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South Regional Initiative: Improving Energy Market Integration in Europe

The South Regional Initiative aims to integrate national electricity and gas markets in France, Portugal, and Spain to create a single energy market in Europe. This initiative focuses on increasing interconnection capacity, promoting interoperability, ensuring transparency, and establishing hubs. However, there is a need for new investment decisions to meet market demands.

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South Regional Initiative: Improving Energy Market Integration in Europe

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  1. ERGEG South Gas Regional Initiative José Angel Sanz Viejo Regulation Director GIE Annual Conference 23rd November 2007

  2. Regional Initiatives Main objectives • To make specific improvements in the development of a single energy market in Europe by firstly integrating national electricity and gas markets into regional markets.  • This is achieved through the identification and removal of impediments to trade at a regional level.

  3. The South Regional Initiative • Countries involved: • France • Portugal • Spain • According to ERGEG, this Region “plays an important role for European gas supply”. • “It is both a significant gas market in itself with a consumption of nearly 80 billion cubic meters/year (17% of the EU25)” • “It contributes to the security of supply by diversification, acting as one of the main entries for natural gas coming from the north of Africa, and for the LNG coming from a variety of origins (87% of LNG supplied to EU25 enters through this region)”.

  4. The South Regional Initiative • The three markets are characterized by a small number of indigenous resources, so they have to be supplied by external sources. • All of them have LNG terminals that represent a significant part of their national supplies, varying from ¼ of the national supplies in France to around 2/3 of the supplies in Spain. • There are a significant number of gas import sources that enhance the security of supply by means of diversification. • It can be considered that Portugal and Spain are well integrated, from a physical point of view, but that is not the case of France and Spain, where interconnection level is rather limited.

  5. The South Regional Initiative. Identified priorities • Priority I: Interconnection Capacity • Priority II: Interoperability • Priority III: Transparency • Priority IV: Hubs The priorities order is relevant. It is necessary to have solutions in a previous priority before tackling the next one.

  6. Priority I: Interconnection Capacity 2007 Taisnières Dunkerke 59 13 Obergailbach Demand 48 Oltingue 3 Biriatou Larrau Demand 36 Units: bcm Nowadays the Iberian Peninsula has an serious lack of interconnection capacity with the rest of Europe

  7. Progress so far: Since April 2006 to October 2007 (I) • Two projects will increase slightly the interconnection capacity between France and the Iberian Peninsula. • Guyenne 1 • Larrau A and B 2010 Δ0,6 Δ1 Units: bcm • However the Open Subscription for Guyenne 1 and Larrau A and B should be launched simultaneously, to avoid serious risks for the shippers.

  8. Interconnection capacity level in some EU countries Planned interconnection capacity Actual interconnection capacity 135% 30% 7 % If the interconnections projects defined in the S-GRI until 2015 were developed, the Iberian Peninsula would have an interconnection level similar to those EU countries with lowest interconnection capacity.

  9. Progress so far: Since April 2006 to October 2007 (II) • The current increase of capacity of 0,6 bcm from France to Spain and 1 bcm from Spain to France is not sufficient to satisfy market needs. • Guyenne 1 and Larrau A and B were decided before the starting of the regional initiatives projects and not as result of this initiative . Guyenne 1, according to a CRE 2005 deliberation, is for the evacuation of gas from the Fos Cavaou LNG terminal, and a large part of the capacity created will mainly benefit Gaz de France and Total • The necessary infrastructures to increase the interconnection have been identified; but, no new investment decision has been made. • A decision on the necessary investments to increase the interconnection capacity should be made as soon as possible.

  10. Conclusions • Problems have been identified • The increase of interconnection capacity between due to investments already decided will be just +0,6 bcm (FR to ES) and 1 bcm (ES to FR) in 2010 • No new investment decision has been made. • A decision on the necessary investments to increase the interconnection capacity should be made as soon as possible.

  11. Muchas gracias

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