the eu internal energy market vittorio musazzi general manager 6 th wfer - istanbul istanbul, may 25...
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The EU internal energy market
Vittorio MusazziGeneral Manager
6th WFER - Istanbul
Istanbul, May 25th 2015
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European Gas Transmission Network 2014
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Gas and power markets have different characteristics:
• Gas: 90% of gas flows across international borders and connected markets
• Power: mainly national markets with market coupling/price convergence • Transmission costs for gas is far lower than for electricity
Dimensions of EU gas and electricity
Source: TYNDP ENTSO-E/ENTSOG
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Energy covered in the EU:23,1%
Directly employed staff: 49,540
Length of high-pressure pipeline network:
242,000 km
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As laid down mainly in Article 4 of the Regulation 715/2009, the purpose of ENTSOG is that:
• All transmission system operators shall cooperate at Community level through the ENTSO for gas
• in order to promote the completion and functioning of the internal market in natural gas and cross-border trade
• and to ensure the optimal management, coordinated operation and sound technical evolution of the natural gas transmission network.
Role of ENTSOG
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ENTSOG structure
Capacity Balancing Tariffs Investment Interoperability Transparency
Board: President and 12 Members
General Assembly 44 TSOs, 3 Associated Partner and 4 Observers
Regional Co-operation
GeneralManager
SystemDevelopment
Market SystemOperation
Liaison Group
LegalFinancial
Ad hoc DTFSAdministrativeResearch Plan
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ENTSOG activities
• Pan-European Network Codes to cover cross-border/market integration issuesframework Stability
• Pan-European Ten-Year Network Development Plan (‘TYNDP’) • Regular gas supply/demand outlooks on the European market • Develop common operational tools (CNOTs): network security and reliability• Providing information/data (Transparency Platform, maps)
Network Code development: 12 months
Preparatory work Project planning
Prepare launch
document
Interactive draft code
development
Prepare final code
ACER review Comitology
Cooperation amongst Stakeholders, Institutions and TSOs made this possible!
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Market Opening through the implementation of the common rules and transparency and information availability
Internal Energy Market (1)
Rules and tools
TYNDP and Platforms
Network Codes
Implementation Transparency Information
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On the way to EU law Network Code development: 12 months
Preparatory work Project planning
Prepare launch
document
Interactive draft code
developmentConsultation Prepare final
code ACER review Comitology
ENTSOG second NC - published as Regulation (EU) No 312/2014 (26th March 2014)
BAL NC - Network Code on Gas Balancing of Transmission Networks
ACER Reasoned Opinion 26th March 2015: on going discussion ex art. 6(8) Reg. 715/2009.
Gas Committee meetings: Q4 2015 + Q1 2016
TAR NC - Network Code on Harmonised Transmission Tariff Structures for Gas
CAM NC Amendment for Incremental capacity
In line with the invitation from EC ENTSOG drafted the NC amendment and submitted to
ACER. Same timescale as TAR NC for Gas Committee
ENTSOG third NC - published as Regulation (EU) No 703/2015 (30th April 2015)
ENTSOG first NC - published as Regulation (EU) No 984/2013 (14th October 2013)
CAM NC -Network Code on Capacity Allocation Mechanisms in Gas Transmission Systems
INT NC - Network Code on Interoperability and Data Exchange Rules
CMP Guidelines Approved as amendment to the Reg. 715 on August 2012
FrameworkGuidelines
NetworkCode Evaluation Comitology Entry
into force
The objective of the EC is to meet the 2014 target from the EU Council Rules on priority topics are developed by 2014
ProjectPlan
LaunchDoc SJWS Draft
CodeFormal
Consult. RevisionFinalCode
12 months maximum
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Designing the EU Internal Market (3rd Package)
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TSOs‘ Commitment to ENTSOGBrussels based> Small ENTSOG team workingwith extensive inputs from member companies
ENTSOG Members’ commitment> Working Group participants
Stakeholders involvement> Stakeholders Joint Working Session>Up to 100 attendees per meeting
Institutions cooperation> Deep discussion and > High level of cooperation
ENTSOG team
Members’ staff
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ENTSOG working process
… involvement of all market participants is the key of success of the work done!
The real spirit and the results possible in line with the 3rd Energy Package!
ENTSOG
EC
ACER
Member StatesShippers
End users/Connected operators
> Stakeholder consultation is at the heart of the team’s work
> Huge progress made in engaging a range of market participants
> Market participants see ENTSOG as a fair partner
> Stakeholders have responded very positively to our processes and outputs
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Early Implementation of network codes
• Projects in the CAM Roadmap
• Review of national regulatory frameworks
• Issues and challenges being addressed in CAM implementation
Introduction
Projects in the CAM Roadmap
PILOT PROJECTS
• Rapid progress towards early implementation of CAM NC in large number of MSs spanning most EU
regions
• Driven by voluntary initiatives established by TSOs, with support from
NRAs.
France Daily Monthly Quarterly Yearly
Netherlands Daily Monthly Quarterly Yearly
Belgium Daily Monthly Quarterly Yearly
Hungary & Romania Daily Monthly Quarterly Yearly
Italy Daily Monthly Quarterly Yearly Interruptible
capacities
Denmark Daily Monthly Quarterly Yearly
Germany Daily Monthly Quarterly Yearly
Austria Daily Monthly Quarterly Yearly
Portugal Monthly Quarterly Yearly Interruptible
capacities
Poland• TBC
Czech RepublicPilot project via Prisma (Monthly, Daily)Pilot project via GSA
Spain Monthly Quarterly Yearly Interruptible
capacities
UK• TBC
Ireland• TBC
PRISMA
GSA
RBP
Capacity Platforms
SlovakiaPilot project via Prisma (Q2 2015)
Slovenia Daily Monthly Quarterly Yearly
LuxembourgPilot project via Prisma (Q2 2015)
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Transparency Platform:
Legal Obligation1. Transparency guidelines (Reg. (EC) 715/2009, Chapter 3 of Annex 1)
Definition of the technical information necessary for network users to gain
effective access to the system
Definition of all relevant points for transparency requirements
Definition of the information to be published at all relevant points and the time
schedule according to which that information shall be published
2. Congestion Management Procedure
Amendment of Transparency Guidelines by CMP Commission Decision of 24th
august 2012 (2012/490/EU)
TSOs obliged to publish data on a Union-wide central platform, established by
ENTSOG
New data to be published (CMP data)18
Transparency Platform 2.0
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Next step: Implementation of network codes
• Implementation of the network codes
• 01/10/2015 Balancing
• 01/11/2015 CAM
• 01/05/2016 Interoperability
Introduction
Integration and Diversification
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Regulatory framework Stability and vision for investments are needed
Internal Energy Market (2)
Information and visionInvestments
supplies, routesInterconnections
New routes
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Ten Year Network Development Plan2015 2035
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From projects to commissioned infrastructure> 259 projects (South Stream withdrawn)> A bit less projects than previous edition> Construction works are on time but FID are often
delayed
Main barriers to investments> Based on project promoter feedback> Regulatory frameworks are often perceived as focusing
too much on tariff reduction ignoring the economic benefits of well-integrated markets
> Market is not able to provide necessary investment signals due to economic situation, short term orientation given by regulation and lack of visibility on the role of gas in the EU energy mix
Executive Summary - Infrastructures
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Stable demand driven by global context > Gas demand for power generation is the major driver> Use of two demand scenario differentiated by commodity price (gas, coal, CO2),
power generation capacity mix, economic environment...> Scenarios in the upper half of other outloks (IEA 450 and DG ENER trends to 2050
and Eurogas slow progression are lower)> 0.4% increase per annum but situation is heterogenous from one region to the other
Executive Summary - Demand
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Europe needs to enlarge its supply portfolio> In line with current situation of midstreamer having difficulty to manage ToP> Situation will become tighter with the continuous decrease of indigenous production> Under current perspective Russian gas and LNG will be the sources compensating this
decrease with negative consequence on Europe control on import prices> Potential exist to further diversify European supply and limit the import bill
Executive Summary - Supply
Russia
LNG
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Market integration, a constant challenge> Confirmation of results of previous edition> Extension of the time horizon shows how regional issues may impact the whole
Europe without the proper investment decisions
Executive Summary – Assessment - 1
or
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Facing national production decline…
The basic blocks: Supply
… Europe will have to develop new imports and indigenous production
Biomethane
Shale gas
This can materialize through the
implementation of many projects of
different sizes
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High capital intensive infrastructures> Economic lifetime of gas infrastructures is 30 to 55 years > What will be the situation in 2045-2070?
Private investor interest> The bulk of the investment has to continue to come from private investors> This requires the attractiveness of the sector which has to be insured through:
Stable and incentivising regulatory framework recognizing the social benefits of market integration
Visibility on the long term role of gas
Funding from European Institutions> This funding can only represent only few percent of the investment need> But as it is tax payer money, supported projects should be thoroughly selected
Stable Regulatory Framework: Why?
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European Gas Transmission Network 2014
Thank You for Your Attention
ENTSOG -- European Network of Transmission System Operators for GasAvenue de Cortenbergh 100, B-1000 Brussels
EML:WWW: www.entsog.eu
Vittorio MusazziENTSOG General Manager