EU warned on gas investment incentives

EU legislation on gas supply security has yet to set the right market obligations to ensure new infrastructure is built where it is needed, Jacques Laurelut, president of Gas Transmission Europe (GTE), told EURACTIV in an interview.

Even when there is a clear case for reinforcing the gas transmission network to enhance security of supply, the market might not be ready to pay for the investment, the GTE president warned.

“Normally, as a TSO, when we build the pipe, we organise an open season – that means that we sell the capacity of the pipe before building the pipe. If there is no demand from the market for the pipe, nobody will pay for it and we have no reason to build it,” Laurelut said. 

Such a scenario could be realised if TSOs and gas shippers do not have the same obligations imposed on them in terms of preparedness for disruptions, Laurelut pointed out. He argued that this could be achieved through the Security of Supply Regulation currently being debated in the EU.

However, the draft text introduces a discrepancy by requiring TSOs to have the capacity to supply customers throughout a seven-day peak period, while the obligation on shippers concerns any 60-day period, the GTE president explained.

“The draft regulation sets different constraints for transmission system operators (TSOs), shippers and suppliers. They could be adjusted so that there would not be such a large difference,” Laurelut said. The optimal result would be to ensure that market demand coincides with the TSO’s imperative to build new infrastructure, he said.

After last January’s gas dispute between Ukraine and Russia, it became clear that the better prepared a country is for the risk of supply disruption, the fewer consequences it suffers, Laurelut said. The first recommendation the TSOs gave the European Commission was to map out possible crisis scenarios and compare whether network flows are sufficient to face them.

In order to estimate preparedness, GTE is preparing a 10-year network development plan to be published by the end of the year, the organisation’s president said. 

“The idea is to identify the demand in Europe, the capacity of the network and then the supply, and to see if all that works correctly for the next ten years,” he said. In an ideal scenario, the plan would map out potential congestion and direct the market towards removing it.

“The market in such a case could be a company that intends to build a gasification plant somewhere. It has to know if there is a need for gas,” Laurelut explained.

He was speaking to Susanna Ala-Kurikka.

To read the interview in full, please click here.

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