Enabling greater market opportunities through gas storages

Transcription

1 Enabling greater market opportunities through gas storages 8 th European Gas Summit, Berlin 29 th 30 th September 2014 Michael Kohl, Managing Director, RWE Gasspeicher GmbH RWE Gasspeicher GmbH PAGE 1

2 Storage demand drivers negative impact > economic downturn > gas less favourable as a generation fuel > declining demand for heating gas > introduction of a daily balancing regime > availability of other flexibility sources, such as: gas hubs pipeline flexibility positive impact > growing renewable energies with natural gas as back-up > wind intermittency requires a high volatility of gas flexibility > CO 2 reduction requirements set a focus on natural gas in the gas-to-coal competition > Power-to-gas opportunities > Increasing security of supply (SoS) requirements RWE Gasspeicher GmbH 15/09/2014 PAGE 2

3 Future supply and demand gap L-Gas? Germany > L-Gas demand is covered by declining production and Dutch imports > Flexibility is delivered from Dutch suppliers > Few L-Gas storages in Germany > Change from L- to H-Gas starts in 2015 and is planned until 2030 GWh/h Entry storages Import volumes NL German production (with safety cut) Redundancy (Entry storages versus NL volumes) Source: NEP 2013, page 65 L-Gas in Germany 2012 capacity demand extrem capacity demand high capacity demand declining capacity demand RWE Gasspeicher GmbH 15/09/2014 PAGE 3

4 Rising liquidity of the L-Gas market Gasyear 2010/11- traded volumes market area NCG 13,784 GWh Gasyear 2012/13- traded volumes market area NCG 22,749 GWh Gasyear 2013/14- traded volumes market area NCG 24,384 GWh Source: NetConnect Germany, Datenservice; MWh/d L-Gas - traded volumes in Germany BUT: Will there be enough flexibility from the Dutch market in the future to cover the demand? RWE Gasspeicher GmbH 15/09/2014 PAGE 4

5 Will there be a niche market for L-Gas storages in Germany as well as for G-Gas in the Netherlands? WHICH NICHE? Opportunities for gas storages? RWE Gasspeicher GmbH 15/09/2014 PAGE 5

6 RWE Gasspeicher GmbH is ready to supply a niche RWE Gasspeicher L-Gas storages Gas storage Gas facilities quality Epe L-Gas L-Gas Epe NL G-Gas *WGV: Working gas volume Network operator Open Grid Europe (OGE) Gas Transport Services B.V. Max. injection Max. withdrawal Market WGV* capacity capacity area [million m³] [m³/h] [m³/h] NCG , ,000 TTF , ,000 RWE Gasspeicher GmbH 15/09/2014 PAGE 6

7 Gas oversupply in EU already gone? RWE Gasspeicher GmbH 15/09/2014 PAGE 7

8 H-gas storages will be taken off market EUR/MWh (Working Gas Volume) Stay-in-Business Cost, Pore Storage Stay-in-Business Cost, Cavern Storage EUR/MWh of which H-gas if revenues stay below the cash and opportunity costs in the long term of which L-gas EUR/MWh (WGV) Source: RWE Gasspeicher, public storage data 1 10 RWE Gasspeicher GmbH 15/09/2014 PAGE 8

9 Storage operators are reacting with mothballing, closure, project shifts and termination Mothball / closure of gas storages Pore storage Dötlingen (ExxonMobil / BEB, GER) is in the process of decommissioning Storengy mothballed two pore storages in 2012 (Soings and Trois Fontaines, FR) Reitbrook (Storengy, GER) went out of the market in 2014 and Kalle (RWE, GER) will follow in 2016 New builds put on hold or partly cancelled otypically pore storages with structural disadvantages (e.g. technical issues, slow or smaller storages) Caythorpe, Baird (UK/Centrica), Aldbrough extension (UK/SSE,Statoil), Deborah (UK/Eni), Jemgum (GER/ E.ON), Triepkendorf, Himmelpfort and Klaushagen projects (GER/Gazprom) as well as Staßfurt (GER/ RWE) have been postponed, put on hold or cancelled ono market incentives for new storage capacities RWE Gasspeicher GmbH 15/09/2014 PAGE 9

10 S/W Spread NCG [ /MWh] L & H-Gas demand Prices for flexibility Spotprice versus Q1/2015 prices [ /MWh] Source: RWE & Heren Price Assement RWE Gasspeicher GmbH 15/09/2014 PAGE 10

11 Influence of an embargo of Russian gas Source: EWI; An embargo of Russian gas and Security of Supply RWE Gasspeicher GmbH 15/09/2014 PAGE 11

12 The influence by figures Supply shortfalls in select European countries for different embargo lengths (bcm) Source: EWI; An embargo of Russian gas and Security of Supply RWE Gasspeicher GmbH 15/09/2014 PAGE 12

13 Storages contributing during an embargo German Gas Balance no embargo, 6-month embargo Conclusion > Storages and LNG supply are the medium to counteract to an embargo > Storages are expected as the main medium during an embargo of 3-6 months Source: EWI; An embargo of Russian gas and Security of Supply > higher LNG imports have also to be structured by storages RWE Gasspeicher GmbH 15/09/2014 PAGE 13

14 Potential support schemes to keep gas storages online > Reduced grid tariffs for gas storages > Increased penalties for imbalances > Obligatory minimum storage booking > Strategic gas storage capacities > Capacity market payments Impact on gas market has to be carefully examined RWE Gasspeicher GmbH 15/09/2014 PAGE 14

15 Conclusions In any case, SSOs have to monitor the L-Gas / G-Gas supply and demand balance in North-West Europe check closing options for gas storages permanently follow the discussion on potential support schemes with the EU, National Governments and Regulators Security of supply is a fragile good! RWE Gasspeicher GmbH 15/09/2014 PAGE 15