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Gas

policy workshop may 2017

Event Highlights

31.05.2017

The end of the long-term contracts era: which consequences for the EU Gas Market?

Long-term contracts (LTCs) used to be the most commonly used supply agreements in the gas sector and necessary to ensure the security of supply.  Indeed, […] read more

Electricity

Event Highlights

15.05.2017

Moving the Electricity Transmission System Towards a Decarbonised and Integrated Europe

Is Europe heading towards a seamless transmission system for electricity? The establishment of a seamless electricity transmission system and the completion of a single market […] read more

Energy Law

5th Vienna Forum on European Energy Law

Event Highlights

10.05.2017

Vienna Forum on European Energy Law

The slides from the 5th Vienna Forum on European Energy Law are now available. Topics discussed at the forum included the new energy market design, […] read more

Energy Law

Event Highlights

30.04.2017

Maroš Šefčovič addresses the Energy Law & Policy workshop “Clean Energy: The New Legal Challenges”

Vice-President of the European Commission and head of the Energy Union, Maroš Šefčovič, gave a keynote address at the Energy Law and Policy Workshop on the […] read more

Energy Policy

Alberto Pototschnig

Event Highlights

3.04.2017

Cybersecurity in the Energy Sector: Where are we? What’s next?

The increasing digitalisation of the energy sector, together with bringing new technological innovations, has made cybersecurity a crucial factor when discussing the future of the […] read more

Energy PolicyRoad

FSR Regulatory Policy Workshop Series 2016-2017

Event Highlights

23.01.2017

Competition and Regulatory Aspects of Electric Vehicles Charging | Perspectives from the FSR Policy Workshop

In recent years, the EU has strengthened its commitment to reduce greenhouse gas (GHG) emissions, aiming to a 40% GHG decrease by 2030 (with respect […] read more

ElectricityGas

Alberto Pototschnig

Event Highlights

11.11.2016

FSR Regulatory Policy Workshop on “Congestion Management in the Internal Energy Market”

This FSR Regulatory Policy Workshop on “Congestion Management in the Internal Energy Market” reviewed and compared the experience with the implementation of capacity allocation and congestion management measures in both the electricity and gas sector. read more

Gas

The External Dimension of the Energy Union

Event Highlights

8.04.2016

The External Dimension of the Energy Union

The “External Dimension of the Energy Union” has now become a crucial issue at the core of European policy. Security of Supply is one of […] read more

Gas

Alberto's Workshop

Event Highlights

23.03.2016

Tariff Structures for the Internal Gas Market | FSR Regulatory Policy Workshop Series

Regulators from across the continent gathered in San Domenico to discuss the importance of transmission tariff structures in the internal gas market as part of […] read more

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policy workshop may 2017

The end of the long-term contracts era: which consequences for the EU Gas Market?

- Gas

Long-term contracts (LTCs) used to be the most commonly used supply agreements in the gas sector and necessary to ensure the security of supply.  Indeed, the current EU gas infrastructures often reflect the geography of existing LTCs.

But, as the EU gas market has undergone intense structural changes for the past 10 years, LTCs may no longer represent the most adequate instrument to comply with the market’s new requirements. Furthermore, according to a recent study of the European Commission, Cedigaz and ENTSOG, the existing long-term commodity contracts are expected to terminate in the course of the next 20 years.

Is this the end of LTCs era? If so, which are the consequences for the EU Gas Market? Are long-term commodity contracts the only way of guaranteeing the security of supply?

The Florence School of Regulation explored these topical issues on Friday 19th May, in its fourth and last meeting of the 2016 – 2017 FSR Regulatory Policy Workshops, directed by Alberto Pototschnig (ACER Director and FSR Senior Advisor). The workshop, titled: ‘The end of the long-term contracts era: which consequences for the EU Gas Market?’, analysed the main changes and challenges of the evolving gas sector.

Despite the variety of inputs which emerged during the discussion, two trends seem to be evident: just like utilities, TSOs will need to re-adapt their costs and business plans in the long run – but there is also a clear necessity for the regulatory framework to be updated, both at national and European level. Only by ensuring the regulatory flexibility required by the short-term trading system, will Europe remain competitive and continue to attract investments in the future.

Flexibility also appears to be an important feature when it comes to security of supply. Policy makers and regulators can contribute in this regard by clarifying  possible security of demand scenarios, as well as by providing access to demand through liquid markets, and access to the networks.

While a simple and univocal answer did – and could –  not be found, it clearly emerged that the era of LTCs is not (completely) over. The current challenges will have to be faced according to the current market design and to the latest variables, avoiding to impose any sort of artificial intervention or distortion in the market.