Decision on introducing daily gas balancing due in a year - ENTSO-G

12 November 2013 12:09 Source:ICIS

European system operators have a year to decide if they will introduce EU-mandated daily balancing by October 2015 or apply to delay its implementation, the European network of transmission system operators for gas (ENTSO-G) told ICIS last week.

The balancing network code is expected to enter into force in March or April 2014. The code was approved by the European Commission’s internal committee on 1-2 October. It now needs to be approved by the European Parliament and Council, which should come within three months. The new code will introduce daily balancing in all EU states in a bid to boost short-term trading and provide clearer price signals, especially in emerging markets, European Commission representative Tanja Held had said ( see ESGM 16 October 2013 ).

The code should be implemented by October 2015, but transmission system operators (TSOs) can apply to delay bringing it in by one year or use transitional measures up to April 2019 before fully implementing the code.

If TSOs want to use transitional measures for five years, they need to apply to the relevant regulatory authority within six months of the entry into force of the code. If all goes to plan that would be around September or October 2014.

Transitional measures

If the liquidity of the short-term wholesale market in a country or market area is insufficient for the formation of a balancing market, balancing should take place on a separate platform. If a balancing platform fails to boost liquidity then alternative balancing services should be formulated, under the guidance of the relevant regulatory authority.

Market-based balancing

When the code is in place, TSOs will use the wholesale market as much as possible to balance, buying and selling short-term standardised gas products. They will only carry out residual balancing after exhausting the possibility of buying gas on the market.

The European Federation of Energy Traders, EFET, welcomed the latest version of the code. “We are pleased to see that the final version of the EU gas balancing network code retains the core requirements. Market participants will be financially liable for their portfolio imbalances at the end of the day and TSOs must first access the local market to buy or sell short-term gas if linepack flexibility is insufficient.”

According to the association, the code could lead to a “new impetus” in the development of day-ahead and within-day gas markets at virtual trading points throughout Europe. Matilde Mereghetti

By Matilde Mereghetti