3 II. Capacity Allocation Mechanisms II.1. Draft Roadmap for Capacity Allocation Mechanisms (CAM Roadmap)II.2. NW Capacity Allocation PlatformII.3. Improvements in the SP-PT CAMII OSP between SP-FRII.5. Next steps and calendarArea of workResponsibleStartingDeadlineOSP France-Spain: annual allocation of short-term capacitiesTSOsNov. (yearly)Dec. (yearly)CAM harmonisation proposal (CAM pilot testing Sp‐Pt borders)NRAs-TSOsJan. 2011Jun. 2012CAM harmonisation proposal in the whole regionJan.2012Dec.2013Set up a common TSO Allocation PlatformJan.2014Dec.2014
4 II. Capacity Allocation Mechanisms II.1. Draft Roadmap for Capacity Allocation Mechanisms (CAM Roadmap)ACER/ENTSOG CAM Roadmap for Europe (for information by ACER)CAM Roadmap for SGRI (for information by NRAs)
5 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for South Gas Regional InitiativeGOAL: early implementation of the provisions from the CAM NCIn line with the Roadmap for the early implementation of the CAM NC, developing by ACER and ENTSOG.123
6 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRICapacity product definition and calendar (I)Main issues to be decided:Bundled/Virtual products to be offeredStandard capacity products to be prioritisedCapacity reserved for each productAllocation calendar for 2014 and onwardsIP where the products will be allocated (physical or virtual points)Coordination CMP-CAM1
7 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRICapacity product definition and calendar (II)Definition of available bundled capacity for the next 15 years (Oct ), agreement on the split of capacity (Q, yearly, 15 yearsVIP or two IP ?Common criteria on: unbundled / interruptible / backhaulMonthly capacity products have been allocated by OSP until 31st March 2014Capacity products to be offered before March 2014 for the period April September Proposal: Maintain prorate or new CAM NC?1SPAIN-FRANCE (I)
8 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRICapacity product definition and calendar (III)Proposal of Auctions:Annual quarterly capacity auction in June 2014: first Q capacity products from Oct 2014 to Sept 2015 (Q1-Q4) ---- common platformRolling monthly auction in Sept 2014 ?Daily auctions from October 2014 ?Annual yearly capacity auction in March 2014/2015: first yearly capacity products from Oct 2014/2015 (Y1-Y15)1SPAIN-FRANCE (II)
9 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRICapacity product definition and calendar (IV)Definition of available bundled capacity for the next years (Oct ), agreement on the split of capacity (Q, yearly, 15 years), Longest allocation period = 1 year ?VIPCommon criteria on: unbundled / interruptible / backhaulYearly and Monthly capacity products have been offered by auction in June 2012, from Oct 2012 to Sept 2013To be decided: Quarterly capacity product could be offered in June (Oct 2013-Sept 2014) the same methodology than last year? Yearly capacity product in March 2013?1SPAIN-PORTUGA L (I)
10 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRICapacity product definition and calendar (V)Proposal of Auctions:Annual quarterly capacity auction in June 2014: Q capacity products from Oct 2014 to Sept common platform for the first timeRolling monthly capacity auction Sept 2014 ?Daily auctions from October 2014 ?Annual yearly capacity auction in March 2014/2015: first yearly capacity products from Oct 2014/2015, for one year?1SPAIN-PORTUGA L (II)
11 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRI1Annual yearly auctions: 1st Monday of March / Y1: 1st Oct-31st SeptAnnual quarterly auctions: 1st Monday of June / Q1: 1st Oct-1st Jan.Monthly capacity auctions: 3rd Monday of each monthDaily auctions: CET D-1
12 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRIRegulatory needs (I)Auction mechanism as a default CAM in the interconnectionsMoving towards bundled and virtual capacityHarmonizing the capacity products and timeframesNew regulation need to be consistent with European NC:CMP NCBalancing NCAgreement on nomination and renomination schemesInteroperability and Data Exchange NCHarmonization of gas day / gas year- 2014Temperature to measure gas- 2014Units used to allocate capacity and sign contracts- 2014Tariffs NC:Reserve pricePrice to be paid by subscribers during all the contract life2
13 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRI2Regulatory needs (II)To be discussed:Shipper license to participate in auctions process, allowing the same shipper to book unbundled capacity. Qualification steps.Price steps definition and allocation of revenues arising from the auction among TSOsRelease of information to the market. CalendarCapacity contracts: obligation to subscribe the capacity allocated in the auction, timing, financial deposit...Responsibilities of TSOs (implementation) and NRAs (supervision)Secondary capacity market: bundled virtual capacity to remain as allocated in the auctionCoexistence of old and new contracts
14 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRI3IT SystemTo develop a single platform to allocate capacity: Best available technologies, functionalities, secure, smooth exchange of informationCalendar to join European Capacity Platform by TSOs in the SGRITSOs to develop its own IT system to integrate the information from the capacity auctionsTSOs to collaborate bilaterally to develop IT systems for nomination and renomination of bundled capacity, CMP implementation, exchange information for balancing process.
15 II. Capacity Allocation Mechanisms II.1. CAM Roadmap for SGRIWay forwardFurther discussion on this draft Roadmap with TSOs - ASAPPublic consultation of this document with Stakeholders- February 2013Final CAM Roadmap of the SGRI – March 2013Discussions and definition of the capacity products, available capacity and IT systems– April/May 2013Start of the implementation of IT systems –Summer 2013Start of proposing national regulation modification – Summer 2013.
16 II. Capacity Allocation Mechanisms II.2. North West Capacity Allocation Platform(to be presented byPlatform member)
17 (to be presented by TSOs) II. Capacity Allocation MechanismsII.3. Improvements in the Spain-Portugal allocation of capacity(to be presented by TSOs)
18 II. Capacity Allocation Mechanisms II.3. Improvements in the Spain-Portugal allocation of capacityEnagás and REN will develop a similar procedure than the previous year.The intention is to carry out the auction process during the 2Q, earlier than the previous year.Enagás and REN suggest to open a short period for comments on top of the consultation already held in October.Enagás and REN will jointly study the possibility to adapt the products to the NC on CAM subject to the approval of NRAs.
19 II. CAM II.3. Improvements in the SP-PT CAM (I) Capacity Products to be offered for the gas year 1st Oct 2013 to 30th Sept 2014:Firm yearly productsFirm quarterly productsInterruptible products if less than 95% of firm capacity has been allocated at the previous firm products auctions.IT system to allocated capacity to shippers
20 II. CAM II.3. Improvements in the SP-PT CAM (II) Annual Transmission Capacity Auction will take place in June 2013.National regulations to be aproved in advance in order stakeholders will be timely informed:Resolución CNE on methodology for the coordinated capacity allocation at the IP between Spain and Portugal.Mecanismo de atribuição de capacidade da RNTGN - ERSEInformation Memorandum and Standard Contracts: to be elaborated by TSOs describing the procedures for the annual auction (following the Draft CAM NC): rules, price steps, reserve price, capacity offered, application form, contract information, calendar…. To be approved by NRAs.
21 (to be presented by TSOs) II. Capacity Allocation MechanismsII OSP ST Capacity between Spain and France(to be presented by TSOs)
22 II. Capacity Allocation Mechanisms II.5. Next steps and calendar(for discussion)
23 III. Congestion Management Procedures III.1. CMP Roadmap (for information by TSOs)III.2. Next steps and calendar (for discussion)Area of workResponsibleStartingDeadlineCMP harmonization proposal between SP-FRNRAs-TSOsJan. 2011Dec. 2012CMP harmonization proposal between SP-PTJan. 2012Jan. 2013
24 (for information by TSOs) III. Congestion Management ProceduresIII.1. Draft Roadmap for Congestion Management Procedures (CMP Roadmap)(for information by TSOs)
25 III. Congestion Management Procedures III.2. Next steps and calendar(for discussion)
26 IV. Ten-Year Network Development Plan and Project of Common Interest (PCI) IV.1. Update on PCI Identification (for information by regulators)Area of workResponsibleStartingDeadlineRegular update and publication in CEER website of project status of OS 2013 and 2015TSOs - NRAsDec. (yearly)Jun. (yearly)Creation of a working group in the region in order to test the process of PCI identificationNRAs-TSOsApr. 2012Dec. 2012
27 IV. TYNDP and PCIs IV.2 Update on PCIs identification (I) North-South Gas Interconnections in Western Europe6th meeting held on 18 January: Previous meeting organized by EC with NRAs with the aim to know NRAs’ opinion. Summary on NRAS’ opinion on impact areasMain rule: a project must impact on at least two Member States to be eligibleClusters: projects considered in a cluster represent just one PCI.Presentation of analysis of qualitative and quantitative assessment carried out by consultants, as well as a preliminary PCIs listMain comments from attendants: impact areas, quantitative assessment (formulas application, parameters used, inputs, etc.). As a result, new calculations are being considered and a new list will be elaboratedParticipants were given time to send their opinion on impact areas and clustersNext meeting to be held in late February-early March
28 IV. TYNDP and PCIs IV.2 Update on PCIs identification (II) North-South interconnections in Western Europe
29 IV. TYNDP and PCIs IV.2 Update on PCIs identification (III) North-South interconnections in Western Europe
30 IV. TYNDP and PCIs IV.2 Update on PCIs identification (IV) North-South interconnections in Western Europe
31 NRAs-TSOs-stakeholders V. Developing hub-to-hub trading in the South regionV. 1. Proposal of models for the integration of the Spanish and Portuguese gas markets in an Iberian natural gas hubArea of workResponsibleStartingDeadlineHub developmentNRAs-TSOs-stakeholdersJan.2013Dec. 2013Hub-to-hub gas trading in the regionJan.2014Dec.2014
32 (for information by NRAs) V. Developing hub-to-hub trading in the South regionV. 1. Proposal of models for the integration of theSpanish and Portuguese gas markets in an Iberian natural gas hub(for information by NRAs)
33 MIBGASModels for the integration of the Spanish and Portuguese gas markets in a common Iberian Natural Gas HUBArea of workResponsibleStartingDeadlineAnalysis of the possible models for the integration of the Spanish and Portuguese gas markets in a common Iberian Natural Gas HUBNRAs2013Dec. 2013
34 General ObjetiveAnalysis of the possible models for the integration of the Spanish and Portuguese gas markets in a common Iberian Natural Gas HUB (National Market Areas, Regional Market Zones or Supra National Market), analyzing the advantages and drawbacks, the regulatory harmonization requisites for its implementation and a proposal roadmap for its entry into force
35 Context: European Gas Target Model The 3rd package sets a new regulatory framework for a single European Market with:Decoupled entry-exit tariff system & not based on transport routesCapacity allocation and balancing, both market-basedCompetitive & liquid markets for gas trading, with wholesale price transparency
36 Context: European Gas Target Model The European Regulators have established, as an objective at a medium term, a model of European Market based in balancing zones with organized markets interconnected through systems of entrance and exit tariffs with independent trading.In the Madrid Forum, ACER and the EC encouraged regional initiatives to develop pilot projects in the framework of the objectives of the GTM, to ensure the implementation of the common market under this model gas 2014.The European Gas Target Model has two objectives:To promote the creation of series of harmonized liquid and functional regional gas markets within the EU.To facilitate trading between these regional market.
37 Enabling functioning wholesale markets in Spain and Portugal 5.200FR ES PT4.000HHI < 2000> 3 supply sourcesDemand ≥ 20 bcmChurn rate ≥ 8RSI > 110% > 95 days per year1.90020001.600FRESPTIberiaDemand473320 bcm?6FRESPTSpain complies with most of the liquidity parameters to develop a liquid Hub, which would even become higher if considered at regional level with Portugal has no structural conditions to create a stand-alone wholesale gas market37
38 IBERIAN GAS HUBIBERIA has some conditions that favor the development of a Gas Hub:High regasification capacity.Available transport capacity.Potential bridge of gas from North-Africa to EuropeHigh volume of LNG
39 Current OTC gas market in Spain has a lack of price transparency In Spain, the OTC market (based on bilateral transactions) is used mainly as a tool used by traders to manage/optimize the stock of LNG in terminals after unloading shippersIn Spain, in terms of energy, the volume of operations associated to the OTC market is very high, particularly in regasification terminalsTransactions already closed are notified to system operator through the system MS-ATRThe CNE is in charge of publishing the traded volumes and purchasing quotas in the OTC marketOTC market has a lack of price transparencyThere are 8 balance and trading gas points in the Spanish system: the virtual point, the 6 LNG terminals and the UGS
40 Current OTC market in Spain Most of the OTC trade is done at the LNG terminals.
41 Regulatory instrument In 2010, CNE proposed a roadmap for the development of a gas exchange in SpainGeneral objectiveAccelerate the creation of a gas hub in the Spanish Gas System in order to promote competitiveness, transparency, and reduce the lack of transparency of the current OTC marketRegulatory instrument1.Guarantee of access to every potential party (traders and consumers) under objective, transparent and non-discriminatory conditions2.Trading hub3.Development of standard contracts (OTC and organized market)4.Free and transparent settlement of prices (at least for pre-defined segments of the hub)5.Offer of gas transparency services, settlement and clearing6.Potential offer of additional services, based on what demanded by agentsCreation of an gas exchange market in Spain1.Participation of traders and consumers not mandatory2.Implementation along with the introduction of gradual changes in regulation3.Creation of transparent price signals4.Search of minimum level of liquidity
42 In 2013, CNE will create a working group for the development of a gas exchange in Spain In 14th December 2012, The CNE has approved a proposal of actions in order to speed up the development of the organized market of natural gas in Spain and Portugal (Iberian Hub).The CNE has approved a working plan with the next targets: Decoupled entry – exit TPA contract models for the Spanish systemRegulatory reforms needed in the logistic model to facilitate gas trading, and the development of a market based balancing model.Report about the current situation of the gas hubs in Europe and Monitoring the development of the different market platforms in Spain.Analysis of the model for the Iberian gas market (for Spain and Portugal), to be realized in the framework of the South-European Regional Initiative from the European Regulators Group.
43 Current initiatives to develop a gas exchange in Spain/Iberia Two existing initiatives to develop a gas trading platformSociedad Promotora Bilbao Gas Hub, S.A.MIBGAS, S.A.TRADE MARK:MIBGAS is within the group of the Iberian Power Market Operator (OMI).STAKEHOLDERS:ENAGAS (main gas TSO), Kutxabank , La Caixa,EVE, Generalitat de Cataluña, and other suppliers in processSTAKEHOLDERS:OMIP (Portugal) and OMEL (Spain)
44 How to enable functioning wholesale markets according with the Gas Target Model? Different pictures all over Europe call for different approaches which are not mutually exclusiveIf a country is capable of establishing a functioning market itself the establishment of one (or two, based on C/B analysis) zone within this country is important (e.g. GB, Germany, France, Spain);If a country is not capable of establishing a functioning market itself (e.g. due to lack of liquidity or size)Cross-border market areas (full merger) is one solution; orAccess to a larger, already functioning market; orTrading Regions – a single cross-border zone for wholesale markets with congestion-free interconnection to national end-user zones.
45 Possible models to study for the Iberian Market 1. The Market Area Model (full integration)2. The Trading Region Model (full integration, except national balancing)3. The Implicit Allocation Model (One single Iberian wholesale platform, with implicit allocation of capacity)4. Two National wholesale markets (no Iberian market integration)
46 1 The Market Area Model (full integration) Features (open to discussion):One virtual point for wholesale tradingFully integrated wholesale marketOne balancing zone from import points to final customersFull integration of DSO networksSingle set of balancing rulesSingle balancing entityCountry AMarket Area AVPNational market areaFinal customers (A)Country ACountry BMarket Area ABCross-border market areaVPSymbolsVirtual point of the market area serving as the sole marketplace of the market areaEntry or exit contractExit contractVPFinal customers (A)Final customers (B)46
47 2 The Trading Region Model (full integration, except balancing) Features (open to discussion):One virtual point for wholesale tradingFully integrated wholesale marketTrading region is basically kept free of imbalancesFinal customers are balanced in national end user zones that may reflect national specificsEnd-user balancing may be done by national balancing entityCongestion-free interconnection between trading region and end user zones through the common virtual point ( virtual exit to end user zone)Country ACountry BTrading Region ABVPEnd user zone AEnd user zone BFinal customers (A)Final customers (B)Legend and SymbolsEntry or exit contractExit contractVirtual point of the trading region serving as the sole marketplace of the trading region and all attached end user zones. Shifting of gas between trading region and end user zone is done by nominating a virtual exit on the VP.End user zone = National balancing zone for national final customers, no matter the system (distribution or transmission) they are connected toTrading Region AB = Cross-border entry/exit system including all nominated points on the transmission systems of countries A and BVP
48 3. The Implicit Allocation Model Interconnection capacity is being reserved for implicit allocationFeatures (open to discussion):One single Iberian Wholesale Gas Trading platformA certain amount of daily firm cross-border capacity is reserved to allow implicit allocation of capacityCross-border capacity is allocated through the trading activity.Combining order books (buy / sell orders) of the exchanges on either side of the borderCross border capacity would be allocated by the Market Operator at the same time of the matching of buy and sell orders.The Market Operator will inform the TSO about the cross border nomination of gas, and will pay the capacity price (if any)The price of the cross border capacity is added to the orders matched among the two countries. Price arbitrage happens automatically.Market participants make “bids” and “offers” for buying or selling of gasThe implicit mechanism matches those bids and offer with the highest price differencesCapacity is automatically assigned once a trade is made until cross-border capacity is sold out or prices have converged
49 IBERIAN GAS HUB Proposal of Schedule Draft document analyzing the advantages and drawbacks of the possible models, the regulatory harmonization requisites for its implementation by CNE – ERSE (2013 Q-2)Public hearing (2013 Q-3)Analysis of stakeholders responses to the public hearing (2013 Q-4)Final document to be approved by CNE- ERSE ( Q1)
50 VI. Review of actions in the WP 2011-2014 (I) Areas of workResponsibleStartingDeadline
51 VI. Review of actions in the WP 2011-2014 (II) Areas of workResponsibleStartingDeadline