The Year 2017 – Review and outlook

Under tragic circumstances, the month of December made very clear that gas has something to do with physics and chemistry. On December 12, an explosion occurred in the gas receiving station in Baumgarten. An employee of TÜV Austria died, 21 people were injured. In the course of gas market liberalisation, a commercial or virtual layer is laid over the physical one. We talk about virtual trading points, virtual storage, virtual reverse flow and, in future, virtual interconnection points. The efficiency of the whole system has, of course, increased immensely due to the implementation of all these virtual elements. But one should not forget the physical foundations. Hopefully, it will seldomly be brought to mind with tragic events such as that in Baumgarten.

What fits to the topic of the physical foundations is the development in the TENP I system. It should perhaps attract more attention. Since this autumn, one part of the transit pipeline from the German-Dutch and the German-Belgian borders to Switzerland and Italy has been shut down. The maintenance work is scheduled until the end of March 2019. This contributes to price spikes in Italy but also has an impact on the supplies to the state of Baden-Wuerttemberg. It is one topic in this edition.

---

Framework Conditions

Green Gas: The proper implementation strategy

In the November edition, ener|gate Gasmarkt presented a study for the FNB Gas which was compiled by a number of consultancies led by Frontier Economics. The main conclusion from the study: “Green gas” can contribute substantially to a 95 per cent carbon reduction. A high utilisation of synthetic methane and hydrogen in the final energy consumption is economically more efficient than a large scale electrification. But the main requirement is: the cost for power-to-gas plants must go down substantially. During the presentation of the study, FNB Gas therefore proposed to allocate power-to-gas plants to the network sector. A joint planning of gas and power networks should make sure that these plants are built if the cost is lower than an extension of the power networks. Such an industrial use of plants – FNB Gas thinks – is to allow further improvements of the technology as well as economies of scale and scope. This should enable the necessary cost reductions.

---

What happened in 2017?

2017 was the year the gas industry defeated the spectre of an “all electric world”. But before this struggle is briefly redrawn, here are some notes about market and regulation. The most important event in 2017 was the amendment of the ordinance provision on gas network access. The important change: from April 2022 at the latest, the two German market areas must be merged. The story of the “making of” of this amendment was a bit absurd and it also seems odd that the merger is prescribed with no costbenefit analysis required. But from a market perspective the merger may offer interesting opportunities; from the perspective of the TSOs this is not the case. The TSOs started the very first preparations for the merger and has done some first network modelling for a joint market area. In 2018 – and this is already an outlook – the integration process will start. A nice long-term outlook: In 2022, the large import and export border points Olbernhau, Brandov and Waidhaus must be merged into a Virtual Interconnection Point (VIPs) between the new German hub (interesting question: what will be its name) and the Czech hub. VIPs were a very special 2017 topic which will be mentioned in the outlook.

---

---