Exchange-based balancing to boost TTF liquidity from June

The Dutch natural gas transmission system operator (TSO) GTS has said it will switch procurement of Within-Day gas for balancing purposes to the European ICE Endex commodity exchange from 3 June.

According to Dutch regulator ACM, the EU-driven move towards a more market-based balancing regime is likely to boost liquidity at the Netherlands’ TTF hub. GTS said it made the switch in order to comply with the EU’s balancing code, which has to be implemented by 1 October 2015.

The new procurement model will replace a portfolio of balancing tools currently offered by GTS, including the bid price ladder (BPL), the call correction factor and the incentive component.

Instead of these tools, GTS will launch a new Linepack Flexibility Service (LFS), which includes penalties to be paid by shippers who are imbalanced at the end of the gas day. The TSO is currently developing a new screen on its website in order to make usage and costs of the new service visible to the market.

Generally, GTS will be able to buy two different products at the exchange, depending on the extent of the imbalance.

In urgent cases, the TSO will buy or sell the 1-hour product, which means gas will start to be delivered or withdrawn within one hour after the balancing action was first called, with the delivery itself also lasting an hour. In less urgent cases, GTS will go for the end-of-day product, with deliveries starting three hours after the action was called and lasting until the end of the gas day.

The initial plan to launch the regime from 1 April was postponed to allow ICE Endex more time to test the new system ( see ESGM 22 November 2013 ). The exchange already offers TTF Within-day trading, but said the new balancing products would require an extension of its existing service.

Total traded TTF Within-day volumes via the ICE Endex rose by 64% year on year in 2013, reaching 905GWh last year, according to data provided by the company. Kirsty Ayakwah