Gas | Other
A simple implementation of pan-European storage obligations
29 April 2022
BY: Enrico Tesio , Ilaria Conti, VOLPATO Francesco
About 1,100 TWh of natural gas can be stored in 115 storage facilities in 19 countries in the EU27 area, accounting for 25-30% of European consumption in winter periods. Securing high storage filling levels can therefore reduce the impact of large demand shocks and supply disruptions on prices and gas availability in Europe. The expected winter-summer price spread is the main driver of decisions by market participants to store gas. Price expectations might not fully reflect the cost of extreme demand/supply conditions. In the past year storage filling levels have been inconsistent with the price spread realised, and remained below the historical average (10% less as of January 2022). Unprecedented price levels and potential threats to security of supply linked to dependence on Russia have led national and European institutions to consider introducing storage filling obligations. The European Commission has recently put forward a proposal that “[…] aims notably at ensuring that storage capacities in the Union, which are crucial to ensure security of supply, do not remain unused, to ensure that storages can be shared across the Union, in a spirit of solidarity. For that purpose, a mandatory minimum level of gas in storage facilities will reinforce the security of supply ahead of the winter 2022/2023 and for the following winter periods.” The Commission’s proposal provides (amongst other things): - a mandatory “filling target”: storage infrastructure in each Member State shall be full to at least 90% by 1 November each year (for 2022 the filling target is 80% because “Member States will need some time to set up the necessary measures”); - a mandatory “filling trajectory”: intermediate targets for each Member State in February, May, July and September (From 2023 onwards storage shall also be specifically monitored in February to avoid sudden withdrawals of gas from storage in the middle of the winter); - a commitment by each Member State to take all necessary measures, including financial incentives and compensation for market participants, to ensure that the mandatory filling targets are reached. We assessed the potential role of mandatory storage filling provisions in a recent policy brief which was published before the RePowerEU Communication and – most notably – before the Russian invasion of Ukraine, which triggered the Versailles agreement[1] to phase out European dependence on Russian imports. In this policy brief we propose a policy measure to ensure that a target storage filling level is achieved and maintained with the smallest possible impact on the functioning of the internal gas market. The remainder of the document is organised as follows. In section 1 we present a basic version of the proposed model. In section 2 we discuss some variations on the basic model. Section 3 concludes by assessing the impact of the proposed measure on the functioning of the European gas market.
logo cadmus Read it on Cadmus Download in open access

LATEST FSR PUBLICATIONS

Other
Rail has a key role to play in making transport more efficient and sustainable in the EU and elsewhere. However, increasing passenger and cargo volumes require investment in infrastructure, and [...]
Technical Report
In this work, we present the major application and impact areas of Contracts-for-Difference (CfDs) in a European context, describe the most relevant design dimensions and discuss several design packages for [...]
Other
After years of record announcements, frantic policy development and the establishment of substantial public support mechanisms, the clean hydrogen sector is nearing an inflexion point. Many clean hydrogen projects have [...]
Other
The safeguarding of critical offshore energy infrastructure has assumed a heightened level of urgency in the wake of the Nord Stream pipeline explosions in September 2022 and the suspected sabotage [...]
Other
The Performance Review Commission (PRC) is an independent body supported by EUROCONTROL with a remit to review and report on European air traffic management (ATM) performance. While performance has improved [...]
Technical Report
As part of the LIFE COASE project, the first Net Zero Carbon Market Policy Dialogue (NZCMPD) was held in September 2023 to discuss the latest developments and challenges faced by [...]

Join our community

To meet, discuss and learn in the channel that suits you best.

scroll

top