Annual Report 2017

Securing Europe’s energy future – implementing the internal market for gas

ENTSOG – Annual Report 2017

ENTSOG, as required by Regulation (EC) 715/2009, publishes its Annual Report annually. This document provides an overview on key activities and deliverables for each Business Area, a description of the ENTSOG membership and structure of its Working Groups and a financial statement for the year.

President’s Foreword

In April 2017 the Tariff Network Code came into force – a significant achievement for ENTSOG and at least for now the last Gas Network Code developed by ­ENTSOG and its Members.

This signalled a progression of the organisation’s role of ­defining the rules for integrating the EU gas market, for monitoring the implementation and effects of the network codes and for active involvement in the further development of the codes, as required.

In 2017, the organisation took steady steps to participate in the design of the future role of gas and gas infrastructure. It is my belief that future gas market design should consider the proper integration of all elements of the energy system, including gas and electricity. In that respect, last year saw continued and enhanced cooperation between ENTSOG and ENTSO-E.

For the first time, the ENTSOs worked together to develop the draft Ten-Year Network Development Plan (TYNDP) 2018 Joint Scenario Report, which was issued for public consultation in October 2017. This occurred as a follow up on joint work undertaken in 2016 on a consistent and interlinked model building on combined expertise and modelling capabilities. These common set of ambitious, technically ­robust and equally realistic scenarios also relied on input received from dozens of stakeholders from the industry, NGOs, National Regulatory Authorities and Member States.

The ENTSOs cooperated on their Winter Outlooks, which ­allowed the ENTSO-E Winter Outlook to reflect the ability of the power system to cope with gas security-of-supply ­situations that may affect gas-based electricity production.

A robust European energy system should have ­sustainability, security and affordability as key considerations. The ­ENTSOG TYNDP 2017 outlined the high level of resilience of European gas infrastructure, well equipped to support Europe in achieving its energy and climate ambitions. Integration with the electricity, heat and transport will support the energy transition and contribute to the decarbonisation of the European energy system.

An integrated energy system is, I believe, a realistic goal, but one of the main challenges to achieve this is the barrier between EU ambitions, the range of technological capabilities from a national TSO perspective as well as the regulatory ­organisational framework for this, including the possibilities for the TSOs to play an active role. This is especially ­pertinent for the integration of more renewable or emission neutral gases, such as bio methane, hydrogen and the ­development of the necessary technological and commercial models, e. g. for power-to-gas.

At ENTSOG we are looking forward to our involvement in ­future discussions on sector integration and the important role of gas and gas infrastructure in the European energy mix – across the various sectors, the value chain, and ­country borders.

Stephan Kamphues – ENTSOG

Stephan Kamphues

President, ENTSOG

» It is my belief that future gas market design should consider the proper integration of all ­elements of the energy system, including gas and electricity. «

2017 from the General Manager’s view point

In 2017, the ENTSOG team and specialists from its members worked hard to ­publish the last network code foreseen for the time being – the Tariff Network Code. ENTSOG will continue to monitor the implementation of all network codes, and will going forward focus on network code amendments and ­functioning. Issues raised via the Functionality Process, for example, will allow us to consider potential changes and improvements. In the context of future change, ENTSOG’s work must continue to include evaluation of the evolving role of gas infrastructure usage and gas market design within the overall ­European energy system.

The first edition of the Tariff NC Implementation Document (TAR  IDoc) was published and ready for use before the NC came into force in April. This ­document, along with the ­second edition published in September, offers a set of ­examples and possible solutions for the implementation of the TAR  NC ­throughout the EU.

Another significant task was completed by ENTSOG in April last year – the amendment of Network Code on Capacity ­Allocation Mechanism (CAM  NC), which included new rules for incremental capacity. The report for first market demand assessment for incremental capacity, constituting the start of the incremental capacity process, was published by ­ENTSOG in July. The amended CAM  NC also required ­ENTSOG to draft and publish a template for General Terms and Conditions of bundled capacity products of existing transport contracts for gas. Work on this continued throughout 2017.

Work on the assessment of implementation monitoring and effect monitoring commenced for TAR  NC and continued for all other NCs last year.
It was also a busy year for ENTSOG in terms of investment planning, infrastructure assessment and scenario development for the EU energy system. Highlights from 2017 in this regard included the publication of the finalised Ten-Year Network Development Plan (TYNDP) 2017 and the ­publication of the draft 2nd Cost Benefit Analysis (CBA)methodology.

TYNDP 2017 confirmed that the current gas infrastructure is highly interconnected across most of Europe, and the necessary projects have been identified in those areas where there are persistent long-term investment needs.

Regional cooperation was highly evident between ­ENTSOG’s members. The third editions of the Gas Regional Investment Plans (GRIPs), developed jointly with TYNDP 2017, ­coordinated activities between neighbouring TSOs and ­provided support for further infrastructure development wherever necessary. Essentially, the GRIPs serve as a link between TYNDP and national plans.

Security of supply, which was a prevalent theme in ­ENTSOG’s and its members’ work in 2017, also reflected the benefits of enhanced regional cooperation. There was further development of the Regional Coordination (ReCo) System for Gas to meet the requirements of the revised ­Security of Supply Regulation which was adopted and ­published in October 2017. Already in November 2017 ­ENTSOG published the first edition of the Union-wide ­Security of Supply Simulation report, including 17 different supply interruption scenarios for Europe, allowing Member-State to address identified risks. During the cold spell in Europe in February 2017, the ReCo Teams East and North-West met to plan and exchange information. In December 2017, the ReCo Team East held two virtual meetings due to the unfortunate incident at the Baumgarten hub in Austria, causing ­disruption of the gas flows from Slovakia to Austria, and from Austria to Hungary, Italy, Slovenia and Croatia.

Strong regional cooperation between the Member States, and beyond the EU, will continue to provide a resilient gas market now and into the future.

As we look to the future, and the Commission’s plans to ­update the gas regulation, ENTSOG aims to proactively ­participate in the further development of the legal framework, to optimise gas infrastructure usage within a flexible European energy system. I believe that innovation, and ­research and development in the gas industry should be prioritised, and that through collaborative work, for example ENTSOG’s continued cooperation with ENTSO-E regarding TYNDP and scenarios for testing resilience and adequacy of the energy infrastructure. In parallel ENTSOG started in 2017 working on developing gas visionary scenarios including potential future developments of green gases and new gas usage and meeting the EU energy and climate goals. We expect to be able to show the first results during 2018.

Jan Ingwersen – ENTSOG

Jan Ingwersen

General Manager, ENTSOG

» ENTSOG aims to proactively ­participate in the further ­development of the legal framework, to optimise gas ­infrastructure usage within a flexible European energy ­system. I believe that innovation should be prioritised. «

Our Role

ENTSOG (European Network of Transmission System Operators for Gas) works to facilitate and enhance cooperation between Europe’s gas transmission system operators (TSOs) and to support the development of a European gas transmission system in line with European Union’s energy goals.

ENTSOG’s tasks are mainly defined in Regulation (EC) No 715 / 2009. This includes developing network codes for ­market and system operation, elaborating the Ten-Year ­Network Development Plan (TYNDP), providing regular ­information on gas supply and demand for the European market and delivering common operational tools to ensure network security and reliability.

ENTSOG operates the Transparency Platform, where TSOs provide technical and commercial data on the gas transmission systems and their interconnections. Having all TSOs’ data available on one central platform and website facilitates transparent data sharing across Europe and allows for comparisons and quantitative analyses.

Having developed the gas network codes and initially ­concentrating on monitoring their implementation, ENTSOG will going forward have a stronger focus on the further ­development of the legislation, for example, using the ­Functionality Process to consider potential changes and ­improvements.

Network Codes and beyond

ENTSOG has developed network codes (NC) containing rules on how to further integrate the EU gas market as well as for system operation and development. These NCs deal with subjects ranging from capacity ­allocation to network interconnections. The NC ­development process begins when the European ­Commission (EC) submits a request for a Framework Guideline to the Agency for the Cooperation of Energy Regulators (ACER). Next, ENTSOG transforms the ACER Framework Guideline into a network code while conducting extensive public consultations.

Once approved through the European comitology ­procedure, a network code becomes legally binding for all Member States. Now that all NCs have been ­developed, ENTSOG will continue to provide support during all processes associated with the ­implementation activities.

The path to EU law and implementation
  • Guidelines on Congestion Management ­Procedures and on Transparency
    Published as Annex I to Regulation (EU) No 715 / 2009. Most CMP-rules implemented by October 2013
  • CAM  NC – Network Code on Capacity Allocation Mechanisms in Gas Transmission Systems
    ENTSOG’s first NC – published on 14 October 2013 as Regulation (EU) No 984 / 2013,  implemented by November 2015
  • CAM  NC Amendment for Incremental capacity
    Regulation (EU) 2017 / 459, the first amendment of the NC, entering into force on 6 April 2017. The first incremental capacity process commenced in April 2017.
  • BAL  NC – Network Code on Gas Balancing of Transmission Networks
    ENTSOG’s second NC – published 26 March 2014 as Regulation (EU) No 312 / 2014, implemented by October 2016
  • INT  NC – Network Code on Interoperability and Data Exchange Rules
    Published on 30 April 2015 as Regulation (EU) No 703 / 2015, implemented by May 2016
  • TAR  NC –Network Code on Harmonised Transmission Tariff Structures for Gas
    ENTSOG’s latest NC, published on 16 March 2017 as Regulation (EU) 2017/460. Full implementation expected by end of May 2019.

Union / European-wide Network Development Plan

The Ten-Year Network Development Plan (TYNDP) provides an overview of the European gas infrastructure and its future developments, and it maps the integrated gas network according to a range of development scenarios. The TYNDP also includes a European ­supply adequacy outlook and an assessment of the network resiliency. Gas Regional Investment Plans (GRIPs) led by TSOs with ENTSOG assistance complement the TYNDP by focusing on issues of particular regional ­importance.

Operational Tools

Regulation (EC) 715 / 2009 also envisages the use of common network operation tools to ensure the transparency and coordination of network operations under normal and emergency conditions.

Following the requirement of Article 5 of Commission Regulation (EU) 2015 / 703 establishing a Network Code on Interoperability and Data Exchange Rules, ­ENTSOG developed an interconnection agreement template covering the default terms and conditions set out in Articles 6 to 10 of the Network Code.

Preparing the vision for gas infrastructure in the ­future

In 2017, there were a number of discussions on the potential future development of the EU energy industry and the role of gas within it. In terms of market design, ENTSOG contributed to the EC Quo Vadis study, to ­analyse if the current regulatory framework in the EU gas sector is efficient to maximise overall EU welfare or whether changes may be necessary, and if so, to ­provide recommendations. ENTSOG established the Gas Market Design Task Force, to consider the ­potential impact of any proposed changes in this respect. ­ENTSOG also engaged with CEER on their Future Role of Gas from a Regulatory Perspective study, which ­evaluates the potential future role of gas in a context of the COP21 decarbonisation targets.

ENTSOG also initiated developing a more visionary ­approach to European Scenarios, with the view in ­parallel to the TYNDP scenarios to go beyond the ­usual TYNDP frame, to encompass the full energy system and to look at longer term horizons.