Feasability study of the merger of GRTgaz North and GRTgaz South zones

Transcription

1 Feasability study of the merger of GRTgaz North and GRTgaz South zones Pierre-Laurent Lucille 1

2 Market design changes in France 330 TWh 170 TWh? 500 TWh 460 TWh North merger completed in 2009 Investments made to merge the 3 north zones: 360 M 2 Full Entry/Exit zones 40 TWh What is the right size? The biggest achievable at a reasonable cost 2

3 A changing context in 2011 Market-coupling experiment between PEG Nord and PEG Sud Improved liquidity and price convergence Approval of ERIDAN project by CRE subject to a feasibility study on the merger of the two zones Significant core network development in the south Investment decision taken for Dunkirk LNG terminal, which triggered the Arc de Dierrey project Significant core network development in the north A strong European focus on merging entry/exit zones Definition of a well functioning market within the Gas Target Model working area Balancing framework guidelines 3

4 Trade-off between investment and contractual constraints or mechanisms to ease physical congestions? Investments 2,4 G Full investment merger Acceptable CAPEX? Answers should come from network users 1,3 G Hybrid Merger : taking into account new planned infrastructures (Eridan, Arc de Dierrey) and contractual mechanisms Full contractual merger : considered not acceptable in 2009 Increased Opex (flow commitments) Reduction of firm capacities 4

5 Strong involvement of the different stakeholders A steering committee shared by CRE, DGEC and GRTgaz A European consultant to identify the congestions, assess the different mechanisms and their costs: KEMA consulting Strong stakeholder involvement represented in Concertation Gaz Bilateral interviews with KEMA 7 Concertation meetings within the market design group (validation of methodology and milestones) 5

6 Study methodology in a nutshell (1) Physical congestions exhaustively identified, assuming no restrictions on Entry/Exit flows (GRTgaz) Materialized by a set of conditions on entry/exit flows (e.g.: Fos + Montoir > Q) Set of market-based flows estimated under different market scenarios (KEMA) Assumption : Entry and exit flows are driven by prices of neighbouring markets, global LNG prices and minimum Take-or-Pay obligations Physical congestions assessed through the market filter (KEMA) Identification and classification of significant congestions Potential contractual mechanisms to solve main congestions identified and assessed (KEMA) Roadmap for the merger defined (KEMA) 6

7 North-South Congestion Congestion Nord Sud 1200 Min (F+M-TIGF) Mini Montoir-TIGF+FOS Mini FOS-(TIGF si positif) Maxi Taisnières+Ober-Oltingue Max (Ob+T-Olt) Température / Température Equivalente (entre 17 et 25 C ; 25 C = Conso Août ) Taisnières Min (F-TIGF) si TIGF >0 Min(Fos) si TIGF <0 Dunkerque Obergailbach Oltingue Interpretation To maximize injections in summer, it is necessary to have a certain volume of gas in the South Montoir Chémery TIGF<0 Stockage salins Fos 7 TIGF TIGF>0

8 Study methodology in a nutshell (2) Physical congestions exhaustively identified, assuming no restrictions on Entry/Exit flows (GRTgaz) Materialized by a set of conditions on entry/exit flows (e.g.: Fos + Montoir > Q) Set of market-based flows estimated under different market scenarios (KEMA) Assumption : Entry and exit flows are driven by prices of neighbouring markets, global LNG prices and minimum Take-or-Pay obligations Physical congestions assessed through the market filter (KEMA) Identification and classification of significant congestions Potential contractual mechanisms to solve main congestions identified and assessed (KEMA) Roadmap for the merger defined (KEMA) 8

9 Main assumptions for market-based flows Scenario 1 : cheap pipe gas LTC pipe LNG Spot Spot - Reduced spread Scenario 2 : cheap LNG LTC pipe LNG Spot January April July October January April July October January April July October Scenario 3 : global price convergence LTC pipe LNG Spot January January April July October

10 GWh/d GWh/d GWh/d Simulated market-based flows Scenario 1: Cheap pipe gas Aggregated Supply High 2,500 ToP Low ToP 2,000 2,000 2,000 1,500 1,500 1,500 1,000 1,000 1, LNG Spot LTC GRT Gaz_North - CH GRT Gaz_South - TIGF LNG operating at ToP limit LTC operating above ToP limit LNG operating at (reduced) ToP limit LTC operating above ToP limit and higher than in High ToP scenario 10

11 Study methodology in a nutshell (3) Physical congestions exhaustively identified, assuming no restrictions on Entry/Exit flows (GRTgaz) Materialized by a set of conditions on entry/exit flows (e.g.: Fos + Montoir > Q) Set of market-based flows estimated under different market scenarios (KEMA) Assumption : Entry and exit flows are driven by prices of neighbouring markets, global LNG prices and minimum Take-or-Pay obligations Physical congestions assessed through the market filter (KEMA) Identification and classification of significant congestions Potential contractual mechanisms to solve main congestions identified and assessed (KEMA) Roadmap for the merger defined (KEMA) 11

12 Level of physical constraints violation by market-based flows GWh/d GWh/d GWh/d Cond 1a (Mini Montoir - TIGF + FOS) Cond 1a (Mini Montoir - TIGF + FOS) Scenario 1 (high ToP) Scenario 1 (low ToP) Scenario 2 (high ToP) Scenario 2 (low ToP) Scenario 3 (high ToP) Cond 1a (Mini Montoir - TIGF + FOS) 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 12/1 1/1 2/1 3/1 Significant degree of congestion in scenarios 1 and 3 Increased congestion in case of low ToP for expensive LNG Scenario 1 (high ToP) Scenario 1 (low ToP) Scenario 2 (h Scenario 2 (low ToP) Scenario 3 (high ToP) 12

13 Sensitivity analysis Parameters with major impact for congestions Price scenarios Hypothesis for minimum Take-or-Pay volumes Behaviour of the Spain-France interconnection Parameters with lesser impact Use of storages and CCGTs may also relieve congestions (less robust/conservative hypothesis) Under a cheap pipe gas scenario, an additional 250 GWh/d may be needed, in the south, in summer A probable structural congestion 13

14 Study methodology in a nutshell (4) Physical congestions exhaustively identified, assuming no restrictions on Entry/Exit flows (GRTgaz) Materialized by a set of conditions on entry/exit flows (e.g.: Fos + Montoir > Q) Set of market-based flows estimated under different market scenarios (KEMA) Assumption : Entry and exit flows are driven by prices of neighbouring markets, global LNG prices and minimum Take-or-Pay obligations Physical congestions assessed through the market filter (KEMA) Identification and classification of significant congestions Potential contractual mechanisms to solve main congestions identified and assessed (KEMA) Roadmap for the merger defined (KEMA) 14

15 Identification of potential mechanisms Administrated (mandated restrictions and changes) Voluntary (based on voluntary arrangements) Counterparty Shippers Shippers Capacity Commodity / Nominations 0) Normal Operating Conditions 1) Interruptible / Conditional capacity Targeted on unsold capacities 2) Locational restrictions 0) Normal Operating Conditions 3) Capacity buy-back 4) Locational trades 5) Flow commitments Infrastructure operators 6) TSO-contracted storage 7) Locational swaps 8) TSO-to-TSO swaps 9) Re-routing 15

16 Impact Qualitative Assessment of different mechanisms High Low Normal operating conditions S->N and O->E congestions TSO storage Reduction of firm booked capacity Locational trades Invest Reduction of firm unbooked capacity associated to N->S overselling congestion Flow commitments Seldom Frequency Permanent Different congestions need to be covered by different mechanisms The N->S congestion requires a mix of solutions 16

17 KEMA s Recomandations and quantitative costs assessment At GRTgaz Sud/TIGF interface : Conversion of firm unsold capacity into interruptible capacity Capacity buyback or locational trades At Fos Monthly tenders for locational gas in the South (Fos) Annual flow commitment in the South Scenario 1 Scenario 2 Scenario 3 Type of congestion Marketbased mechanism only Inkl. reduction of firm capacity Normal year Cold year North-South South-North West-East Total

18 Next steps Final recommendations and roadmap from KEMA Final results presented in Concertation Gaz working group in January 2012 This is not the end of the story Regular impact of updated market conditions on congestions New contracts to design and tenders to organize for a more reliable cost assessment Impact on maintenance Impact on IT Systems 18

19 First conclusions A methodological breakthrough for merger studies Involvement of market players is key to establishing reference market conditions Structural congestions were identified (North to South) A varied tool box has been identified to lift the congestions and enable the merger by 2016 solutions will probably be based on a mix of mechanisms Costs estimates rely on strong assumptions (price spreads) Final decisions should be taken based on network users feedback Only network users can really assess the benefits from the merger 19

20 THANK YOU FOR YOUR ATTENTION 20