ACER publishes today its Opinion on the Winter Supply Outlook for 2023-2024 of the European Network of Transmission System Operators for Gas (ENTSOG).

ENTSOG's Outlook evaluates the European gas network's readiness to meet supply and demand requirements for the upcoming winter. It also provides an overview of summer 2024.

ENTSOG’s key findings

• Cooperation is key: the EU gas infrastructures is adequate to meet winter gas demand and the storage filling targets, if Member States cooperate and sufficient gas supply is ensured.

• Storage fillings levels: storage filling levels already reached the 90% target in August 2023, showing that the measures implemented in the Members States were effective.

• If specific circumstances of high demand materialise, Europe would still risk to face demand curtailment and low level of gas in stock at the end of the winter.

• A minimum of 46% of working gas volume should be retained at the end of winter, to meet the summer demand and achieve the 90% targets by 1 November 2024.

• Early and significant withdrawal of gas from storages will negatively affect the flexibility of the gas system and the security of supply for winter 2024–25.

• The prolonged unavailability of the Balticconector (connecting the Estonian and Finnish gas grids) does not pose a significant risk to the security of gas supply in the region.

What are ACER’s conclusions?

• Timely publication: ACER welcomes the timely publication of the Winter Supply Outlook 2023–24.

• Scope of the analysis: ACER appreciates that the analysis carried out by ENTSOG includes different scenarios, including a full disruption of Russian gas supply and different availabilities of LNG imports and storage filling levels. It also welcomes that the Outlook extends its analysis by also assessing the level of preparedness for winter 2024-25.

• Risks and supply disruptions: as the risk for a potential full disruption of the Russian gas supplies persists, an effective monitoring of European gas supplies and storage filling trajectories is key.

• Maximisation of cross-border and import capacities: recently commissioned infrastructure has added significant cross-border and import capacities. ACER invites the Transmission System Operators (TSOs) involved to coordinate, maximise their capacities and jointly manage contractual and physical congestions.

• ENTSOG’s Outlook methodology:  ACER finds that improvements are needed:

  • In the definition of demand and supply projections. 

  • To improve transparency by publishing the assumptions underlying the different demand and supply scenarios.

  • To engage with stakeholders before drafting the Outlooks and to consult on the methodology proposed.

• Cooperation between ENTSOG and ENTSO-E: ACER invites the ENTSOs to cooperate in ensuring consistent assumptions in their seasonal outlooks and to align the timing of their publication.

Read ACER’s Opinion and access ACER's other ENTSOG Outlook Opinions.

Today, ACER publishes its report on the French national regulatory authority’s (CRE’s) proposed gas transmission tariffs. In its report, ACER assesses the methodology proposed for calculating the tariffs applicable to the transmission networks and provides several recommendations to further justify the methodology.

What are ACER’s recommendations?

• Improve the justification provided for the proposed flow scenarios, in particular:
  • Support the proposed distance cost driver calculation with evidence. In the proposed methodology, this is based on the ‘shortest distance between entry and exit points’, instead of using the average distance between network points, which is the standard approach in the capacity weighted distance methodology.
  • Demonstrate that the application of non-economic combination of points is consistent with the possibility of sourcing gas to neighbouring markets from the French hub. The methodology proposes that certain combinations of network points cannot be considered in the calculation of the distance cost driver, as they are not competitive with alternative EU routes.
  • Provide a clearer explanation on the calculation steps and the outcome of the optimisation algorithm.

This recommendation aims at ensuring that CRE provides an appropriate justification for the assumptions and calculations proposed in the methodology.

• Increase transparency: ACER recommends that CRE assesses the impact of the proposed flow scenarios and unit cost equalisation on the distance cost driver and on tariffs respectively. CRE proposes that tariffs for the intra-system and cross-system use of the network have the same unit costs, but does not explain the degree to which tariffs are modified to achieve this objective.

• Yearly assessment on contracted capacity: ACER proposes a yearly assessment of the difference between the forecasted contracted capacity and the actual contracted capacity at the beginning of each tariff period. This is particularly relevant as the forecast is completed for a four-year period, instead of the more standard yearly period. The publication should inform stakeholders about the accuracy of the contracted capacity forecast.

Access all ACER reports on national tariff consultation documents.

Today the annual report monitoring the internal gas market in 2022 and 2023 is published.

This ACER-CEER report provides an overview of the latest developments in European gas markets and examines the drivers of the gas price spikes in summer 2022. The report draws lessons from the crisis and identifies forward-looking implications to offer strategic perspective for policy makers to make the market more resilient. 

What are the key findings and lessons?

• The EU's integrated gas system showed a certain resilience against the energy crisis. Yet, the severe supply shock led to highly congested access to LNG terminals and pipelines, causing price surges, hub price disparities and trading disruptions.
• After the 2022 shock, the European gas market supply and demand balance improved thanks to consistent imports of Liquified Natural Gas (LNG) and a significant decreased gas demand. This resulted in gas prices to trend closer to pre-crisis levels.
• Global gas supply overall is still tight, exposing prices to unexpected developments. China’s LNG demand recovery remains an important influencing factor on EU gas prices going forward.
• The report highlights the lasting impact of the Russian supply shock on the EU energy market and the steps done to overcome the supply dependence. It draws some lessons for the future around the EU gas markets’ future resilience factors: increased EU reliance on LNG; reducing gas demand; revenue redistribution; and the enhanced security of supply role of underground storages.
  • European gas prices will be more exposed to global competition and hence will be more volatile.
  • The reduction in conventional gas demand shall assist the EU’s decarbonisation goals. Yet, it needs to be done smoothly in order to preserve the economic activity and the security of supply that gas offers to the EU’s energy system.

Also today, the European Securities and Markets Authority (ESMA) publishes its report examining the development of gas trading activity in summer 2022. ESMA analyses reveal a well-maintained trading activity despite a more challenging trading environment.

What’s next?

• Save the date: on 16 November 2023, ACER and CEER are organising a webinar on evolving trends in the European gas market. Register here.
• Early 2024: Analysis of LNG market developments.

Access the ACER-CEER European gas market trends and price drivers report.

Dive into ACER’s interactive dashboard and explore the evolution of price and demand supply metrics for the period 2015 to 2023.

ACER publishes today a consultancy study on the impact of EU and national gas storage regulations.

The study was commissioned to VIS Economic & Energy Consultants with the aim of:

• collecting and analysing national measures recently applied by EU Member States (with and without storage facilities) within the framework of the European Gas Storage Regulation;

• assessing how these measures contribute to achieving the storage filling targets, and, where possible, estimating the associated costs; and

• identifying possible difficulties when implementing the measures.

What is the role of gas storage and why is it important?

Gas storages play an important role in the European gas system as they supply up to 25-30% of the total gas consumed in the EU during winter. Storing gas physically in the EU helps mitigating the impact of a potential gas disruption. This is key in a context where the EU’s internal gas production declines, while Europe aims to phase out its remaining dependency on Russian gas supply.

The energy crisis which followed Russia’s invasion of Ukraine in February 2022 underscored the importance of having gas storages adequately filled in across Europe, in case of potential gas supply disruptions.

When gas prices are similar during winter and summer, or even more expensive during summer (as it happened during 2022), market participants are discouraged from injecting gas into storages during the summer, as they would do it at a loss. As a consequence, winter storages levels may be lower and less gas can be withdrawn in case of need. This may pose a risk to the security of gas supply as storage levels at the start of the winter may not be sufficient to address supply-demand imbalances. In such cases, administrative measures may be required to ensure that gas storages are filled in, regardless of unfavourable market signals.

What are the main findings of this report?

The analysis concluded the following measures recently helped meeting the storage filling targets, despite the discouraging market signals:

• Financial incentives for storage users: offering financial incentives for storage users facilitated the utilisation of storage capacity. Incentives such as tariff discounts and direct subsidies have proved to be effective. On the other hand, the interest of market participants in taking part in more elaborate incentive schemes, such as signing contracts for differences, was limited.

• Stockholding obligations: imposing stockholding obligations help guaranteeing that storing filling targets can be achieved. However, when positive market price signals incentivise market participants to store gas, there is the risk they can reduce the overall flexibility of the gas system (if stockholding obligations account for the largest part of the storage capacity).

• Last resort storage entities: appointing an entity to provide storage filling of last resort contributes to safeguard security of supply, in case the market would not act, but it comes at a cost. The mechanism should be made more efficient by planning when the entity should act, volume requirements, and introducing risk reduction mechanisms (e.g. price hedging by the designated entity).

• Use-it-or-lose-it mechanisms: implementing these mechanisms enabled the swift release of booked but unused capacity and contributed considerably to storage filling.

The report further concluded that some measures are in need of greater transparency and verifiability.

The report also found that:

• Member States without underground storage facilities made efforts to store gas in neighbouring countries but the remaining technical and commercial constraints should be addressed, by strengthening coordination between Member States with and without storage and finding ways to enhance regional solidarity.

• All Member States with underground gas storage facilities met the filling target obligations. Measures implemented by Member States helped overcome negative market signals during the 2022 injection period and contributed to achieve adequate levels of stored gas.

• In 2022, the Member States’ underground facilities collectively stored over 630 TWh of gas as result of the measures. This amount represents approximately 53% of the European Union’s total aggregated storage capacity.

What are the next steps?

As a next step, the Council of European Energy Regulators (CEER) will undertake another study on storage burden-sharing mechanisms and identification of best practices and recommendations to enhance the efficiency of storage filling obligations.

Access the report and the slides  summarising the most important findings.

8 March 2024 update: Access the second part of the study. 

With gas markets being impacted by a global pandemic (2020) and a European energy crisis (2022), the resilience of the current market rules (also known as “network codes”) has been tested. Although they have mostly ensured a proper market functioning (see ACER’s Market Monitoring Reports and congestion reports), lessons have yet to be learned to further enhance market resilience.

The European gas market must also ensure its readiness to align with the latest policy and technological developments, guaranteeing that the decarbonisation targets set by the Green Deal can be met.

Against this background, the latest European Gas Regulatory Forum (also known as “Madrid Forum”) has recently emphasised the importance of having gas market rules which can adequately reflect this evolution, and therefore prompted for the revision of the Capacity Allocation Mechanisms Network Code (“CAM NC”).

What is the Capacity Allocation Mechanisms Network Code?

The rules for allocating gas transmission capacity have been in place since 2017, when the current version of the Network Code on Capacity Allocation Mechanisms was adopted.

These market rules harmonise how network users can utilise the gas transmission network to enter or exit a market, and how these capacity rights can be obtained.

What is the role of ACER?

As a first step, ACER is planning a public consultation (opening on Tuesday 14 November 2023) and workshop (on Tuesday 12 December 2023) to take stock of what works under the current market rules and collect views from stakeholders on the way forward.

ACER will benefit from this information when it may recommend amendments to the CAM NC in the course of 2024.

What are the next steps? Save the dates!

ACER is launching a public consultation on the “Capacity Allocation Mechanisms Network Code: achievements and the way forward”, which will run from Tuesday 14 November 2023 until Friday 5 January 2024.

On Tuesday 12 December 2023, ACER will also organise an online workshop on the same topic. Registrations will open on Tuesday 14 November 2023.

The event aims to:

• debate the achievements and possible areas of improvement of the CAM NC; and

• provide stakeholders with the opportunity to present their views.

ACER also intends to publish a policy paper, tentatively in the first quarter of 2024, to follow up on any identified areas of improvement. This policy paper will be a first input when the formal review of the CAM NC may be launched in the course of 2024.

The European gas system was gas primarily designed for transportation of Russian supplies from east to west. Following the Russian invasion of Ukraine, Liquified Natural Gas (LNG) and increased pipeline supplies began to enter Europe from the west, which caused bottlenecks in North-West Europe (NWE).

Addressing congestion in North-West Europe

In addition to its annual monitoring of congestion, ACER publishes today its Special Report on addressing congestion in North-West European gas markets. The report examines:

• How acute bottlenecks emerged in Belgium, France, Germany and the Netherlands; 
• How the respective Transmission System Operators (TSOs) and National Regulatory Authorities (NRAs) addressed the bottlenecks; and
• The lessons learnt.

What did ACER find?

• Congestion on the gas network in NWE drove hub spreads high.
• TSOs benefitted from significantly higher congestion revenues in 2022 (compared to 2021). EU TSOs recorded €3.4 billion in gas congestion revenues in 2022 (of which €2.98 billion or nearly 90% was earned by NWE TSOs); for comparison, EU’s total gas congestion revenues in 2021 were €55 million.
• The EU’s integrated gas market proved to be resilient to the crisis, facilitating the reconfiguration of supply and demand, and ensuring gas would flow to where it was most needed;
• TSOs made commendable efforts to address the acute physical bottlenecks from Belgium to the Netherlands, from Belgium to Germany and from France to Germany by increasing the gas capacity (kWh/h) available;
• But, while there was coordination among neighbouring TSOs, such coordination and information availability weakened while striving to maximise the availability of firm and interruptible capacities on both sides of the borders under difficult circumstances. This resulted in mismatched transmission capacities. In addition, the availability of information on the optimised network could be improved. Hence, a key learning is the need for continuous coordination and information sharing.

During an energy crisis, short-term mitigating actions are important:

• Europe’s voluntary gas-demand reduction target has been extended until 31 March 2024;
• The storage-filling targets agreed in 2023 were updated for 2023.

No-regret measures include:

• Addressing the most acute gas bottlenecks (in this instance, NWE) to improve market efficiency in the short term;
• Optimising existing infrastructure to accommodate new gas supply routes.

ACER recommends:

• Joint optimisation by network operators of gas capacity;
• Better information on gas network use;
• Careful assessment of investment needs to avoid stranded assets;
• Fine-tune the rules on gas transmission capacity.

Access the ACER Special Report on addressing congestion in North-West European gas markets.

Access reports' infographic. 

ACER publishes today its report on proposed gas transmission tariffs in Greece.

What is in the report?

ACER assessed the proposed tariff methodology to calculate the natural gas transmission network in addition to the charge used to allocate part of the costs of the Revithousa LNG terminal to users of the Greek gas transmission network.

What are ACER’s main findings?

ACER notes that the Greek gas transmission network has seen a significant change in recent years, as a result of the construction of new infrastructure and the changing flow patterns. In the coming years, Greece could become a landing point for LNG to be transported to North Macedonia, Bulgaria and beyond via different interconnection points in the North.

ACER finds that the choice of the postage stamp methodology and the network charge to allocate the costs of the Revithousa LNG terminal should be further substantiated. 

ACER recommends to the Greek national regulatory authority, RAE, to assess the possibility to set tariffs based on locational signals in the future. This can provide investment signals for future investments, enabling efficient decisions over the potential expansion of the network.

Access the report on the Greek gas tariffs.

Access all ACER reports on national tariff consultation documents.

ACER publishes its Opinion on the European Network of Transmission System Operators for Gas (ENTSOG) draft Ten-Year Network Development Plan (TYNDP) 2022 for gas and hydrogen sectors.

What is the TYNDP?

Every two years, ENTSOG publishes a TYNDP to assess and identify the need of new infrastructure projects to ensure an adequate level of security of gas supply, market integration and competition. ACER monitors the development and execution of the TYNDP process and issues an opinion on ENTSOG’s draft TYNDP 2022.

This TYNDP 2022 for the first time covers hydrogen projects. The estimated investment costs of all projects included in the TYNDP is unprecedentedly high (at €110 billion), and furthermore it still lacks cost information for a significant number of projects.

The TYNDP projects are submitted by project promoters to ENTSOG and are not the result of the modelling exercise that ENTSOG performs to identify investment needs. Hence, some of the TYNDP projects may not match any apparent infrastructure need.

What’s in the ACER Opinion on ENTSOG’s TYNDP for 2022?

ACER welcomes the increased focus of the TYNDP on the energy transition, the dual gas system modelling approach that considers both hydrogen and conventional natural gas networks simultaneously, and for the first time the TYNDP covering hydrogen projects.

Natural gas (methane) projects:

In ACER’s view,

• The TYNDP includes a large portfolio of conventional gas infrastructure projects which is likely to exceed reasonable needs for such infrastructure, considering the expected reduction in gas demand in Europe from 2030;
• The natural gas network in Europe is well developed and resilient;
• Some infrastructure investment gaps will be closed soon with on-going projects, further reducing the dependency on Russian gas supply.

Hydrogen:

In ACER’s view,

• The lack of a complete (European and national) legal framework for hydrogen regulation hinders the assessment of hydrogen infrastructure projects by some regulatory authorities;
• Future TYNDPs should evolve once market signals and final regulations for hydrogen are defined;
• ENTSOG should improve its analysis of market players' interest in developing transportation capacities, as it is one of key drivers of hydrogen infrastructure projects.

Investment costs:

In ACER’s view,

• Investment costs for all projects in TYNDP 2022 are unprecedentedly high (€110 billion) and incomplete due to declared confidentiality of project costs by some promoters;
• Hydrogen projects (at €77.5 billion), primarily in early stages, account for almost 70% of these costs;
• Consistency between the European TYNDP and national Network Development Plans (NDP) projects has decreased compared to previous TYNDPs. This is mainly due to the inclusion of hydrogen and other new project types in the TYNDP, which are not yet included in most NDPs.

What does ACER recommend to ENTSOG to improve its TYNDP?

ACER recommends to ENTSOG for the final TYNDP 2022 to:

• Consider National Regulatory Authorities (NRAs) comments on TYNDP 2022 projects;
• Enhance the comprehensiveness of Annex D (methodology);
• Demonstrate the consideration of feedback from stakeholders and ACER Opinion;
• Publish project-specific Cost-Benefit Analysis (CBA) assessments results, including economic performance indicators.

For ENTSOG’s TYNDP 2024 and beyond, ACER suggests improvements in the following areas (further explained in the Opinion):

• Scenarios, planning and consultation of stakeholders;
• Submission of TYNDP projects;
• Implementation of CBA and cost transparency;
• Identification of infra needs and modelling;
• Interlinked assessments.

Access the ACER Opinion 06/2023 on the ENTSOG draft Ten-Year Network Development Plan 2022.

ACER publishes its Opinion on the 2023 Summer Supply Outlook of the European Network of Transmission System Operators for Gas (ENTSOG). ACER welcomes ENTSOG’s Outlook but recommends some targeted improvements to it.

ENTSOG’s Summer Outlook 2023 assesses the resilience of the European gas network for the summer of 2023 by examining the potential evolution of gas demand and supply. In particular, it analyses the likelihood of gas storage sites being filled to 90% of their capacity by 30 September 2023 (in line with Europe’s minimum gas storage filling obligations), considering the existing gas supply risks and the current dependence of the EU on Russian gas. With EU gas storage above 75% in early July 2023, Europe is on track to meeting the 90% target if current gas storage injection levels continue.

Highlights of ENTSOG’s Summer Supply Outlook

ENTSOG’s Summer Supply Outlook 2023 presents two scenarios:

• Minimised Russian gas imports; and
• Complete disruption of Russian pipeline supply.

Its main findings include:

• Reaching 90% storage filling levels by end of this summer is possible in both scenarios, if there is cooperation among EU countries.
• The existing gas infrastructure, including recently commissioned projects, can effectively reduce the dependency on Russian gas supply.
• In a 'cold winter' with full Russian pipeline disruptions (which is the harshest scenario), additional gas supplies and demand reduction would be required.
• Additional measures to improve the security of gas supply include:
  • Increased liquified natural gas (LNG) imports (beyond historically observed import levels);
  • Enhanced capacities provided by transmission system operators (TSOs), leading to shift in gas flow (from West to East); and
  • Implementation of the existing target to reduce gas demand by 15%.

What is in the ACER Opinion?

• ACER appreciates that ENTSOG’s Outlook reflects already reduced gas flows from Russia and has a scenario of complete disruption of Russian gas.
• ACER welcomes that the recently commissioned infrastructure has added significant cross-border capacities and more than 30 bcm of LNG import capacities, improving the resilience of the EU gas system to import gas from sources other than Russia.
• ACER agrees with ENTSOG that additional LNG imports, enhanced transmission capacities and the implementation of a 15% gas demand reduction target may be needed to secure adequate levels of gas storage at the margins of 2023/24 winter season.
• ACER also stresses that continued vigilance regarding gas supplies and monitoring of storage filling trajectories are crucial because of the persistent risks of a significant reduction in Russian gas supply.

ACER’s main recommendations to ENTSOG for improving Outlook’s methodology and results:

• Use a complementary scenario based on expected gas supply and booked capacities;
• Estimate the effects of high gas prices on gas demand;
• Where relevant, adapt gas supply assumptions to potential events impacting the gas supply import capabilities, going beyond assumptions based on historic values;
• Use gas demand projections which are fully consistent with the European targets on gas demand reduction and phase-out of Russian gas; and
• Increase the level of granularity of the simulation results, the network topology, and its visualisation.

ACER highlights the importance of a close cooperation between ENTSOG and the European Network of Transmission System Operators for Electricity (ENTSO-E) to ensure consistent assumptions and results in their respective seasonal outlooks.

Access the ACER’s Opinion on ENTSOG’s Gas Summer Supply Outlook 2023.

Also see the recent ACER communication on ENTSO-E’s Summer Outlook 2023.

ACER monitors and reports annually on the EU (internal) markets of electricity and natural gas (in our so-called Market Monitoring Reports (MMR)).

In 2023, ACER publishes a series of overviews of gas markets and the progress towards an internal EU gas market. Today’s Key developments publication provides an initial assessment of key developments in European wholesale gas markets over the recent months. The analysis will be further elaborated in our September’s MMR on European gas market trends and price drivers.  

What are the key findings?

Among the main trends identified in 2022 and the first half of 2023:

• The extreme wholesale gas price rises during 2022 can be primarily attributed to the Russian supply shock. However, it was the resilient demand for gas, driven upwards by above-average storage injections, that caused prices to clear at record-high levels;
• Since the end of 2022, the demand-supply balance in the gas market has improved due to a combination of rising liquified natural gas (LNG) imports and a decrease in demand, effectively compensating for the loss in Russian pipeline flows;
• This improved balance has resulted in a reduction in gas prices, which are now approaching pre-crisis levels. However, supply is overall still tight exposing prices to unexpected developments. China’s LNG demand remains an important factor for EU gas prices going forward;
• The significant price spreads between Northwest European (NWE) and South European hubs during the summer of 2022, caused by limited access to NWE, have returned to normal levels, due to increased LNG import capacity;
• Gas trading activity has increased in recent weeks due to more favourable prices and reduced margin requirements.

What are the next steps?

• September: European gas market trends and price drivers (analysing the drivers behind record-high gas prices in spring and summer 2022);
• November: 2023 Synthesis and Recommendations for gas; and
• December: Analysis of LNG market developments.

Access the Key developments in EU gas wholesale markets – 2023 Market Monitoring Report.

Dive into our interactive dashboard and explore the evolution of price and demand supply metrics for the period 2015 to 2023.