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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
Evolving the German gas market
Johannes Lambertz – Regulatory Affairs Kiev, 5th December 2019
Contents
1. Open Grid Europe – Who we are?! 2. Evolution of the regulatory framework – A German perspective 3. Regulatory requirements in detail 4. Evaluation – An effect monitoring
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Open Grid Europe – Who we are?!
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
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Open Grid Europe – Who we are?!
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
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Open Grid Europe – Who we are?!
Affiliated companies
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Open Grid Europe – Who we are?!
DEUDAN MEGAL METG NETG NETRA TENP ZEELINK Full Name Deutsch/ Dänische Erdgastransport- Gesellschaft Mittel- Europäische- Gasleitungs- gesellschaft Mittelrheinische Erdgas- transportleitungs- gesellschaft Nordrheinische Erdgas- transport- leitungs- gesellschaft Netra GmbH Norddeutsche Erdgas Transversale Trans Europa Naturgas Pipeline Gesellschaft Grid Footprint Grid Length 110km 1,095km 427km 288km 343km 1,000km 215 km Share-holder Structure (% approx.)
(50%)
(25%) 7 MGU Workshop | Kiev | 5.12.2019
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Evolution of the regulatory framework – A German perspective
Regulatory change and its drivers
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Regulation European production Renewables
Competition Sustainability Security
Evolution of the regulatory framework – A German perspective
Political will: Regulation ▪ EU packages 1-3: responsable for restructureing the energy sector ▪ Within Germany the NRA (BNetzA) is in charge for regulatory
▪ Regulation covers: 1. Removal of trade barriers 2. Harmonization of norms and standards 3. Fully operational market → as though competition of natural monopoly a) Unbundling b) Non-discriminatory grid access c) etc.
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Realization of the European internal market
Evolution of the regulatory framework – A German perspective
Historical development…
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KoV KoV II KoV III KoV IV
→ negotiated/regulated third party access
Amendment
EnWG 3rd amendment 1st amendment
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
GasNZV (2005)
European level National level
GABi Gas (2008)
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2nd amendment
Evolution of the regulatory framework – A German perspective
…and the current process leads to…
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GasNZV NC CAM (2013)
KoV VI KoV VII KoV VIII KoV IX amendment
2013 2014 2015 2016 2017 2018
GABi Gas
European level National level 1st amendment NC BAL (2014)
amendment
2012
KoV V
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Evolution of the regulatory framework – A German perspective
…the governance structure under the 3rd energy package
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NRAs ACER EU COM ENTSOG Member States Negotiated access rules by national associations
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Regulatory requirements in detail
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
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Legal basis for network access
Regulatory requirements in detail
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
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Basic provisions
2 Contract Model
Regulatory requirements in detail
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
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Regulatory requirements in detail
Excursus on market areas (1/2) ▪ Connection of different networks ▪ Allocation of endconsumers to one market area ▪ 2 contract model applicable within one market area ▪ VTP: Trading of gas independent from capacity ▪ One market area manager per market area
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TSO RSO DSO
Market Area 1
TSO RSO DSO
Entry Contract
Consumer
Exit Contract Entry Contract
Consumer
Exit Contract
Market area IP
Provision to implement 1 market area in Germany Market Area 2
Excursus
Regulatory requirements in detail
Excursus on market areas (2/2)
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2006 19 market areas 2011 2 market areas 10/2021 1 market area
Excursus
Regulatory requirements in detail
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
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Regulatory requirements in detail
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
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Establishment of a robust short term market
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Evaluation – An effect monitoring
Developement of wholesale market trade volumes
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Forward Spot Constant gain in liquidity
Source: EEX, 04/2019
In TWh
Evaluation – An effect monitoring
A great number of suppliers can lead to…
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Source: BNetzA, Monitoring report (2019)
1,2% 4,6% 32,1% 62,1% 1,5% 9,7% 43,6% 45,2% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 1 to 20 21 to 50 51 to 100 > 100
Number of suppliers
Households All consumers
Evaluation – An effect monitoring
… supplier changes of households
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Gain in competition
Source: BNetzA, Monitoring report (2019)
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