit to customer’s needs; possibility of secondary marketing necessary

DEVELOPMENT OF MARKETING OF STORAGE CAPACITIES

1

Retailer

Wholesaler

Producer

Trader

TSO

Power Generation

Seasonal Flex.

Peak Shaving

Strategic Stock

Balancing

Shift of gas flows

Power to Gas

Asset-backed

Trading

Parking

Interruptible

capacity

Bundled units

volume

Withdrawal/

injection capacity

Products

Mark

et segm

ents

Products Needs Segments Willingness to pay

Wheeling

Duration*

* e.g. Year, Season, Month, Day



Storage business becomes more and more an entrepreneurial business with

more & more focus and commercial than on technical issues

TEAM CONSULT’s forecast model on the storage balance for NWE shows significant

excess capacities on behalf of WGV until 2030.

Since the last forecast in 2011 no major changes on the likely scenario for the storage

market has happened: gas demand and supply and along with the them the resulting

flexibility needs haven’t changed.

Storage market is under pressure: significant additional capacities are about to become

operational in Germany (foremost), G2G competition puts pressure not only on the gas

price but on the value of flexibility

Storage operators need to react on this situation with ever more effort for marketing of

their capacities.

Certain opportunities for a more optimistic development of the gas storage market are

possible:

New international interconnectors between markets leading to new gas flows

Increasing influence of renewable energies

Decommissioning of nuclear power plants: Germany (by 2022), Belgium (by 2025), Switzerland

(by 2034)

SUMMARY OF NWE STORAGE MARKET DEVELOPMENT

1

Contact data

Gas Power Oil Heat

TEAM CONSULT G.P.E. GmbH

Robert-Koch-Platz 4

10115 Berlin

T. +49.30.400 556 00

F. +49.30.400 556 99

[email protected]

www.teamconsult.net

http://www.teamconsult.net/

examining the demand of natural gas storage in europe · 2018. 3. 6. · services portfolio...

Documents