Gasunie to tackle security of supply bottlenecks

Gasunie is to extend its gas transport network at various locations to guarantee security of supply in the Netherlands and Northern Germany. The measures taken in the Netherlands will require an investment of nearly EUR 500 million, most of it to be spent on a new pipeline link between Beverwijk and Wijngaarden. These expansions are crucial for maintaining security of supply and for realising the Dutch government’s gas roundabout policy. Without them, the continued import of gas, work on storage projects and exports to domestic users in Belgium and France would become more difficult. Moreover, timely development of sufficient transport capacity will be essential to enhance flexibility in power generation through gas fired power stations. This flexibility will allow the share of sustainable energy sources to increase, while maintaining a stable energy supply as a whole.

Initial steps for this expansion project were taken in 2009 with the launch of an Open Season by GTS (Gas Transport Services B.V., Dutch transmission system operator, a Gasunie subsidiary), which combined customers’ requests for gas transport capacity to create an efficient investment programme. Because customers booked the capacity they require for a long period of time, it has been possible to put together an efficient and cost-effective investment package which facilitates the further implementation of the government’s gas roundabout policy and hence strongly supports security of supply and competition alike.

Uncertainty about the future development of the gas infrastructure
Gasunie sees however a number of major uncertainties in the future realisation of vital infrastructure projects. In past few years investments in infrastructure have taken place on the basis of a tariff regulation that allowed for sufficient return on investment. Within this framework Gasunie has initiated the current expansion project. However, in June 2010 the basis for tariff regulation (captured in the method decisions of the regulator NMa) have been annulled by the Trade and Industry Appeals Tribunal (CBb). Recently, the regulator announced a new draft regulation. This new regulation looks likely to worsen the economic basis for realising gas transport projects considerably, and will therefore also hinder the gas roundabout policy. Gasunie has made its concerns known to the regulator. Gasunie and its shareholder, the State of the Netherlands, have nevertheless decided to go ahead with the expansion project in order to safeguard the gas roundabout policy and hence security of supply for gas users and consumers.
Customers of GTS and Gasunie are also making substantial investments in the gas roundabout (for example, in an import terminal for liquid gas and in storage facilities) and they will also depend on the capacity development of Gasunie’s national grid. Customers have indicated that they will still need considerable extra capacity in the future. It is clear that a sufficiently strong investment climate will be vital, based on adequate regulation governing gas transport tariffs.

Security of supply for Germany, Denmark and Sweden
Expansions are also taking place in Gasunie’s network in Germany. They are needed to maintain security of supply in Northern Germany and Denmark as well as Sweden. One such project is the construction of a pipeline link (NEL – Nordeuropäische Erdgasleitung) between the point where the Nord Stream pipeline across the Baltic from Russia makes landfall in Germany and the German Gasunie network. This pipeline connection will – together with first extensions to the Gasunie Deutschland network – form a crucial link in the security of supply to Denmark and Sweden and provide a robust basis to build up additional gas infrastructure for future gas supplies in the Schleswig – Holstein area. Denmark and Sweden are experiencing a sharp increase in demand for gas transport capacity, partly to compensate the declining gas production in Denmark, but also to support sustainable energy development, which brings along extra flexibility need – to be provided by gas - in the energy supply. The cost of the package that has now been approved is approximately EUR 450 million. This will cover roughly half the capacity requirements. Constructive discussions with the German regulator have allowed execution of this first expansion step under difficult regulatory framework conditions. Continuation of the dialogue and tuning of some regulatory conditions would allow execution of the next steps, for which Gasunie Deutschland is continuing its planning activities by executing the permitting processes. The expectation is that demand for new gas transport capacity will rise sharply, even accelerated under the influence of the changed political framework for energy policy in Germany (“Energiewende”).

More information: press@gasunie.nl