TSO

1
TSOs and Long-term Security of Gas Supply in
Europe
Peter A. Hodal Vice President of Gas
Transmission and System Operations, Energinet.dk
2
Framework Natural gas will continue to be an
important part of the energy-mix in Europe!

• Increasing demand for Energy in EU
• Today natural gas constitutes 24 of Europes
  energy-mix
• Expected to be at least 28 i 2030 (IEA)
• IEA (WEO 2007) estimates that EU demand for
  natural gas will increase by 1,4/year from
  2005-2030 (550 bill. m3 to 771 bill. m3)
• The fastest growing primary energy source in the
  developed world
• Gas to power generation a main driver
• The Climate issue
• Fossil fuels will continue to be an important
  part
• of the energy-mix - cannot be ruled out
  overnight
• unless dramatic fall in overall energy demand!
• Natural gas has the lowest CO2-emission of the
• fossil fuels almost 12 compared to Coal!

3
Framework Natural gas will continue to be an
important part of the energy supply in Europe!

• Characteristics/advantages of natural gas
• Main producers are close Worlds largest
  reserves in the neighbouring countries/regions -
  Russia, Norway, Africa, Middle East
• It can be traded globally
• Increasing relevance of LNG
• It can be stored

4
But also

• EU indigenous production decreasing Increasing
  import dependency
• Increased global competition on fossil fuels
  coal, oil, gas
• Secure and cheap supplies can no longer be
  taken for granted!
• Gas will have to be transported over
• longer and longer distances to
• come to Europe

5
What can be done?

• Need for massive investment in infrastructure in
  EU, particularly cross-border. IEA estimates 400
  bill. towards 2030 (of these 160 bill. on
  transmission distribution)
• Better integration of the European network,
  physically and in terms of network codes/rules,
  procedures, IT-platforms
• Diversification of suppliers/supply routes

6
What can be done?

• Necessity of longer-term contracts (but not for
  the full capacity!)
• Increased need for storage! (consequence of the
  longer transports)
• Need for European, not national, security of
  supply strategies due to falling domestic
  production,
• EU/TEN funding of strategic projects (such as the
  Nabucco feasibility study)
• Strategic storages
• Denmark already
• has such a setup

7
Market and security of supply brothers in arms!

• Suppliers (Shell) An open and competitive,
  liquid and interconnected single European market
  is crucial
• Will make gas move around quickly
• Harmonisation of rules on a European level The
  importance of an effective coming ENTSOG,
  composed by independent TSOs
• But also focus on regional strengthening to
  secure faster development of markets!
• What will help diversification of supplies? Big
  buyers with negotiating powers - or a liquid,
  competitive market with many players?!

8
The role of TSOs in gas supply security

• Security of supply lies within the
  task-portfolio of TSOs
• TSOs has the know-how, expertise and overview
• TSOs must show the necessary will and courage to
  invest the need is there!
• Necessity of improved demand-supply information
  and forecast by unbundled/neutral TSOs
• Improved options for collaboration between TSOs
  and SSOs
• Open season procedures conducted by the TSOs (in
  pairs for border points)
• Neutrality/Objectivity Independent and unbundled
  TSOs are the best to play this role!

9
What is Energinet.dk doing today?

• Denmark is currently exporter of natural gas
• But North Sea gas production
• will go off plateau within 5 yrs.
• Led to GISA - Gas Infrastructure
• Analysis project, where Energinet.dk assesses
  all options
• Diversification of supply routes

10
Does the 3d package provide the tools?

• Points in the right direction as regards security
  of supply
• Ten years statement/forecasts on a national and
  European level
• Effective ENTSOG for faster code and rule
  development (but ownership or ISO unbundling
  crucial for strong and credible ENTSOG
  development)
• ACER and the Commission are granted important
  roles to assist and ensure ENTSOG progress.
• Improved options for cross-border investments
  Regulators and ACER to secure investment
  decisions are made