ACER Opinion: EU gas network set to meet demand and winter storage goals

ACER issues its Opinion on the Summer Supply Outlook 2024 published by the European Network of Transmission System Operators for Gas (ENTSOG).

ENTSOG’s Summer Outlook 2024 evaluates the expected gas supply and the capacity of the EU gas infrastructure to meet demand, exports, and storage needs during summer 2024. It focuses on the goal of filling gas storage to 90% by 30 September 2024 (in line with EU’s obligations to reach this level by 1 November). The Outlook considers current gas supply risks and the EU’s remaining dependence on Russian gas supply. Additionally, it includes an analysis of gas supply conditions for the winter 2024/25.

Highlights of ENTSOG’s Summer Supply Outlook

The Outlook presents two scenarios:

• minimised and complete disruption of Russian pipeline supply; and
• Liquified Natural Gas (LNG) supply for Europe modelled across high, reference, and low supply scenarios.

The Outlook’s main findings include:

• New gas infrastructure, especially the LNG terminals set up since autumn 2022, has helped reduce the dependence on Russian pipeline gas by enabling more imports from other gas sources.
• With high storage levels at the start of summer 2024 and assuming an increased LNG supply, the EU gas network is capable of meeting demand and fill storage by the end of the injection season (1 November) without relying on Russian gas.
• If Russian pipeline supply is completely disrupted and LNG supply to Europe is limited, increased withdrawals from gas storage would be necessary to meet demand, resulting in very low storage levels by the end of winter 2024/2025. In this scenario, gas demand would need to be reduced by 15% (from the average of the last 5 years) and additional LNG supply would be required to avoid gas curtailments.
• Ukrainian storage facilities could enhance the gas system flexibility by providing an additional 10 billion cubic meters of storage capacity.
• Gas storage remains crucial for ensuring security of supply, as it provides essential flexibility to the gas system during winter.

What is in the ACER Opinion?

• ACER acknowledges improvements in ENTSOG’s Outlook methodology and appreciates the inclusion of gas supply scenarios addressing major supply risks and uncertainties concerning future Russian gas flows via Ukraine after the end of 2024.
• ACER notes that gas storage filling levels reached 75% in early July, one of the highest levels in the past five summers, which allows for cautious optimism for the summer ahead.
• ACER agrees with ENTSOG’s recommendations for mitigating the risks of gas supply-demand imbalance in a scenario where Russian pipeline supply ceases and LNG supply to EU is limited. Specifically, ACER supports the need for gas demand reduction and increased LNG imports from different sources to ensure adequate security of supply levels for the winter of 2024/25.
• ACER also stresses the importance of closely monitoring gas supply flows and storage filling trajectories.

ACER’s main recommendations to ENTSOG for further improving its Outlook methodology:

• Consider a low LNG supply scenario that excludes Russian LNG supply imports.
• Assess the consistency of Transmission System Operators’ (TSOs’) gas demand projections with estimates from other entities and with European recommendations for gas demand reduction.
• Provide more detailed information on additional LNG import and cross-border capacities introduced by projects recently commissioned and expected to be commissioned in the next six months.
• Include data on the future gas wholesale prices for reference.

Cross-sectoral considerations

The European Network of Transmission System Operators for Electricity (ENTSO-E) also published its summer adequacy assessment for the European electricity system. ENTSO-E Summer Outlook confirms sufficient resource adequacy to meet European consumers’ power demand during the summer months.

Given the high interdependence of the electricity and gas sectors, ACER highlights the importance of a close cooperation between ENTSOG and ENTSO-E to ensure consistent assumptions and results in their respective seasonal outlooks.