Today, ACER releases its second quarterly review of key developments in European gas wholesale markets as part of its 2024 Market Monitoring Report (MMR). The first publication was issued in March 2024.

This report highlights the main trends in Europe’s gas markets in the first half of 2024 and identifies upcoming challenges for Europe arising from global developments (flows via Ukraine, global LNG markets etc.).

What gas market trends did ACER monitoring find?

The report finds volatile prices and supply changes in European gas markets in the first half of 2024:

• Gas prices: at the end of Q1, European gas wholesale prices fell to levels not seen since before the energy crisis but increased in Q2 as markets re-focused on supply risks, including a tighter global Liquefied Natural Gas (LNG) market.
• Price integration has not yet returned to pre-crisis levels, in part due to increased transportation costs. No critical network congestion in Europe’s gas market in the first half of 2024.
• Pipeline and LNG supply: gas pipeline supply to the EU was stable. LNG remained key for EU supply.
• Gas demand fell: in the first half of 2024, gas-fired power generation in the EU decreased by 16% compared to the same period last year.
• Gas storage: In Q2 2024, the EU injected 41 TWh less gas into storage compared to Q2 2023. Despite the slower rate, storages are on course to reach the mandated filling level of 90% by 1 November. The storage level reached in Q2 2024 is one of the highest in the past five summers.

What challenges lie ahead?

• The transportation agreement for Russian gas through Ukraine expires by the end of 2024, and its renewal is unlikely. Landlocked Central European countries will need alternative supply routes, making cross-border trade essential for affordable gas.
• Hurricane season in the Atlantic (from June to October) could affect LNG production and transportation in the Gulf of Mexico, reducing global LNG supply and tightening European gas balances.
• Any delays in concluding the scheduled maintenance of Norwegian upstream gas assets in September could trigger price volatility.
• If gas withdrawals significantly exceed those of the past two winters, EU buyers may need to increase their competitiveness in the LNG markets to replenish stocks in 2025, potentially impacting wholesale prices. Weather conditions will play a key role in exposing or mitigating these risks.
• Several LNG production projects are nearing completion, with first cargoes expected in 2025, which could help stabilise gas prices. Significant additional LNG volumes are anticipated from 2026 onwards, as several large projects are scheduled to come online.

ACER will continue to closely monitor trends in the European gas markets that could lead to short-term volatility for European energy markets. The next update on the European gas wholesale markets will be published in October 2024.

Check out our other 2024 MMR publications.

ACER publishes today its feedback on ENTSOG’s “Implementation Guidelines and other complementary guidance documents” for the Ten-Year Network Development Plan (TYNDP) 2024. ACER welcomes the publication of these guidance documents for the first time, as recommended in ACER’s position paper on Cost-Benefit Analysis (CBA) consistency (March 2023), but calls for some further improvements.

What is the TYNDP?

Every two years, the European Network of Transmission System Operators for Gas (ENTSOG) publishes a non-binding TYNDP which looks forward over a ten-year horizon to identify infrastructure needs, assess projects’ benefits and provide an overview of supply adequacy across Europe. ACER monitors the development and execution of ENTSOG's plan and issues an Opinion on the draft TYNDP, evaluating its alignment with regulatory requirements.

The TEN-E Regulation 2022/869 mandates ENTSOG to consult with all relevant stakeholders and consider their input as part of this process.

What are ENTSOG’s guidance documents about?

From 19 June to 9 July 2024, ENTSOG conducted a public consultation on its guidance documents for the TYNDP 2024 including on the:

• elements required to perform project-specific cost-benefit analyses (CBAs) for the TYNDP 2024,
• methodology for assessing hydrogen and natural gas system needs for the TYNDP 2024, and
• methodology for identifying hydrogen infrastructure gaps for the Infrastructure Gaps Report 2024.

What are ACER’s key findings?

ACER recommends further improvements in ENTSOG’s guidance documents, including to:

• Revise the Infrastructure Gaps Identification (IGI) methodology by taking into account current uncertainties in hydrogen system development and align the methodology with ENTSO-E’s approach, specifying infrastructure needs in terms of required capacities per border.
• Improve clarity on the use of assumptions throughout different stages of the TYNDP process.
• Use more realistic infrastructure levels in line with expected developments in natural gas and hydrogen infrastructure.
• Enhance stakeholder engagement by collaborating with industry stakeholders to develop joint methodologies for defining relevant assumptions and parameters.
• Define and consult on a methodology to introduce a sensitivity analysis on the costs of hydrogen disruption, which significantly affect the benefits of infrastructure projects.
• Limit the security of supply assessment outlined in Annex D3 of the draft TYNDP to natural gas infrastructures only.

What are the next steps?

In line with the TEN-E Regulation 2022/869, ACER will issue an Opinion on the ENTSOG’s Infrastructure Gaps Identification (IGI) as well as on its draft TYNDP 2024 at a later stage. ACER emphasizes the importance of receiving all relevant materials promptly to ensure they align seamlessly with the 2025 Projects of Common Interest (PCI) selection process.

Access ACER’s feedback.

Today, ACER releases its report on the Swedish gas transmission tariffs, directed at the Swedish Energy Markets Inspectorate (EI), the National Regulatory Authority (NRA), and Swedegas, the Transmission System Operator (TSO) of Sweden.

The report evaluates the compliance of the proposed methodology with the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR).

What are the key findings?

After analysing the proposed methodology, ACER concludes that:

• The methodology used to determine the actual reference prices for the Swedish transmission network (referred to as the “applied methodology”) differs from the one presented in the public consultation.
• The consultation does not include the information requested in Article 26(1) of the NC TAR, as the details provided do not refer to the methodology applied to derive the reference prices.
• The TSO's continual revenue under-recovery questions whether its costs correspond to those of an efficient and structurally comparable network operator.
• There is no information on the applied methodology to conclude whether it complies with the NC TAR (Article 7) and satisfy the conditions for accessing gas transmission networks (Article 13 of Regulation (EC) No 715/2009).

What does ACER recommend?

ACER recommends that the NRA (or the TSO, as decided by the NRA) conduct a consultation on the applied methodology in the Swedish transmission network, following the requirements of the NC TAR.

ACER invites the NRA to repeat the consultation next year, considering that the NC TAR prescribes tariffs to be set at least every five years. This threshold has already passed at the time of this report’s publication.

Access all ACER reports on national tariff consultation documents.

Today, ACER releases its report on the Austrian gas transmission tariffs proposed for 2025 by E-Control, the National Regulatory Authority (NRA) of Austria.

The proposed methodology takes into account the changes in network patterns resulting from the 2022 energy crisis. To address these challenges, E-Control proposes:

• Adopting a capacity weighted distance methodology as the reference price methodology.
• A split of revenue between entries and exits of 27/75.
• Introducing a cap on domestic exit points to mitigate potential tariff increases, alongside offering 50% discounts at storage exit points.

What does ACER recommend?

ACER analysed the information provided by E-Control and assessed the compliance of the proposed methodology against the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR). Based on this analysis, ACER provides the following recommendations to the NRA:

• Evaluate the network topology and use patterns. For instance, the NRA should take into account the distance gas flows need to cover to supply different network points into the methodology.
• Explore the methodologies that best align with the network’s characteristics and usage, including selecting appropriate cost drivers and other instruments such as flow scenarios.
• Compare the results of the Capacity Cost Allocation (CAA) assessment to identify the most suitable methodologies for the Austrian transmission network. The NRA should investigate whether high CAA outcomes indicate potential cross-subsidisation between intra-system and cross-system network usage.

What are the next steps?

E-Control adopted the motivated decision on the reference price methodology on 31 May 2024, after receiving preliminary input from ACER.

Following the publication of this report, E-Control shall consider ACER’s recommendations in its next tariff consultation, scheduled for completion by the end of 2024. 

Access all ACER reports on national tariff consultation documents.

ACER’s 2024 report finds that congestion progressively diminished in 2023 due to adjustments of gas demand, supply, and flow paths to reduce reliance on Russian gas. However, the repercussions of the gas market crisis remain clear, as price convergence between European gas hubs has not yet reached the pre-crisis levels.

What does congestion mean?

Different types of congestion can occur in gas markets:

• Contractual congestion happens when the capacity of the gas transportation system is fully booked but remains partially unused, with actual gas flows below the technical limit of the gas system. This can prevent other users from accessing the gas network, leading to inefficiencies. Bringing unused capacity back to the market eases contractual congestion.
• Physical congestion occurs when gas flows reach the technical limit of the gas system. If structural bottlenecks happen, a careful assessment must be done on the need for further investment in the gas system, not necessarily in transmission assets. This assessment should be done in line with the EU’s energy and climate policies, ensure security of supply, and mitigate the risk of future asset stranding.

Addressing the most acute congestions by optimising the use of transmission capacities remains a short-term action that can help deal with tight market conditions.

What are the key findings?

The report finds that in 2023:

• Congestion diminished but remains present on key west-east routes that allow to reduce the reliance on gas supplies from Russia.
• 35 exit and entry sides at Interconnection Points (IPs) were congested, a decrease from 50 congested IPs in 2022.
• New LNG import capacity boosted supply and helped remove congestion at entry points from Norway and the UK.
• Improved market conditions at the most critical bottlenecks reduced the spreads between hub prices. As a consequence, this lowered the incentive for network users to pay high premiums to acquire capacity to move gas between those hubs.
• Total congestion revenues collected by Transmission System Operators (TSOs) amounted to €140 million, a significant drop from the €3.4 billion generated from capacity auctions in 2022. However, this figure remains high compared to the pre-crisis level of €55 million in 2021.

What does ACER recommend?

• Neighbouring TSOs should closely coordinate to maximise the availability of firm and interruptible capacities.
• Neighbouring National Regulatory Authorities (NRAs) should collaborate to remove any regulatory barriers that hinder the optimal use of the existing network for reconfigured supply routes.
• TSOs shall assess whether new investments are needed to address physical bottlenecks that persist after operational optimisations.
• NRAs need to assess whether investments to eliminate structural bottlenecks align with the EU’s energy and climate policies, and security of supply requirements.

What are the next steps?

ACER reports annually on the status of contractual congestion in the EU gas markets and on how it is managed.

Considering the monitoring results, the NRAs shall decide on the application of congestion management procedures in their own countries.

ACER publishes today its report on the proposed gas transmission tariff methodology for Interconnector Limited (INT), the natural gas pipeline in the North Sea connecting the United Kingdom (UK) and Belgium, allowing bidirectional flows to supply gas to continental Europe. INT is a merchant pipeline, previously known as Interconnector (UK) Limited (‘IUK’).

The report analyses the proposed reference price methodology, consulted upon by the Transmission System Operator (TSO) to set the tariffs for the INT pipeline.

What is the methodology about?

This interconnector falls under the regulatory jurisdiction of the British National Regulatory Authority (NRA), the Office of Gas and Electricity Markets (Ofgem), and the Belgian NRA, Federal Commission for Electricity and Gas Regulation (CREG).

As a merchant pipeline, INT differs from regulated assets built or operated by TSOs, including the absence of:

• an allowed or target revenue set by the NRA (as theirs does not have a regulatory asset base);
• captive consumers directly connected to its infrastructure.

Accordingly, INT (formerly IUK) was granted a derogation (in 2018) by the British and Belgian NRAs from a number of provisions of the EU Network Code on Harmonised Transmission Tariff Structures (NC TAR).

INT’s proposed methodology aims at setting transmission tariffs that can be adjusted to market conditions in the UK and Belgium.

What does ACER say?

ACER’s report on the proposed reference price methodology finds that the information provided by INT in the consultation document is insufficient for ACER to conduct a complete compliance analysis of the proposed tariff methodology with the EU gas tariffs Network Code. Furthermore, the ACER report refers to the requirements in the EU Network Code that are applicable to the INT pipeline.

What are the next steps?

CREG shall take a motivated decision on the methodology to set the tariff methodology for INT.

Access the report.

Access all ACER reports on national tariff consultation documents.

Today, ACER releases its report on the Czech gas transmission tariffs proposed for 2025 by the Energetický regulační úřad (ERO), the National Regulatory Authority (NRA) of the Czech Republic.

Recent changes in the patterns of the European gas imports (resulting from Russia’s invasion of Ukraine) have led to the underutilisation of the Czech natural gas transmission infrastructure. Additionally, future flows into the network face considerable uncertainty due to the termination of the transit contract for gas transportation through Ukraine scheduled by the end of 2025.

To address these issues, ERO proposes to apply:

• A capacity weighted distance methodology as the reference price methodology (RPM).

• Several mechanisms to address this volume risk, including the implementation of a price cap regime and a risk premium. These mechanisms aim at allocating the existing risk to the TSO. The NRA recommends applying these measures until the end of 2025, when greater stability and visibility on gas flows across the EU is expected.

What does ACER recommend?

ACER analysed the information provided by ERO and assessed the compliance of the proposed RPM against the requirements of the Network Code on Harmonised Transmission Tariff Structures (NC TAR), providing the following recommendations:

• Ensure transparency and consistency of the proposed reference price methodology.

• Provide additional information on the risk premium collected by the TSO in 2021 and 2022.

• Provide further details on the revenue reconciliation and revenue sharing mechanisms, proposed by ERO to mitigate the volume risk of the network.

• Monitor and analyse the differences between the flow-based charge applicable to domestic exit points and the one applied to Interconnection Points’ (IPs’) exits.

What are the next steps?

By 19 October 2024, ERO shall adopt a motivated decision on the new tariff methodology to be applied to the Czech transmission network, taking into account ACER’s analysis.

Access the report.

Access all ACER reports on national tariff consultation documents.

Today's ACER European LNG Market Monitoring Report (MMR) analyses global and EU market developments and recommends further actions to improve transparency, competition and flexibility in European LNG terminals.

What 2023 trends did ACER’s monitoring and data insights find?

• During the energy crisis, EU successfully secured gas supply and diversified gas imports away from Russia, with LNG playing a key role in this shift.
• Since 2022, over 50 bcm of new LNG regasification infrastructure in the EU has eased supply congestion and helped narrow the price gap between European gas hubs and LNG spot prices.
• EU is the biggest LNG import market (with 134 bcm of LNG imports in 2023), and the US the largest exporter (119 bcm in 2023).
• In 2023, Europe imported 18 bcm of Russian LNG, mostly from long-term contracts signed before 2022. At least 1 bcm, but possibly more, was re-exported to Asian markets through LNG reloads.
• EU LNG demand is likely to reach its peak in 2024. This is due to reductions in structural gas demand driven by the EU’s ambitious decarbonisation goals.
• 19 global liquefaction projects under construction are set to boost LNG production by circa 200 million tonnes by 2030, equivalent to half of the current yearly trade.
• Around 75% of the LNG import capacity added in the EU since 2022 are Floating Storage and Regasification Units (FSRUs). This allows for the potential repurposing or relocation of these floating infrastructure should their utilisation significantly decline.
• The targeted gas demand cut scenario of REPowerEU (if it materialises by 2030) could shift EU's reliance on the spot LNG market, turning a 49 bcm ‘under-contracted’ status in 2023 to an ‘over-contracted’ position of 30 to 40 bcm between 2027-2030. Under-contracted means insufficient long-term contractual commitments increasing buyers’ reliance on the more volatile spot market. Over-contracted means the long-term contracts exceed the demand. Nonetheless, the surplus in long-term commitments should not pose a burden thanks to the flexibility of free-on-board (FOB) contracts, which enable surplus LNG to be sold on the spot market or redirected elsewhere.
• Contrary to the general belief, the EU remains more dependent on long-term than on spot LNG contracts (2 thirds vs 1 third). TTF serves as the predominant indexation term for EU spot contracts (64%), but not for long-term ones (where Henry-hub and Brent indexations are dominant).

Read more about the report.

Explore other MMR publications.

What’s next?

Join our webinar to learn more about the evolving role of LNG in the European energy market.

When? 30 April 2024, 10:00 to 11:00 CET (online). Register for free here.

ACER sees the need to update the European rules on allocating gas transmission capacity. Hence, ACER will run a public consultation to collect proposals from stakeholders on which amendments to the gas Capacity Allocation Mechanisms Network Code (CAM NC) could be considered.

What is the Capacity Allocation Mechanisms Network Code?

The current Capacity Allocation Mechanisms Network Code has been in place since 2017. It harmonises how Transmission System Operators (TSOs) offer and allocate the available gas transmission pipeline capacity to the network users. In the context of Europe’s decarbonisation targets and the evolving gas market, the network code needs to be updated.

ACER had several interactions with stakeholders on how to do this. This included a preliminary analysis (from October 2023 to January 2024) of the main achievements of the network code to date and potential improvements (see the scoping consultation and the workshop).

After having shared its conclusions with the European Commission, the Commission invited ACER to launch the EU-wide network code revision process building on the scoping and problem identification work undertaken by ACER and considering the regulatory elements introduced by the recently agreed hydrogen and decarbonised gas market package. The CAM NC revision process will conclude with ACER recommending amendments to the Commission, which is responsible for revising the text of the network code.

What are the next steps?

ACER is preparing a policy paper on the revision of the Network Code on Capacity Allocation Mechanisms in the gas transmission systems, which will focus on the potential improvements to the network code.

A public consultation based on the policy paper will run from 8 May until 14 June 2024.

ACER will organise a workshop (by invitation only) on 9 July 2024 (09:00 – 11:00). Respondents of the public consultation that specifically expressed their interest in the survey will be invited to this workshop.

After considering stakeholders’ inputs, by the end of 2024, ACER will draft a recommendation to the Commission on amending the network code.

ACER releases its report on the Dutch gas transmission tariffs, directed at Autoriteit Consument & Markt (ACM), the National Regulatory Authority (NRA) of the Netherlands. The report provides guidance on addressing the requirements of the Network Code on Harmonised Transmission Tariff structures (NC TAR) when defining the gas transmission reference price methodology (RPM) for the period 2025–2029.

For the new methodology, building on the previous one, ACM proposes to:

• Apply the same postage stamp RPM of the past regulatory period (2020-2024).

• Increase the discount at the storage facilities’ entry and exit points.

• Introduce a discount at Liquified Natural Gas (LNG) facilities’ entry points.

What does ACER say?

ACER identified several elements (required by the NC TAR) that are not adequately addressed in the consultation process established by ACM. Consequently, it is not possible to conduct a complete assessment on whether the methodology resulting from this process complies with the network code.

To address these concerns, ACER recommends ACM to:

• Compare the proposed RPM with the capacity weighted distance methodology, that reflects the current network characteristics and utilisation, and consider these findings when justifying the RPM.

• Publish a representation of the networks' structure, including the relevant infrastructure changes compared to the previous motivated decision.

• Enhance future tariffs predictability by incorporating forecasts of contracted capacity for 2025–2029, along with the methodology and assumptions used for their calculation.

• Include a cost allocation assessment comparing different scenarios (with or without the storage and LNG discounts) for the relevant regulatory period.

• Further justify the reasoning for the proposed discount at LNG entry points, clearly distinguishing the role of the discount as a means to increase security of supply.

What are the next steps?

By 14 July 2024, ACM shall adopt a motivated decision on the new gas tariff methodology to be applied to the Dutch transmission network, taking into account ACER’s recommendations.

Access the report.

Access all ACER reports on national tariff consultation documents.