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Long-term aspects of the gas market and the need for a sound investment climate should be recognized.

GIE views on Gas Target Model - focus on storage - Jean-Marc Leroy GSE President / GIE Board Member CEER - 3 rd Gas Target Model workshop London, 11 April 2011. GIE General Remarks on Gas Target Model.

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Long-term aspects of the gas market and the need for a sound investment climate should be recognized.

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  1. GIE views on Gas Target Model - focus on storage -Jean-Marc LeroyGSE President / GIE Board MemberCEER - 3rd Gas Target Model workshop London, 11 April 2011

  2. GIE General Remarks on Gas Target Model • Long-term aspects of the gas market and the need for a sound investment climate should be recognized. • Detrimental impact on activities of storage and LNG terminals should be avoided. • Market mergers are beneficial if tariff consequences are limited. • Market coupling is less relevant for the gas market. • Instruments provided by the Third Package should be used in the first place. • A sound cost/benefit analysis is necessary. • The attractiveness of the European marketplace and security of supply should not be reduced.

  3. GSE Remarks on Gas Target Model (1/3) • Scope of the Gas Target Model: • The Madrid Forum mandate regarding Gas Target Model concerns access to transmission infrastructure only. • Storage is a specific activity: • Storage is a flexibility tool in competition with other flexibility instruments. • Storage development entails very long lead-times which may extend up to 25-30 years.

  4. Gas Storage: typical cash-flow pattern for a 0.5 bcm green-field storage project

  5. GSE Remarks on Gas Target Model (2/3) • Gas Target Model, if incorrectly established, may have adverse effects on competition: • Impact on storage business will have a knock-on effect on storage investment thus undermining the development of a flexibility market. • Gas storage can be influenced by national policies on security of supply, such as strategic storage, which were assumed to have local impact In some countries only. • Wrong enlargement of market zones could lead to a spillover effect of uncompetitive local solutions on other areas.

  6. GSE Remarks on Gas Target Model (3/3) • GTM should not create artificial need for investment: • Will have a negative impact on the final gas bill. • Will increase the overall transport cost to and from storage which will impact on the price of storage as perceived by the customer. • Any transmission tariff consequences of the GTM should not negatively affect the use and value of storage.

  7. Conclusions • GTM process should respect the mandate and not extend beyond transmission issues. • Incorrect establishment of new market design can have adverse effects on competition. • Artificially driven network investment should be avoided. • Transmission tariff consequences should not impact the use and value of storage. • For the GTM process to be credible, it needs to be transparent and inclusive of all stakeholders’ views. • The announced revision of the GTM in 2012 brings into question the process and creates further uncertainty for stakeholders.

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