FSR Regulatory Policy Workshop Series 2018-2019
The European Commission has recently proposed the “sector coupling” concept, reflecting the requirement for a greater integration between electricity and gas, and possibly other sectors and activities as well (i.e. electro-mobility, heating and cooling).
The Workshop will explore the extent and in which form(s) the electricity and gas markets and systems could be usefully coupled to meet the challenges facing the energy sector in the future. It will also consider which other sectors and activities could be “coupled”, although in a different form.
- Session 1 will focus on how the electricity and gas markets and systems could be coupled beyond the level of modelling integration currently envisaged;
- Session 2 will consider which other sectors/activities could be usefully coupled to the electricity and gas sectors, and, if so, with which solutions.
This workshop is exclusively open to national regulators, representatives from public bodies and associate & major donors of the FSR Energy area.
Current legislation already envisages cross-sectoral market and system modelling, through the development by the European Networks of Transmission System Operators (ENTSOs) of a “consistent and interlinked electricity and gas market and network model including both electricity and gas transmission infrastructure as well as storage and LNG facilities”. However, more integrated modelling could also assist other areas in the future.
The opportunity and the benefits of ensuring greater coordination between different markets were at the basis of the development of cross-border market coupling in the energy sector. With electricity market coupling, market participants do not have to trade energy and cross-border capacity separately, avoiding the risk of inefficient outcomes. It is now widely accepted that a similar form of cross-border coupling is not required in the gas sector.
However, a different form of coupling between the short-term gas and electricity markets may well assist in increasing the efficiency of the overall energy sector. Such “sector coupling” may also take advantage of the fact that, alongside the traditional gas-to-power transformation available through gas-fired generation, power-to-gas technologies are developing. The gas-to-power and power-to-gas capabilities, combined with conditional bids, would allow some form of “arbitrage” between the electricity and gas markets, making sure that prices on these market develop in a consistent way and, potentially, allowing the smoothing of price volatility.
Cross-sector market coupling will also call on greater integration not only of network development (which is already envisaged), but also of system operation, as the constraints in the two markets might require coordinated management.
Other sectors or activities – such as electro-mobility or heating and cooling – might also benefit from closer integration with the electricity (and possibly gas) sector(s), even though such integration will likely take a looser, or at least different, form.