Evolving the German gas market Johannes Lambertz Regulatory Affairs - PowerPoint PPT Presentation

Evolving the German gas market Johannes Lambertz – Regulatory Affairs Kiev, 5th December 2019

Contents 2 Open Grid Europe – Who we are?! 1. Evolution of the regulatory framework – A German perspective 2. 3. Regulatory requirements in detail Evaluation – An effect monitoring 4. MGU Workshop | Kiev | 5.12.2019

3 Open Grid Europe – Who we are?! MGU Workshop | Kiev | 5.12.2019

Open Grid Europe – Who we are?! 4 Open Grid Europe in brief … ▪ Established in 2004 as E.ON Gastransport → 2010 renamed Open Grid Europe ▪ One of Germany’s leading gas transmission system operators ▪ Sole responsibility for the operation, control, expansion and marketing of the gas grid ▪ Some 1,450 employees ▪ Head office: Essen, Germany ▪ Customers: over 450 German and international a) TSOs/DSOs b) municipal utilities c) industrial customers d) gas traders MGU Workshop | Kiev | 5.12.2019

Open Grid Europe – Who we are?! 5 The pipeline system ▪ Approx. 12,000 km of gas pipelines ▪ 27 compressor stations housing 97 compressor units ▪ 17 border crossing points ▪ Approx. 1,100 exit points ▪ Annual exit volume: approx. 700 TWh ▪ Two types of gas shipped: a) H-gas b) L-gas MGU Workshop | Kiev | 5.12.2019

Open Grid Europe – Who we are?! 6 Affiliated companies MGU Workshop | Kiev | 5.12.2019

Open Grid Europe – Who we are?! 7 DEUDAN MEGAL METG NETG NETRA TENP ZEELINK Deutsch/ Mittel- Mittelrheinische Nordrheinische Netra GmbH Trans Europa Dänische Europäische- Erdgas- Erdgas- Norddeutsche Naturgas Pipeline Full Name Erdgastransport- Gasleitungs- transportleitungs- transport- Erdgas Gesellschaft Gesellschaft gesellschaft gesellschaft leitungs- Transversale gesellschaft Grid Footprint Grid  215 km 110km 1,095km 427km 288km 343km 1,000km Length • • • • • • • Share-holder OGE (25%) OGE (51%) OGE (100%) OGE (50%) OGE (41%) OGE (51%) OGE (75%) Structure • • • • • • Gasunie (75%) GRTgaz (49%) Thyssengas Gasunie (29%) Fluxys (49%) Thyssengas (% approx.) (50%) (25%) • Jordgas (31%) MGU Workshop | Kiev | 5.12.2019

8 Evolution of the regulatory framework A German perspective MGU Workshop | Kiev | 5.12.2019

Evolution of the regulatory framework – A German perspective 9 Regulatory change and its drivers Competition Regulation European Renewables production Security Sustainability MGU Workshop | Kiev | 5.12.2019

Evolution of the regulatory framework – A German perspective 10 Political will: Regulation ▪ EU packages 1-3: responsable for restructureing the energy sector ▪ Within Germany the NRA (BNetzA) is in charge for regulatory oversight ▪ Regulation covers: 1. Removal of trade barriers 2. Harmonization of norms and standards Fully operational market → as though competition of natural 3. monopoly a) Unbundling b) Non-discriminatory grid access c) etc. Realization of the European internal market MGU Workshop | Kiev | 5.12.2019

Evolution of the regulatory framework – A German perspective 11 Historical development … 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1. EU Package (1998) 2. EU Package (2003) 3. EU-Package (2009) European level • Non-discrimination • Regulated third party access • Network Codes → negotiated/regulated third party access • Legal Unbundling for TSOs • ENTSOG • Financial Unbundling • Ownership unbundling EnWG 1st amendment 2nd amendment 3rd amendment • Point-to-Point-Model Amendment GasNZV (2005) National level GABi Gas (2008) KoV KoV II KoV III KoV IV • 2-Contract-Model MGU Workshop | Kiev | 5.12.2019

Evolution of the regulatory framework – A German perspective 12 …and the current process leads to … 2012 2013 2014 2015 2016 2017 2018 NC CAM (2013) 1st amendment European level NC BAL (2014) GasNZV amendment National GABi Gas amendment level KoV V KoV VI KoV VII KoV VIII KoV IX MGU Workshop | Kiev | 5.12.2019

Evolution of the regulatory framework – A German perspective 13 … the governance structure under the 3rd energy package EU COM ENTSOG Member ACER States Negotiated TSO access rules NRAs by national associations MGU Workshop | Kiev | 5.12.2019

14 Regulatory requirements in detail MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 15 German Energy Act (EnWG) ▪ Non-discriminatory network access → Particularly 2 contract model ▪ Publication of conditions and tariffs (online) ▪ Design of the accesss rules for networks a) Gird operators offer entry- and exit-capacities b) Shippers only need one entry and one exit contract c) Mandatory cooperation between network operators Legal basis for network access MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 16 Gas Grid Access Ordinance (GasNZV) ▪ Principles for allocation of entry- and exit-capacity ▪ Balancing a) Gird operators offer entry- and exit-capacities b) Shippers only need one entry and one exit contract c) Mandatory cooperation between network operators ▪ Single booking platform ▪ Auctions ▪ Reduction of market areas until 2022 2 Contract Model Basic provisions MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 17 Basic model for balancing energy and rules in the Gas sector (GABi Gas) ▪ Daily balancing ▪ Structuring of the gas network is area of responsibility for market area managers ▪ Balancing energy settlement ▪ Control energy ▪ Procurement in behalf of TSOs ▪ Levy for financing purposes ▪ Within day obligations ▪ Information provisions MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 18 Excursus Excursus on market areas (1/2) ▪ Connection of different networks Entry Entry ▪ Allocation of endconsumers to one market area Contract Contract Market ▪ 2 contract model applicable within one market area TSO TSO area ▪ VTP: Trading of gas independent from capacity IP Market Area 1 Market Area 2 ▪ One market area manager per market area RSO RSO DSO DSO Exit Exit Contract Contract Consumer Consumer Provision to implement 1 market area in Germany MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 19 Excursus Excursus on market areas (2/2) 2006 2011 10/2021 19 market areas 2 market areas 1 market area MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 20 Network Code on Capacity Allocation Management (NC CAM) ▪ Standard capacity products ▪ Strict definition of auction algorithm a) Long term capacity: ascending clock auction b) Short term capacity: uniform price auction ▪ Bundling of capacity products ▪ Booking platforms (mandatory) ▪ Harmonization of GT&Cs within the EU ▪ Process for incremental capacities MGU Workshop | Kiev | 5.12.2019

Regulatory requirements in detail 21 Network Code on Balancing (NC BAL) ▪ Nomination procedure ▪ Control energy procurement ▪ Daily imbalance charges (balancing energy) ▪ Within day obligations a) Structuring of entries and exits within one gas day b) Decision to be taken by NRA ▪ Information Provision Establishment of a robust short term market MGU Workshop | Kiev | 5.12.2019

22 Evaluation An effect monitoring MGU Workshop | Kiev | 5.12.2019

Evaluation – An effect monitoring 23 Developement of wholesale market trade volumes Spot In TWh Forward Source: EEX, 04/2019 Constant gain in liquidity MGU Workshop | Kiev | 5.12.2019

Evaluation – An effect monitoring 24 A great number of suppliers can lead to … Number of suppliers 45,2% > 100 62,1% 43,6% 51 to 100 32,1% 9,7% 21 to 50 4,6% 1,5% 1 to 20 1,2% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% Households All consumers Source: BNetzA, Monitoring report (2019) MGU Workshop | Kiev | 5.12.2019

Evaluation – An effect monitoring 25 … supplier changes of households Source: BNetzA, Monitoring report (2019) Gain in competition MGU Workshop | Kiev | 5.12.2019

26 Thank you very much! Дякую за увагу MGU Workshop | Kiev | 5.12.2019