ENTSOG’s TYNDP

Sofia -- 28-29 March 2012

Carmen Rodríguez Adviser

Union-wide TYNDP regulatory framework

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An ENTSOG obligation established by the 3rd Energy Package > A non-binding plan published every 2 years and including:

• an supply adequacy outlook

• An identification investment gaps with focus on cross-border capacity

• An identification of barriers to new investments

Regional and national consistency > TSOs shall cooperate at regional level to produce Gas Regional Investment Plans

and most of them have to produce similar plan at national level

> Consistence between national, regional and European level has to be ensured and is monitored by NRAs and the ACER

Enlarged framework > According to Regulation on Investment notification, Member States can delegate

their obligations to ENTSOG through TYNDP

> Regulation on Security of Supply quotes TYNDP as a monitoring tool

> Draft regulation on Connecting Europe Facility makes TYNDP the basis of Project of Common Interest selection

TYNDP 2011-2020 geographical scope

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TYNDP 2011-2020 - Data & Methodologies

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o Gas Infrastructures

o Demand

o Supply

o Modelling: Security of Supply Market Integration

Infrastructure projects

Collection process − Efficiency and transparency concerns led to a public questionnaire

− Project sponsors willingness to provide data depends on their interest and political concerns

− Regarding how many factors may influence investment decision, it is not possible for TSOs to classify projects as mature or not within TYNDP

Infrastructure modelling − Simulations have been carried out with 2 infrastructure settings:

o Existing infrastructures plus all FID projects

o Idem plus all non-FID projects

− Individual load factors picture project influence

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Submitted projects per category

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Pipes FID Non-FID

Projects 62 97

10^6 € 13 711 58 556

UGS FID Non-FID

Projects 26 22

10^6 € 4 260* 2 593*

LNG FID Non-FID

Projects 11 20

10^6 € 3 570 6 614*

(*): some project sponsors have not submitted costs

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ENTSOG considers gas as an affordable way toward sustainability − Power generation from gas is a fast and affordable way to comply with emission target

while supporting renewable development

− Denying gas advantages would hinder investment in long life span assets

90%

100%

110%

120%

130%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

ENTSOG EU-27 (2009)

ENTSOG EU-27 (2010)

Eurogas Environmental (EU-27)

Eurogas Base Case (EU-27)

IEA New Policies 2010 (EU-27)

IEA 450 Climatic 2010 (EU-27)

Primes Baseline 2009 (EU-27)

Primes Reference Case 2010 (EU-27)

> TSOs’ forecasts for 1-in-2 annual demand and 1-in-20 daily demand > Annual forecast compared with third parties’ yearly scenarios

Demand Outlook 2011-2020 (Growth trends (%), 2011 start)

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TWh/y

Overall potential supply

ENTSOG (EU-27) demand

> Definition of annual supply potential through mostly own research of publicly available information

> Daily supply assumptions based on historical data and new capacity development checked against annual supply potential

Annual Supply Demand Balance

Potential source spread as the rationale of market integration and

price convergence to end-consummer benefit

Sensitivity study – 67 scenarios

Reference Case

Norway

North

Africa

Russia

Caspian

LNG

Low

UGS

Norway

(T)

Algeria

(T)

Qatari LNG

(S) Belarus

(Tr)

Ukraine

(Tr)

Security of Supply

Market Integration

Simulation of technical, supply and transit disruption in order to assess

European gas network resilience

Decreasing UGS deliverability to

assess the minimum level required for SoS

Overview of modelling for TYNDP

TSOs translate a physical network into commercial offers

Which are used as the basic blocks of ENTSOG network model

Providing a panoramic vision of European gas grid flexibility

Altogether with regional focuses

Focus on Security of Supply

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Impact of indigenous production decline − Shall be compensated:

o On a yearly basis by additional imports

o On short severe climatic conditions by additional imports and/or new UGS

− In any case alternative and longer gas flows should be anticipated

European network is still not perfectly prepared to all disruptions − Modelled Norwegian, Algerian and LNG disruption scenarios should not decrease the

ability to face the whole demand with low impact on remaining flexibility

− Ukraine transit disruption impact should decrease with North Stream, OPAL and Gazelle (FID) and should be completely mitigated with Nabucco and South Stream

− Belarus transit disruption impact should decrease in Poland with LNG terminal (FID); the Baltic region will nevertheless still be negatively impacted even with the planned non-FID projects due to limited integration with the other regions

UGS seasonality will depend on new project development − FID projects are only sufficient to address the additional demand under severe climatic

conditions

2011

Evolution of remaining flexibility (1-in-20 day)

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FID

Non-FID

2015

2020

New investment decisions are crucial in order not only to maintain but also to increase European security of supply (FID projects will not be sufficient)

Focus on Market integration

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TYNDP 2011-20 is a first attempt to picture market integration − No clear direction neither from REG-715 nor TYNDP WS on 17 October 2010 but EC

informal position on supply diversification per country:

o At least 3 different sources

o Access to one LNG terminal (LNG implicit diversification to be considered)

− High level of supply diversification across Europe is seen as a main underlying of price convergence across Europe

− Contractual congestion cannot be considered on a 10-year range especially when considering CAM/CMP measures to be implemented

− Criteria: maximum even spread of supply source / Targeted level 5% (second step 20%)

Heterogeneous situations − From an end-consumer perspective, the ability to access different sources will increase

but will still widely differ in 2020

− From a supply source perspective, gas reach will vary from regional extent (North Africa & Caspian region) to pan-European extent (Russia, LNG & Norway)

Supply source even spread in 2015 (FID)

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LNG Norway Russia

Algeria Libya

Source accessibility for end-consumers

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Number of alternative potential sources

TYNDP 2011-2020 - Feedback & Opinion

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Public consultation > A big step toward the right direction but:

Demand analysis should go both wider and deeper (e.g. power generation mix)

Market integration should be better investigated

Contradictory feedback on infrastructure project assessment (FID/non-FID status; analysis or not of individual projects etc.)

ACER’s opinion > Reaffirms stakeholders’ opinions

> Calls for the introduction of an economic dimension

> Stresses the importance of involvement of external stakeholders

ENTSOG anticipated most of the feedback. To follow up on the proposals for improvement, ENTSOG calls on stakeholders to pro-actively participate in the

development process.

TYNDP 2013-2022 How to meet ever higher challenges

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Challenges ahead

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TYNDP’s role is evolving (REG-715/DIR-73 >> REG-SoS >> EIP) > Outputs from Target Model discussion may give some indication regarding the

expected market integration

> SoS resilience assessment in TYNDP will need to reflect Risk Assessment carried out by Competent Authorities at national level on the basis of REG-SoS

> ENTSOG TYNDP is likely to play a role in supporting the PCIs identification

Key priorities as derived from consultation > Demand analysis should capture the European policy goals as well as the role of gas

in the power generation mix; modelling should determine what impact this may have for the resilience of the network; cooperation with ENTSO-E will ensure consistent approach to the interface between gas and electricity

> Identification of investment gaps should be complemented by identification of related barriers

> Interaction between TYNDP and GRIPs (and national TYNDPs)

SJWS concept applied to TYNDP

Get a better understanding of stakeholders’ expectation > Overall targets of TYNDP provided by Regulation

• Supply adequacy assessment

• Investment gap identification

• Identification of barriers to investments closing the gap

> Methodology needs to be enhanced according to stakeholders’ feedback in order to meet their expectations in the most appropriate way

Ensure access to knowledge beyond TSOs’ expertise > As TYNDP scope exceeds demand and transmission capacity direct input from

other stakeholders are required to face TYNDP target

> Accuracy of the final report always reflects the lowest quality input, this implies that methodological improvements can be implemented only if the related data are provided to ENTSOG

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SJWS process

Build robust common understanding > TYNDP is a thick report encompassing many topics making it difficult for non

specialist to extract the entire added-value

> Continuous interaction with stakeholders during the process is key to ensure a good readability, involvement process thus needs to be further improved

> First part of the SJWS is to ensure a common understanding of previous report and received feedback

Analyze ENTSOG initial proposals > Once common understanding will be reached, ENTSOG will release an initial

proposal for each topic to be discussed with stakeholders

Final definition of methodology and inputs > Based on the information and expectations coming from the SJWS, ENTSOG will

define the methodology and data to be used in TYNDP 2013-2022

> Conclusions will be presented during June WS for final feedback prior to drafting process

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TYNDP 2013-2022 - Indicative timeline

21 * SJWS - Stakeholders’ Joint Working Session

TYNDP 2013-2022 Process

External process M A M J J A S O N D J F M A M J J A S O N D J F MStakeholder's engagement process

Workshop on TYNDP 2011-2020 (3rd TYNDP WS)Public consultation on TYNDP 2011-2020Bilateral meetings with respondents to PCWorkshop on TYNDP 2013-2022 process (4th TYNDP WS)Network modeling tool presentationInfrastructure projet clustering SJWSDemand SJWSSupply SJWSSoS resil ience test SJWSMarket integration test SJWSWorkshop on methodologies and assumptions for TYNDP 2013-2020 (5th TYNDP WS)Informal bilateral talks

ACER-related processSubmission to ACER for opinionPublication of ACER opinion

Data collectionInfrastructure projectsGas demandGas supply

Methodology definitionSoS resil ienceMarket integration resil ience

Internal process M A M J J A S O N D J F M A M J J A S O N D J F MEdition

Data processingSimulationsAnalysis and editing

Approval process M A M J J A S O N D J F M A M J J A S O N D J F MENTSOG approval process

Data & methodologies intermediate approvalReport final approval

2012 20132011

Gas Regional Investment Plans (GRIPs)

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GRIPs

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Regulation (EC) 715/2009

‘[…] Given that more effective progress may be achieved through an approach at regional level, transmission system operators should set up regional structures within the overall cooperation structure, whilst ensuring that results at regional level are compatible with network codes and non-binding ten-year network development plans at Community level […]’ (Preamble 16)

− TSOs are obliged to 'publish a regional investment plan every two years‘(Art. 12)

− TSOs ‘may take investment decisions based on [the] regional investment plan‘(Art. 12)

GRIPs are to be developed by TSOs within ENTSOG. GRIPs are to be compatible with TYNDP.

GRIPs

The following regional groups were identified for the development of GRIPs 2012-2021.

• GRIP South (PT-ES-FR; co-ordinator: Enagas)

• GRIP North-West (IE-UK-FR-BE-NL-LU-DE-DK; co-ordinator: Fluxys)

• GRIP BEMIP (SE-DK-PL-LT-LV-EE-FI; co-ordinator: Gaz-System)

• GRIP North South (CEE) (PL-CZ-DE-AT-SK-HU-BG-RO-HR; co-ordinator: NET4GAS)

• GRIP South-North (DE-FR-CH-IT; co-ordinator: SRG)

• GRIP Southern Corridor (IT-AT-SK-SI-HU-RO-BG-GR; co-ordinator: DESFA)

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Conclusions

• The TYNDP geographical scope is not limited to UE countries/ENTSOG’s members

• The SEE zone has been identified as the less resilient in TYNDP 2011-2020, stressing the importance of the active involvement of the TSOs in the zone to the analysis, within ENTSOG’s TYNDP and GRIPs

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Thank You for Your Attention

Carmen Rodríguez, Adviser ENTSOG -- European Network of Transmission System Operators for Gas Av. De Cortenbergh 100, B-1000 Brussels EML: carmen.rodriguez@entsog.eu T: + 32 2 894 5125 WWW: www.entsog.eu