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Infrastructure: the difficult ingredient of the recipe

Written by Ilaria Conti

Being Italian – and a woman! – the world has high expectations concerning your cooking skills.  Your mother is almost certainly a good cook, not to mention your grandmothers – whose pasta al forno and tiramisu have indelibly marked your family’s taste buds for generations.

Flour, sugar, eggs…the recipe is often easy and the ingredients are always the same, but in every recipe there’s always a secret – usually a tricky ingredient – which is able to make the difference between a masterpiece and a total failure.

In the recipe for the perfect gas market, this ingredient is infrastructures.

What’s the right amount?

Luckily enough, I still have the possibility to find out my grandmothers’ cooking secrets by simply calling and asking them. “Nonna, how much cinnamon should I add? How much milk do you use for your besciamella?”.  And, to make things even more complicated, the answer I get is always the same: “Oh, you know…quanto basta!”. 

Yes – because the right amount of the tricky ingredient is always quanto basta (in English, “the right amount” or “as much as you need”)[1] – a quantity that nobody has yet managed to measure, but which has to be included in the right doses to contribute to the successful outcome of the recipe!

Applied to the gas market, how many LNG terminals does Europe need? Do we have too many gas pipelines already? Or too few? Or is the current number of gas infrastructure just the right one?

Europe has tried to answer these questions by developing a common methodology for EU infrastructure development. Regulation 347/2010 established a process with clear roles for the EU Commission, NRAs and ACER concerning the development of new infrastructures.

Regulation 347/2013 provided guidelines concerning the identification and analysis of the so-called Projects of Common Interest (PCIs) and required ENTSOG to develop a methodology for an EU-wide cost-benefit analysis (CBA) of PCIs.

The Florence School has been researching in the past on these subjects. Very recently, FSR – jointly with Deloitte – was tasked by the European Commission to look into the methodology currently used by ENTSOG for the PCI selection and CBCA processes and identify recommendable updates or improvements.

We organised an online debate on 10 March to discuss our first findings and our draft recommendations have been on public consultation until last week. FSR and Deloitte will be collecting the feedback received and shall be working at a final draft in the course of the next weeks.

So, to conclude, the main ingredients are all there: competition, liquidity, transparency of information… all in different doses they contribute to a pretty well-mixed dough.

The constant challenge is to identify the “quanto basta” level of gas infrastructures for Europe at all times, but what we can do is looking into the right methodology – to be regularly updated – to assess at least which elements should be taken into account, in the analysis of a new project.

 

[1] This is not an invention of my grandmothers. “Quanto basta” is found as q.b. in most of Italian recipes.