2. RO-HU-AT - a pilot project for incremental capacity
GRI SEE
13 December 2016, Bucharest
RO-HU-AT - a pilot project for incremental capacity
How to develop functioning markets?
Infrastructure needs and initiatives for Europe
RO-HU-AT - a key project for Central and South-East Europe

3. Starting Point 2014 Network users indicated non-binding demand for
long term transportation services
potential natural gas supplies originating
from an upstream project initiative
in the Black Sea
from Romania (RO)
via/to Hungary (HU)
and further on to Austria (AT)

4. Physical gas flows in the region

5. PCI ROHUAT
Expansion and refurbishment of the existing gas transportation systems

6. New gas route - ROHUAT

7. Incremental capacity process
To coordinate the process and to find suitable solutions in the framework of the incremental capacity
Regulatory Authorities
To express the need for new infrastructure
To support the initiative to give valuable inputs
Network users
TSOs
To prepare the open season/ incremental process
To plan the necessary construction works

8. The following 3 allocation methods have been consulted
Market survey
A market survey on different capacity allocation methods was conducted by the TSOs in February 2016
The following 3 allocation methods have been consulted
13 responses form market participants

9. Method 1 Market integration
Ascending clock auction algorithm according to Art. 17 of the CAM NC
Bundled capacity offered as single years in the auctions

10. Allocation rule core logic:
Market integration
Method 2
3 allocation rounds foreseen
Allocation rule core logic:
Round 1: 15 year commitment for both IPs
Round 2: 1 year commitments for both IPs
Round 3: 1 year commitments for single IPs (same as Mechanism 1)
Round 1
Round 2

11. preferred option according to outcome of market survey
Market integration
Method 3
Bundled capacity offered as single years in the auctions (same as Mechanism 1)
If demand > offer, capacities shall be allocated on the basis of the highest individual bidder commitment in all auctions conducted throughout the period of 15 years at IP Csanádpalota and IP Mosonmagyaróvár
Allocation rule core logic:
NU contribution = price IP1 * demanded capacity IP1 * number of years
+ price IP2 * demanded capacity IP2 * number of years
Method 3
preferred option according to outcome of market survey

12. Main milestones
OS consultation phase

13. Main phases of the Binding OS
Return countersigned contract to participants
Confirmation customers registration by TSOs
Pubblication of the first results by TSO
Publication of the final results
Confirmation of the final results
Customer registration announcement of the biding Open Season Procedure
Operational start-up
1 October 2022
Bid revision II
Economic test II
Bid revision I
Economic test I
Submission of bids
Customer registration
Consultation phase – – – – – – –

14. Interconnection points
Relevant interconnection points (IP)
RO/HU Csanádpalota (IP1)
in both directions
HU/AT Mosonmagyaróvár (IP2)
just in Austrian direction

15. Capacity products & tariffs

16. Capacity products & tariffs

17. Examples
Routes & Tariffs

18. Tariffs overview (in local currency)
18 CZK/kWh/h/y
3,922 €/kWh/h/y
3,944 €/kWh/h/y
32,8 $/1000 m3
0,77 €/kWh/h/y
2,6 €/kWh/h/y
2,69 % m3
VTP
4,46 €/kWh/h/y
0,77 €/kWh/h/y
3,31 €/kWh/h/y
631,25 HUF/kWh/h/y
631,25 HUF/kWh/h/y
98,72 HUF/MWh
2539,15 HUF/kWh/h/y
15,873 Lei/MWh/h
12,47 $/1000 m3 ?
4,31 Lei/MWh
1,81 Lei/MWh/h ?
1,84 Lei/MWh/h

19. Tariffs overview (in Euro)
0,669 €/kWh/h/y
3,922 €/kWh/h/y
3,944 €/kWh/h/y
23,55 €/kWh/h/y
0,45 €/MWh
VTP
0,77 €/kWh/h/y
2,6 €/kWh/h/y
4,46 €/kWh/h/y
0,77 €/kWh/h/y
3,31 €/kWh/h/y
2,016 €/kWh/h/y
0,296 €/MWh
2,016 €/kWh/h/y
0,296 €/MWh
8,111 €/kWh/h/y
3,535 €/kWh/h/y
0,96 €/MWh
9,17 €/kWh/h/y ?
1,58 €/kWh/h ?
0,96 €/MWh
1,82 €/kWh/h/y

20. Possible routs to VTP AT
ROHUAT

21. Possible routs to VTP AT
RO HU SK AT
VTP

22. Possible routs to VTP AT
RO UA SK AT
VTP

23. Transportation cost different routs to VTP AT

24. Ranking of Bids results
Examples
Ranking of Bids results

25. Bid results with overbooking
fill or kill

26. Bid results without overbooking
fill or kill

27. Examples Austrian side
Economic test

28. Austrian coordinated network development plan 2017-2026

29. Determination of the economic viability (Austrian side)
The economic tests (Economic Test I and Economic Test II) for incremental capacity at the entry point Mosonmagyaróvár are based on the following parameters:
PVAR = EUR
f = 0.75
PVUC ≥ EUR
The economic test will be positive if the value of binding commitments of network users is equal to or higher than EUR.
As the allocation of all incremental capacity at the reference price (i.e €/kWh/h/y) would not generate sufficient revenues for a positive economic test outcome, a mandatory minimum premium (i.e €/kWh/h/y) (supplement) is applied for the allocation of the incremental capacity.
The mandatory minimum supplement has been calculated based on the assumption of kWh/h/y minimum booked incremental capacity for 15 years in a row.

30. Determination of the economical viability
Conditions for the calculation of the mandatory minimum premium:
30% of the technical capacity flat booked for 15 years
25% of the total costs socialized on existing IPs

31. Determination of the economical viability
base case: generated revenues

32. Determination of the economical viability
base case: generated revenues

33. Determination of the economical viability
Tariff composition for the base case

34. Negative economic test

35. Negative economic test
to be reallocated to top of the initial mandatory premium

36. Negative economic test
Increasing of the minimum mandatory premium part of the tariff
∆ +1,64

37. Positive economic test

38. Positive economic test
to be subtracted from the initial mandatory premium

39. Positive economic test
decreasing of the minimum mandatory premium part of the tariff
∆−𝟎,𝟖𝟗𝟐

40. Overall economic tests
The project will be realized if all
the 4 economic tests in direction RO -> VTP AT will be positive
the 2 economic tests at the IP Csanadpalota will be positive

41.  alessandro.ischia@e-control.at  www.e-control.at  
Contact

43. Open season platform?

44. Main phases of of the Binding OS
Milestone
Date
Consultation Phase –
Announcement of the Binding Open Season Procedure
Customer Registration –
Confirmation Customer Registration (TSOs) by
Submission of bids –
Economic Test I –
Bid revision I –
Publication of first results (TSOs)
Confirmation of final results (Participants)
Economic Test II –
Bid revision II –
Publication of the final results (TSOs)
Return countersigned contract to Participants

45. Incremental process time line
Execution of the open season
Definition of the „rule book“ of the open season
Market survey on different capacity allocation methods was conducted by the TSOs in February 2016,
Project development
TSO coordination PCI 6.24 capacity of 4,4 bcm is expected to be available at latest in 2022
Upstream project initiative
2015
Q1 2016
Q4 2016
Q1-Q2 2017
2014
Timeline

46. Next steps
to provide tariffs applying the new methodology acc. to TAR NC by March 2017
“Rule book” prepared by TSOs
Open season to be carried out in 2017 in parallel to the yearly auction in accordance with the CAM-auction calendar
put into operation 2nd phase (4.4 bcm/y) depending on when the FID will be taken, latest for 2022

47. Possible routs to VTP AT