Natural gas is an important energy source in the EU. Most gas supplies in the EU are imported from the third countries. Some importing countries are reliant on a single source or a single transport route for their gas. Gas flows can be endangered through disruptions along the route caused by infrastructure failure or by political disputes between a producing country and downstream countries. Security of gas supply (SoS) refers to efforts to help ensure that gas flows to consumers.
What does the report propose for security of gas supply?
CEER believes that well-functioning gas wholesale markets can deliver the best outcomes for customers. In order to allow the market to work as long as possible, we propose that market-based measures should be allowed to continue as long as possible when an SoS situation arises, before shifting to mitigating measures. Where interventions are introduced, the impact on the market should be understood and minimised. The report also covers the benefits of regional cooperation, of results-based requirements for gas supply standards and of involving energy regulatory authorities in issues of security of supply (as we closely oversee the companies managing our gas networks).
Our work was done in the context of the European Union's review of its law on gas security of supply (Regulation (EU) No 994/2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC). We hope it will serve as input to policy makers.
How does it work?
This CEER concept paper describes possible measures to prevent gas supply crises. In this so called “prevention phase”, energy regulators, responsible authorities and other parties can take many different actions which help prevent a crisis. In the prevention phase the aim is to enable the market to be as resilient as possible without interventions by authorities which can hamper market functioning. Sufficient (efficiently used) infrastructure is also needed to ensure that gas can access markets. The development of cross-border pipelines which allow gas to flow in both directions between Member States in certain regions could be very important to support security of supply. In addition, alternatives for sourcing and re-routing the gas flows can allow the market to meet SoS requirements. Other tools, such as facilities for storing gas as well as coastal terminals which receive Liquefied Natural Gas (LNG) help reduce Europe's dependence on dominant suppliers.
When a gas supply crisis occurs, this is called the “mitigation phase”. Before entering into this phase, it is important that all responsible authorities have set up well-functioning cross-border cooperation and have ready-to-use emergency plans to handle the crisis.
We believe solidarity principles should be ready to use in all Member States. Also, access to functioning markets and operational assistance agreed upon between Transmission System Operators (TSOs) are important to support Member States in an emergency situation. Solidarity principles should be clear, transparent and agreed upfront between Member States.
Why is this important for energy customers? What is the impact on energy customers?
Most Europeans need gas in one way or the other. End consumers use gas in their households for heating and cooking, industrial consumers use gas in production processes and electricity producing companies use gas to fuel their gas-fired power plants. If security of gas supply is threatened and gas supply is cut, households risk being left without heating in winter if gas supplies. In particular for those consumers who cannot switch to alternative sources of energy, it is very important to ensure a high level of security when it comes to gas supply.
By setting out a concept for security of gas supply, CEER proposes a framework which aims to achieve an appropriate balance between a sufficiently high level of security of gas supply and keeping the costs of gas at a reasonable level for consumers.
CEER Monitoring Report on Implementation of the Gas Storage Guidelines of Good Practice and the GSE Transparency Template
What are the GGPSSO and the Transparency Template?
In 2011, CEER published updated Guidelines of Good Practice for Gas Storage System Operators (GGPSSO). Unlike electricity, natural gas can be bought and stored in large quantities for a long period of time, until it is needed (for example, during a very cold winter or if gas supply is unexpectedly cut off). Storage operators (SSOs) manage the facilities where such gas is kept and are expected to follow a number of rules when doing so. The voluntary rules in the GGPSSO aim at promoting open, fair, non-discriminatory and transparent access by third parties to these facilities across Europe.
The Transparency Template is a (voluntary) harmonised template for the publication of important information on SSO websites. CEER and Gas Storage Europe (GSE) worked together to develop GSE’s Transparency Template in 2012/2013. The objectives of the Transparency Template are to help SSOs to fulfill EU transparency requirements requirements, meet customers’ needs and ensure that the information published is easily accessible and comparable across European storage facilities.
What does the report propose for GGPSSO and Transparency Template?
The report analyses implementation of the GGPSSO and Transparency Template by European SSOs. In many cases, the results are positive and CEER welcomes the efforts made by SSOs. There are, however, a number of areas where improved implementation is necessary to ensure that European storage markets are functioning effectively. The report encourages European SSOs to work towards full implementation these important initiatives.
How does it work?
This monitoring report is based on responses to surveys among CEER Members in late 2014/early 2015. The report is divided into two main sections. The first covers our monitoring of implementation of the GGPSSO. The second section covers the Transparency Template. Each of these sections includes the background to the relevant initiative; the process undertaken by CEER to monitor implementation; responses to the CEER survey; detailed analysis of implementation; and our main conclusions.
The findings of this monitoring exercise could be used by National Regulatory Authorities (NRAs) and policy-makers as they work towards developing and maintaining well-functioning storage and flexibility markets in Europe.
Why is this important for energy customers? What is the impact on energy customers?
Gas storage is a key component of Europe's energy market. Stored gas provides a flexible solution when additional energy is needed by the market to satisfy demand. It can compete with other sources of flexibility to meet customers’ needs. Gas storage also plays a crucial role in ensuring European security of supply. Therefore, it is important that the gas storage market in Europe is functioning effectively.
Together, GSE’s Transparency Template and CEER’s GGPSSO are important initiatives that aim to promote open, fair, non-discriminatory and transparent access to storage facilities across Europe. By monitoring the implementation of the GGPSSO and Transparency Template, this report helps to ensure that European storage markets are working in the interests of consumers.
