ACER calls for improvements in ENTSOG’s draft gas and hydrogen Ten-Year Network Development Plan

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.