Most European transmission system operators expect far-reaching changes to the way they balance their market when the upcoming EU-wide network code is rolled out over the next five years. This emerged in a report produced by the European network of transmission system operators for Gas (ENTSOG), seen by ICIS.
The balancing network code is expected to enter into force in April 2014 and will be implemented by EU states by October 2015, October 2016 or by 2019, depending decisions to be taken by national regulators.
The new code will enforce daily balancing in all EU states in a bid to boost short-term trading ( see ESGM 16 October 2013 ).
Under the new code, gas companies will face a daily imbalance charge. The aim is for shippers to trade on the market to remain as balanced as possible and limit their exposure to this charge.
The TSOs in France, Portugal and Slovakia expect to have to overhaul their systems to put in place this charge.
The TSOs in the Netherlands, Germany, Belgium, Spain, Italy, Sweden, Bulgaria and Hungary expect smaller but still considerable changes.
More than half of EU TSOs expect the need for new short-term standardised products to require considerable reform.
“Even some countries with well-developed liquid markets that already offer some short-term standardised products through trading platforms consider these provisions challenging,” ENTSOG said in the report.
The code says shippers should be able to balance their portfolios through trading gas for within-day or day-ahead delivery, either on a physical basis or through title transfers.
Only TSOs in Britain, Austria and Hungary say they will not have to change much to comply with this requirement.
TSOs in France, Germany, Ireland, Spain, Portugal, Sweden, Romania, Bulgaria, Poland and Slovakia all say they will have to undertake considerable or complete changes to their operational balancing systems.
TSOs in the UK, Italy, Spain, Portugal and Romania also expect to have to overhaul their nomination processes .
This will also need extensive coordination with adjacent TSOs, ENTSOG said.
Most countries expect to be able to move straight to market-based balancing, without having to resort to transitional measures.
The code allows transitional measures in illiquid markets, where shippers would struggle to get in and out of positions over a single day.
This could include setting up a balancing platform or introduce tolerances to reduce shippers’ financial exposure to the daily imbalance charge ( see ESGM 12 November 2013 ).
It is mainly in central and eastern Europe – including the Czech Republic, where trade has grown rapidly over the past year – and Iberia that TSOs expect to do this. Matilde Mereghetti