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Gas Storage in Northwest Europe

Gas Storage in Northwest Europe. Workshop GIE & DG ENER, Brussels 15 th July 2015 Michael Kohl, Managing Director, RWE Gasspeicher GmbH. Gas Storage demand drivers. negative impact gas less favourable as a generation fuel declining demand for heating gas daily balancing regime

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Gas Storage in Northwest Europe

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  1. Gas Storage in Northwest Europe Workshop GIE & DG ENER, Brussels 15th July 2015 Michael Kohl, Managing Director, RWE Gasspeicher GmbH

  2. Gas Storage demand drivers negative impact gas less favourable as a generation fuel declining demand for heating gas daily balancing regime availability of other flexibility sources, such as: • gas hubs • pipeline flexibility • LNG positive impact • higher Min-take obligations in Russian LTC lead to reduction of flexibility supply? • production cut Groningen field 2016 again under review • increasing security of supply (SoS) requirements? • higher s/w spreads due to more LNG supply in Europe in the summer? • less gas supply from Russia to fulfil requirements of new contracts with China?

  3. Storage closures in Northwest Europe Published storage closures 2016 2015 Total installed capacity (WGV) 60 bcm => 4,82 % 2014 2013 2012 2011 2010

  4. Storages to stay in business? Source: RWE Gasspeicher, public storage data 4

  5. Challenges for L-Gas – The Netherlands Where are we coming from? What has been changed? • Growing number of tremors around the Groningen field • Structuring of the production by gas storages already implemented • Production cuts: • 2014 cut from 49 to 42,5 bcm • 2015 cut form 39,4 to 30 bcm • in 02/15 16,5 bcm for first half of 2015 • In 06/15 13,5 bcm for second half of 2015 • Supply of end customers, power plants and industrial customers with Groningen gas (G-Gas) in NL • Export of G-Gas to Germany (L-Gas Supply), Belgium and France • Export of flexibility out of the gas production to Germany

  6. Challenges for L-Gas - Germany • L-Gas flexibility demand is covered by Dutch imports and declining German production • Change from L- to H-Gas: Germany: Starts in 2015 and is scheduled until 2030 • German network development plan does not differentiate between market areas NCG and Gaspoolyet • Few L-Gas storages in NCG • 30 bcm, including flexibility, to be replaced by H-gas till 2030 Source: NEP 2015, page 95

  7. Potential security of supply support measures • Reduced grid tariffs for gas storages • Increased penalties for imbalances • Reduction of electricity costs in Germany (Exemption from renewable support fee) • Optimised use of existing infrastructure including storages • Allocation of storage capacities to transmission grid operators • Obligatory minimum storage booking level • Obligatory minimum filling level to ensure withdrawal capacity availability • Strategic gas storage capacities • Capacity market payments focussing on the market value of gas storages focussing on the system value of gas storages focussing on the insurance value of gas storages

  8. Thank you for your attention, we are ready to discuss further issues!

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