Examining the Demand of Natural Gas Storage in Europe

Transcription

1 Examining the Demand of Natural Gas Storage in Europe Trends Madjid Kübler Manchester, June 07 th 202

2 0 Agenda 0 Introduction of TEAM CONSULT 2

3 0 Introduction of TEAM CONSULT Our customer base covers both: national & global players REFERENCE LIST (EXCERPT) 3

4 0 Introduction of TEAM CONSULT Our team consists of highly qualified experts with several years of experience in the energy industry TEAM DEVELOPMENT Madjid Kübler Managing Director Sybe Visser Senior Advisor Bernhard Witschen Senior Advisor Jürgen Kehrmann Senior Advisor Christoph Hankeln Project Manager Sirko Pika Project Manager Heike Wunderlich Project Manager Volker Franke Project Manager Georg Haas Project Manager Armin Beilfuss Senior Consultant Jan Meier Senior Consultant Jens Völler Consultant Todor Dimitrov IT Applications Sven Ballentin Econometrics Sandra Hartmann Assistant of MD Christin Balzer Internal Projects Michele Bundtzen Apprentice Dennis Korinth Apprentice 4

5 0 Introduction of TEAM CONSULT A large number of projects with a variety of topics have kept us pretty busy in the last 2 months CONTENT OF RECENT ASSIGNMENTS Gas-to-Power Sourcing of gas fired power plants Renegotiation of gas-topower contracts Evaluation of a merchant plant business model Gas Storage Development of German & European storage market Strategy regarding further development of flexibility services portfolio Evaluation of potential storage enhancements G2G-Competition / Gas-Strategy Development of long-term market scenarios Competitor analysis regarding strategy, volumes and margins Attractiveness of selective market segments Design of market strategies Gas Procurement & Contracts Support on price revision: Preparation of market data Analysis of contracts Negotiation strategy Arbitration support Re-design of procurement strategy Conduction of gas tender process 5

6 0 Introduction of TEAM CONSULT TEAM CONSULT s experts have been regularly invited as speakers & chairmen of major industry events TEAM CONSULT AT CONFERENCES & EXHIBITS th May 20 in Oldenburg Euroforum Konferenz Gasbeschaffung 22 nd 23 rd February 20 in Köln 8 th - 0 th February 20 in Essen Sirko Pika presented Regulation and practice in the German gas market Madjid Kübler was chairman of the conference day two. Bernhard Witschen presented TEAM CONSULT's position at Volatile gas prices and the consequences for gas procurement. Madjid Kübler chaired the stream The future of gas: organized withdrawal or technological advancement and presented Not the procurement but the demand is going to be the problem 7 th annual Flame 20 9 nd 3 th Mai 20 in Amsterdam 7 th November 200 in Brussels Madjid Kübler has chaired the conference stream European Country Spotlight: Germany Sybe Visser spoke about Regulation & Market Structure: The German Business Perspective 6

7 Agenda 0 Introduction of TEAM CONSULT 7

8 Where is the storage market heading at? HEADLINES ABOUT TODAY S TOPIC E.ON Gas Storage sells minority stake in German storage facilities SSE and Statoil inaugurate Aldbrough storage extension VNG offers first gas storage capacity at Etzel Fluxys to expand natural gas storage capacity Bergermeer gas storage gets approval OMV to start open season on 00Mm³ on sites Centrica continues to assess Baird, Caythorpe project on hold 8

9 The flexibility market is affected by a set of fundamental drivers DRIVERS FOR CHANGES OF FLEXIBILITY NEEDS Changes along the value chain Aspects of security of supply Development of demand Weather conditions Change of flexibility needs Changes of demand structure Changes of supply structure Decrease of indigenous production 9

10 Our static forecast shows a structural excess supply for the NWE storage market until 2030 TEAM CONSULT S FORECAST UNTIL 2030 Source: TEAM CONSULT Analysis Strategic stock = 5% of imports to NWE except from Norway 0

11 Overall storage capacities are necessary in a severe winter; who is willing to pay for them throughout the rest of the time? STORAGE FILLING LEVELS IN GERMANY Source: Gas Storage Europe, TEAM CONSULT Analysis

12 The summer/winter spread is the traditional valuation parameter at traded markets for seasonal flexibility; it is at low levels for more than two years DEVELOPMENT OF SUMMER/WINTER SPREAD AT TTF Ø 6.0 Ø 5.7 Ø 2.9 Ø 2.9 Source: ICIS Heren, TEAM CONSULT Analysis 2

13 Valuation of flexibility between traded markets and storage operators is structural; contract price negotiations in long-term storage contracts possible? YEARLY STORAGE TARIFFS IN EUROPE 202/3 (for bundled products) Ø S/W Spread in Q/202 at TTF Source: Storage Operators, TEAM CONSULT Analysis 3

14 Theoretical market effects Price Price Price Physical storage balance Storage balance Storage balance Dynamic developments and actions of market participants can be drawn in a theoretical approach THEORETICAL MARKET EFFECTS a Current forecast 2a Cancellation of projects 3a Market exit old storages b Time Time Time Supply increase 2b Avoidance of worsening future situation Supply decrease S S S S 3b S 2 Quantity Quantity Quantity 4

15 Outlook on decreasing indigenous production almost unchanged DOMESTIC PRODUCTION IN NORTH WEST EUROPE (NWE)* Source: Statline, WEG, BMWi, Danish Energy Agency, Eurostat, National Grid, Oil & Gas UK; TEAM CONSULT Analysis *estimated figures 5

16 Gas demand in traditional heating segments is decreasing, need for seasonal flexibility going down as well; G2P increasing with uncertainty on flex needs GERMAN GAS DEMAND BY SEGMENT: TC FORECAST (in TWh*) Source: StaBuA, TEAM CONSULT Analysis *In GCV = Gross Calorific Value 6

17 In the next several years a large quantity of storage capacity is about to become operational in Germany and the Netherlands ADDITIONAL STORAGE CAPACITY IN GERMANY AND NETHERLANDS (data in mcm) Germany: German WGV as is 23, /3 203/4 204/5 205/6 206/7 Netherlands: Dutch WGV as is 5,300 Zuidwending Cavern storage expansion: additional WGV of some 90 mcm per 202/3 and another 90 mcm per 203/4 Bergermeer storage (new): some 4,00 mcm WGV announced start of operation around 205 Norg & Grijpskerk (expansion): up to 9,000 mcm WGV start of operation not planned yet Groningen field still and for the mid-future equipped with sufficient flexibility to meet customer's flexibility requirements Source:TEAM CONSULT Analysis 7

18 The individual storage markets widely differ in market structure design and regulatory framework DIFFERENT STORAGE MARKETS WITHIN EU WGV/Gas consumption Competitive Status Storage access regulation Storage tariff regulation Relevance of auctioning Germany 25% Oligopoly (85%) Negotiated Negotiated Some Czech Republic 40% Triopoly with dominant player (>75%) Negotiated Negotiated / Auctioned Strong Austria 40% Duopoly Negotiated Negotiated Some Netherlands 0% No TPA available Negotiated Negotiated None France 25% Duopoly with dominant player (>75%) Regulated Negotiated / Auctioned Strong Italy 20% Duopoly with dominant player (>90%) Regulated Regulated None 8

19 New infrastructure developments and further integration will lead to crossborder opportunities & threats CONVERGING EUROPEAN ENERGY MARKETS Gate, Rotterdam Zeebrugge Dunkirk planned (France) MEGAL Swinoujscie planned (Poland) European energy markets will converge with respect to: Regulation Infrastructure New sourcing and supply options across borders emerge Competition across border increases UGS capacities A storage portfolio spread across regions offers new marketing options Current WGV in bcm Probable WGV in 2030 LNG Terminal 9

20 The shutdown of 8 nuclear plants in Germany in 20 and the decommissioning of the rest until 2022 will change Germany s energy landscape INSTALLED CAPACITY INCL. NUCL MORATORIUM INCL. NEW PLANTS** (Power Plants of Public Supply > 00 MW + Renewables) Source: TEAM CONSULT Analysis * Coal, lignite, gas, oil and pumped water storage plants ** Incl. new power plants as announced (7.5 GW) 20

21 Renewable load will increase over time starting in 2020 it can exceed total German power demand in certain hours of the year GERMAN LOAD DEMAND AND RENEWABLE SUPPLY (TC SIMULATION) (in MW) Source: EEX, Entsoe; German Ministry of Environment (BMU), Fraunhofer Institute; TC Analysis 2

22 Without a storage system for excess renewable power, any power exceeding demand would be wasted as capacities are taken off the grid POTENTIAL OF GAS INFRASTRUCTURE TO ABSORB EXCESS POWER Installed ( ) and available capacity of renewables (Wind & PV) Grid extension Loadmanagement 4 Distribution function of power generation Grid capacity Demand curve Square = annual power volume. Power demand Illustrative 2. Load management reaches its limits 3. Limits to grid extension 4. Overproduction: Removal of RE capacities from the grid 5. Transformation of excess power into SNG to balance peaks = full use of renewable power Availability in hours/a 8760 Source: DVGW Innovationsoffensive, E.ON Ruhrgas 22

23 Market segments Marketing of capacities becomes more complex, products need to be vendible & fit to customer s needs; possibility of secondary marketing necessary DEVELOPMENT OF MARKETING OF STORAGE CAPACITIES Segments Needs Products Willingness to pay Retailer Wholesaler Seasonal Flex. Peak Shaving Parking Wheeling Duration* Producer Trader TSO Power Generation Power to Gas Strategic Stock Balancing Shift of gas flows Asset-backed Trading Interruptible capacity Bundled units volume Withdrawal/ injection capacity Products * e.g. Year, Season, Month, Day 23

24 Storage business becomes more and more an entrepreneurial business with more & more focus and commercial than on technical issues SUMMARY OF NWE STORAGE MARKET DEVELOPMENT TEAM CONSULT s forecast model on the storage balance for NWE shows significant excess capacities on behalf of WGV until Since the last forecast in 20 no major changes on the likely scenario for the storage market has happened: gas demand and supply and along with the them the resulting flexibility needs haven t changed. Storage market is under pressure: significant additional capacities are about to become operational in Germany (foremost), G2G competition puts pressure not only on the gas price but on the value of flexibility Storage operators need to react on this situation with ever more effort for marketing of their capacities. Certain opportunities for a more optimistic development of the gas storage market are possible: New international interconnectors between markets leading to new gas flows Increasing influence of renewable energies Decommissioning of nuclear power plants: Germany (by 2022), Belgium (by 2025), Switzerland (by 2034) 24

25 Gas Power Oil Heat Contact data TEAM CONSULT G.P.E. GmbH Robert-Koch-Platz 4 05 Berlin T F info@teamconsult.net