New pricing structure for Dutch Bergermeer gas capacity finalised

A 3TWh tranche of storage year 2017 capacity at the Bergermeer facility in the Netherlands has been tendered via a profit-sharing agreement, with another 2TWh tranche due to be auctioned on 2 March, operator TAQA has confirmed.

The majority of forward capacity at the 45.6TWh capacity site has been allocated as long- or medium-term capacity in previous auctions and open seasons, leaving 5TWh available for the 2017 cycle.

In previous years, TAQA had marketed year-ahead capacity at market-indexed prices based on the forward summer/winter price spread, preceding the start of the storage year.

The operator has changed its pricing structure for the 2017 cycle however, with 2TWh of capacity to be auctioned via a fixed-price auction and 3TWh to be tendered via a profit-sharing agreement based on TTF spreads within the storage year.

The forward summer/winter price spread at the TTF is currently close to a record low and even traded below €1.00/MWh on one occasion last week, according to ICIS trade data. This is making it difficult for storage operators and shippers to cover costs.

Profit-sharing agreement

TAQA said it had recently marketed 3TWh of storage capacity for the 2017 cycle via a profit-sharing agreement containing “a pricing structure that shifts the exposure from a summer-winter spread priced before the start of the storage year, to an exposure to spreads within the storage year.”

The cost of capacity will be based on the price spread between the TTF Day-ahead and Winter ’17 contracts between 1 April-30 September 2017, with any profits split between operator and shipper according to a “predefined percentage”, TAQA told ICIS.

During summer 2016, the front Winter ’16 contract at the TTF averaged a €2.39/MWh premium to the Day-ahead, according to ICIS closing price assessments. This was far greater than the €1.40/MWh average premium that Winter ’16 held to Summer ’16 between 1 October 2015-31 March 2016.

TAQA will use ICE Endex settlement prices to derive spread information to calculate capacity costs for its profit-sharing agreements.

Fixed-price auction

On 2 March, between 11:00-12:00 Amsterdam time, shippers will have the opportunity to bid for up to 2m standard bundled units comprising 1MWh of storage space, 0.579kW withdrawal capacity and 0.427kW injection capacity.

The auction reserve price will be equal to the ICE Endex TTF Winter ’17 premium to the Summer ’17 on 1 March, multiplied by a factor of 1.1. Interested parties can submit up to three fixed-price bids for the capacity.

The ICE Endex TTF Winter ’17 contract held a €1.139/MWh premium to Summer ’17 on 16 January, which would have derived a €1.253 reserve price when multiplied by 1.1.

TAQA said it was “providing a range of pricing methodologies to facilitate different customers’ needs as well as expanding and diversifying our pricing exposures.” jake.horslen@icis.com