Topic of the month:
Balancing and conversion neutrality charge
Balancing and conversion neutrality charge
In this edition, you will find a rather long box with the latest developments around “renewable” gas and renewable hydrogen. The effort the industry is making to promote the topic is remarkable. I hesitated to include the Gasunie Deutschland, Thyssengas and TenneT project ELEMENT EINS in the box. Shouldn‘t the project be appreciated more prominently? Ultimately, I thought it fits in nicely with the other events and that it does not dilute its significance. The project nicely demonstrates one of the most urgent questions for the fast further development of the power-to-gas (PtG or P2G) technology: Is it justified to make such plants part of the regulated asset base? BNetzA has a very clear answer: No! There are good reasons for the rejection by the authority, because network operators may become traders for green methane/hydrogen. However, even market participants that in principal share the BNetzA’s negative assessment believe that it makes sense to have a closer look at the regulatory framework. I attended an event (under Chatham House Rules), in which senior managers of the power transmission operators participated as well. Two messages impressed me: First, P2G will most likely be needed sooner than later to support the power networks, as the further extension of the power grid will become more and more difficult due to public resistance. Second, it makes sense to analyse whether it might be a way forward to separate ownership and operations. Network operators may own PtG plants, but operations might be carried out by third parties. Most likely, it is not the regulator alone who can be made responsible for an adequate framework for P2G plants, but an adjustment of the legal framework might be necessary. Serious discussions about what is needed and what the alternatives are should start very soon.
Topic of the month: Balancing and conversion neutrality charge
The huge increase of the balancing and conversion neutrality charge in particular by NCG is still causing a bad mood and leading to discussions among market participants. In the last edition, ener|gate Gasmarkt reported about the anger among trading companies about the NCG conversion neutrality charge. Gaspool and NCG have now published documents with an explanation of the calculation. More will be reported about this later. First, something about the latest discussions on the balancing neutrality charge and an exchange of letters. In the following, we will focus on NCG. The discussion is currently focused on this market area operator (MAO) as the changes of the neutrality charges were extraordinarily high, and, in particular, much higher than expected.
Calculation basis for the conversion fee and the conversion neutrality charge
At the end of August and in September, both MAOs published the calculation basis respectively for the conversion fee and the conversion neutrality charge. Both documents offer much more to read than the four pages published by the two MAOs on the balancing neutrality charges. Unfortunately, the two reports do not have an identical structure and proceeding. Therefore, a comparison is not directly possible for each topic. The NCG report is more elaborate.
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