Roundtable - lsta.lt Sea_Roundtable.pdfBaltic Sea Roundtable 22 September 2016 Vilnius Sweden World...
Transcript of Roundtable - lsta.lt Sea_Roundtable.pdfBaltic Sea Roundtable 22 September 2016 Vilnius Sweden World...
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3rd WEC Baltic Sea
Roundtable Vilnius, Lithuania
22/09/2016
Hosted by
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Opening words
Rymantas Juozaitis Chairman of Lithuanian Member Committee of the WEC
2
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Germany
• Dr. Hans-Peter Boehm, Vice President Government
Affairs, Siemens AG
• Dr. Carsten Rolle, World Energy Council Germany
3
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Sweden
• Maria Sunér Fleming, Director Energy and Climate
Policies, Confederation of Swedish Enterprise
• Birgitta Resvik, Head of Corporate Relations, Fortum
• Inge Pierre, Secretary, Swedish Member Committee of
the World Energy Council
4
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Finland
• Martti Kätkä, Senior Advisor, Technology Industries of
Finland
5
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Latvia
• Uldis Bariss, Member of the Management Board,
Latvenergo AS, Chief Commercial Officer
• Dr.sc.ing. Gatis Junghāns, Member of the Management
Board, AS „Augstsprieguma tīkls”, Member of the Board,
Latvian MC/WEC
• Dr. sc. ing. Ivars Scerbickis, Head of Operation unit
"Incukalns underground storage" of JSC "Latvijas Gaze",
Member of Latvian MC/WEC.
• Indra Niedrīte, Ph.D candidate, Riga Technical University
• Namejs Zeltiņš, President of Latvian MC/WEC
6
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Estonia
• Prof. Arvi Hamburg, Tallinn University of Technology
• Mihkel Härm, Secretary General, WEC Estonia
7
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Lithuania (1)
• Rymantas Juozaitis, Chairman of the Lithuanian Member
Committee of the WEC
• Gintaras Adžgauskas, Secretary of the Lithuanian
Member Committee of the WEC
• Rolandas Zukas, General Director at UAB "EPSO-G"
• Vidmantas Salietis, General Director at „Energijos
tiekimas“, UAB
• Aistė Krasauskienė, Head of the Market Development
Division at Litgrid, AB
• Vytautas Čekanavičius, General Director at LITGAS UAB
• Saulius Bilys, General Director at Amber grid, AB (the
operator of Lithuania’s natural gas transmission system)
8
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Lithuania (2)
• Vladas Paškevičius, President of Lithuanian Electricity
Association
• Valdas Jurkevicius, Expert at Lithuanian district heating
association
• Prof. Dr. Habil. Jurgis Vilemas, President of the
Lithuanian affiliate of the International Association of
Energy Economics.
• Viktorija Petrėtienė, Director of the National Lithuanian
Energy Association
• Ugnė Bartašiūtė, Executive assistant to the CEO of
Lietuvos Energija
9
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AGENDA
• Opening words by Rymantas Juozaitis, Chairman of
Lithuanian Member Committee of the WEC
• Opening words by Einari Kisel, Europe Regional
Manager for WEC
• First contribution round: Electricity market design issues
in the Baltic Sea region
• Discussion
• Break
• Second Contribution Round: Creation of gas market
around the Baltic Sea
• Discussion
10
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Lithuanian MC/ WEC
11
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Members forming Lithuanian Member
Committee of the WEC
1. National Lithuanian Energy Association
2. Lithuanian District Heating Association
3. Lithuanian Biomass Energy Association LITBIOMA
4. Lithuanian Power Producers Association
5. Lithuanian Wind Power Association
6. Lithuanian Electricity Association
7. Lithuanian Energy Consultants Association
8. Lithuanian Nuclear Energy Association
9. Lithuanian Hydropower Association
10.National Energy Experts Association
12
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Structure of fuel used in Lithuanian
district heating sector
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Dynamics of average price for natural gas and
biomass, Euro/ toe (with transportation, capacity and
other fees)
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Opening words
Einari Kisel Regional Manager for Europe
WorldEnergyCouncil
15
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Electricity market design
issues in the
Baltic Sea region
First contribution round
16
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LITHUANIA
Aistė Krasauskienė
Head of the Market Development Division at Litgrid, AB
17
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LITHUANIA
Vidmantas Salietis
General Director at Energijos Tiekimas, UAB
18
Challenge No 1 – motivation of power producers
Challenge No 2 – different regulatory approaches
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GERMANY
21
Dr. Hans-Peter Boehm
Vice President Government Affairs, Siemens AG
Dr. Carsten Rolle
World Energy Council Germany
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SWEDEN
22
Maria Sunér Fleming
Director Energy and Climate Policies, Confederation of
Swedish Enterprise
Birgitta Resvik
Head of Corporate Relations, Fortum
Inge Pierre
Secretary, Swedish Member Committee of the World
Energy Council
Baltic Sea Roundtable 22 September 2016 Vilnius Sweden
World Energy Council
Production and flow in the Nordic/Baltic market
24
Total export / import
Export Sweden 1 709 MW
Import Denmark 2 277 MW
Export Norway 3 635 MW
Import Finland 2 542 MW
Export Estonia 233 MW
Import Latvia 303 MW
Import Lithuania 465 MW
Picture of 2016-09-21 at 10.00
The agreement on Swedish energy policy raises some questions
• The Green certificate scheme will continue post 2020
with an additional 18 TWh until 2030
• A political vision of 100% RES power system in 2040
– How to ensure a controlled transition to the fully renewable
system without destroying profitability of the generation which
require extensive investments now
• The tax on nuclear in Sweden will be lowered
– And most probably 6 reactors will fulfill the requirements of
independent cooling and still be running 30 years?
• Also tax on hydro will be lowered
• Can the “oversupply” be exported?
25
Regeringen, Moderaterna, Centerpartiet och
Kristdemokraterna presenterar en överenskommelse om
Sveriges långsiktiga energipolitik 10.6.2016
-50
0
50
100
150
200
2015 2020 2025 2030 2035 2040
TW
h
Electricity mix in Sweden with 100% RES power system in 2040
Net exports
Other
Wind
Solar
Hydro
Biomass
Fossil
Nuclear
Realised figures
Increasing wind power production will be largely exported to neighbouring countries
The system will stay in constant oversupply which may undermine the
profitability of market based generation
26
0
20
40
60
80
100
120
Nuclear Gas Coal Wind onshore
Wind offshore
Solar Hydro Woodchips
€/MWh
Indicative ranges for different production type LCOE's
Onshore wind in the north and solar in the south are becoming the least expensive alternatives when investments in new generation are necessary
Upper part with
actual load factor
in 2015, lower part
for base load
Onshore wind
is the least
expensive
Nuclear costs
have inflated in
the past years
due to new safety
requirements
Solar is expensive
and does not fit well
in the Nordic demand
profile but very
competitive in the
southern countries
Disclaimer: The presented figures do not represent
Fortum’s own view on the levelised costs of electricity
*Data from: World energy council 2013, Cost of energy technologies / European PV Technology Platform Steering Committee, PV LCOE working Group: PV LCOE in Europe
2014-30, Final report / IRENA: Renewable power generation costs in 2014 / Fraunhofer: Levelised cost of electricity, Edition November 2013 / Elforsk report: Electricity from new
and future plants 2014 /Lazard’s Levelised cost of energy analysis 9.0. Calculations are made assuming the cost of capital 7%.
27
Onshore wind and solar PV breaking records with PPA contracts
28
28
Germany 69,4 €/MWh
United States 58,0 €/MWh
Chile 26,0 €/MWh
India 57,7 €/MWh
Jordan 54,5 €/MWh
UAE 26,7 €/MWh
South Africa 58,0 €/MWh
1. Sources: announcements by the investing companies and IEA report ”Renewable Energy Medium-Term Market Report 2015” for US, Brazil, South Africa, Australia and Jordan. Values reported in nominal EUR, 1 EUR = 1,12 USD, 1 EUR = 75,3 INR, 1 EUR = 9.48 SEK. United States values calculated excluding tax credits. Typical contract lengths are 15-25 years. The prices indicate levels with which investors have been willing to invest, however, they may not describe the actual comparable costs as the bid prices may be reduced by preferential land prices, site exploration cost, targeted low-cost loans etc.
2. The price level at which investors can hedge their renewable production for the next 4 years: average of 2017-2020 electricity (LUL) + elcertificate futures with 29.8.2016 closing prices. This low price levels still result in continuation of investments in onshore wind in Sweden.
Peru 42,9 €/MWh
New world-record
Mexico 31,7 €/MWh Peru
33,1 €/MWh
United States 42,0 €/MWh
Marocco 26,8 €/MWh
Brazil 43,8 €/MWh
Netherlands 73 €/MWh
Australia 61,6 €/MWh
Solar PV
Onshore
Offshore
Lowest recently announced long-term PPA contract prices and auction results,
without subsidies1
South Africa 45,5 €/MWh
Sweden2
36 €/MWh
Denmark 63,8 €/MWh
As wind and solar have become mature generation technologies, the market will continue bringing RES investments w/o subsidies when and where needed
• One cannot assume the Nordic power market to continue
ensuring security of supply
– if massive investments in weather dependent generation continue
happening irrespective of the signals given by the market,
– if the consumer prices continue being five-ten times higher than
the wholesale prices,
– and if the power grid remains incapable of transferring the
oversupply of renewable power to the centers of consumption
• Several actions required to keep the efficiency of the Nordic
electricity market:
– Gradually abolish subsidies for mature RES
– Steer decarbonisation through efficient carbon pricing
– Clear energy bills from taxes and subsidy costs to reveal
the real price of electricity
– Regional capacity adequacy assessment and grid
development
– Development of the after-spot markets to engage all
balancing resources in the market
29
The overcapacity in summer will be the real challenge
2016-09-28 30
Capacity
(MW)
2030 cold winterday, no wind 2030 summerday, very windy
Hydro 13 568 3 000
Nuclear 6 390 3 000
Wind 1 430 11 000
CHP 6 300 0
Total capacity 27 688 17 000
Demand 24 000 - 28 000 8 000 - 12 000
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FINLAND
31
Martti Kätkä
Senior Advisor, Technology Industries of Finland
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LATVIA
32
Uldis Bariss
Member of the Management Board, Latvenergo AS, Chief
Commercial Officer
Dr.sc.ing. Gatis Junghāns
Member of the Management Board, AS „Augstsprieguma
tīkls”, Member of the Board, Latvian MC/WEC
view on
functioning and developing
of Baltic gas and electricity
markets
Uldis Bariss
Vilnius 21–September–2016
35% of Baltic gas consumption goes to energy sector
Total Baltic gas consumption in 2014 was 46.2 TWh
• 7 % households
• 58 % business clients
• 35 % energy sector
7%
58%
35%
households
business clients
energy sector
pence/therm EUR/MWh SPOT SPCTNBPQFR1
Corelation between gas prices and electricity prices
Factors (Measurment Units) Correlation value
Hydro Balance NO+SE - 64%
Coal Index (Front Month) - 21%
NPB Gas (Front Month) 27%
Brent Oil (Front Month) 34%
Nord Pool Consumption 40%
CO2 EUA, (Front Year) 48%
Natural gas price volatility
Natural gas market prices appear to be at least as volatile as those in power markets
Day-ahead prices are highly correlated in Europe’s major gas delivery points, andare
likely to have an impact on the price direction in the Baltic region
Dutch TTF price volatility during the last three years has been 24%
British NBP price volatility during the last three years has been 26%
Both indices have demonstrated a correlation coefficient of 96%
Front year calendar contracts have demonstrated correlation with European power
prices and followed their general tendencies
Distribution of NBP day-ahead price chages Distribution of TTF day-ahead price changes
Global gas derivatives’ market fundamentals
Forward prices in global gas markets are typically driven by seasonality factors
The price volatility in delivery stage require instrument depth and liquidity in certain
calendar product types
Without a well-functioning financial market, the market players are forced to take on
exposure in seasonal gas consumption and price volatility, when hedging a standard
gas consumer
Oct-YR16 13.27
Nov-YR16 15.18
Dec-YR16 15.18
Jan-YR17 14.99
2017 15.00
2018 15.55
2019 15.60 0
5
10
15
20
25
30
Dutch TTF front year price
Gas capacity is not utilized
Current entry-exit tariffs gives incentives for long term capacity products not favorable for
electricity market
More emphasis should be on rolling day ahead capacity products
There are no transmission grid congestion in the Baltic grid
In 2014 on the GetBaltic exchange 2.5% of total Baltic demand were traded
Kotlovka
325GWh
Klaipeda
47GWh
Kiemenai
67GWh
Paneriai
33GWh
Kursenai
17GWh
Panevezys
29GWh
Kaunas
43GWh
Karksi
74GWh
Varska
42GWh
Narva
32GWh
installed
capacity
GWh/day
Installed Capacity
(mil m3/day)
Average usage
(% of installed)
MAX used
capacity
(% of installed)
RUS-EE (Narva) 3.00 3% 3.3%
RUS-EE (Varska) 4.00 5% 32.5%
LV-EE (Karksi) 7.00 14% 35.7%
LT-LV (Kiemenai) 6.40 3% 9.4%
LNG-LT (Klaipeda) 4.46 28% 64.1%
RUS-LT (Kotlovka) 30.68 36% 69.4%
RUS-LT (A. Paneriai) 3.07 15% 70.7%
LT (Kaunas) 4.00 7% 45.0%
LT (Kursenai) 1.60 12% 56.3%
LT (Panevezys) 2.70 7% 11.1%
Thank you for your attention!
Contact information
http://www.latvenergo.lv
AS „Latvenergo”
Pulkveza Brieza iela 12, Riga, LV-1230, Latvia
Baltic power market challanges
3rd WEC Baltic Sea Roundtable
22nd September 2016 in Vilnius
40
Dr. sc. ing. Gatis Junghāns, Member of the Management Board, AS „Augstsprieguma tīkls”,
Member of the Board, Latvian MC/WEC
Baltic power market at a glance
• Annual demand 25 TWh, production 19 TWh.
• Baltic market model largely based on Nordic market model.
• 100% liberalized, 90% deregulated.
• Implemented day-ahead market (Elspot market share >90%) and intra-day market (Elbas).
• All interconnections 100% allocated to market players via Nord Pool implicit auction.
• Highly competitive retail market in non-household segments.
41
42
Baltics increasingly integrated into European market 2006 2016
In 2016 total installed capacity of Baltic external interconnections exceed Baltic
peak demand.
700 MW
1000 MW
500 MW
Uneven playing field with 3rd countries
• Lack of reciprocity in market opening (import/export monopoly from 3rd countries).
• Unequal access to interconnection capacity (3rd country importer does not pay congestion rent).
• Unequal treatment of CO2 emissions in EU vs 3rd countries.
43
Fragmented Balancing Market
Needed developments in the future:
• Common Baltic harmonized imbalance settlement model.
• Common Baltic harmonized balancing market.
• Integration of Baltic balancing market and imbalance settlement model with the Nordic market.
44
Undeveloped Financial Market
• End-users predominantly prefer fixed-price contracts, typically 1-3 years long. Suppliers are exposed to volatile spot price.
• Nasdaq OMX listed EPADs are not liquid;
• Prohibitively wide bid-ask spread.
• FTR Options could be possible solution, but currently auctioned only on one interconnection (EE-LV).
45
72%
31%
75%
5%1%
78%
30%
64%
1% 2%
System SE4 HEL (FI) SYTAL (EE) SYRIG (LV+LT)
Use of local EPADs, as % of underlying consumption
2015 2016
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
SYRIG SE4 HEL
Eur/
MW
Average spreads in EUR/MWh, June - August 2016
Monthly products Quarterly products Annual products
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ESTONIA
46
Prof. Arvi Hamburg
Tallinn University of Technology
Mihkel Härm
Secretary General, WEC Estonia
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Key points of electricity market design
1. Wholesale and retail markets have to be market based and regional
• Technology neutrality
• Subsidy phase-out
• Scarcity pricing
2. More cooperation is needed to enhanced security of supply
• Synchronization to EU
• Regional generation adequacy assessment
• Wait with capacity mechanisms
3. Closer regional cooperation
• Level playing field with 3rd countries
• More joint task forces
47
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Discussion
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BREAK
49
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Creation of gas market
around the Baltic Sea
Second contribution round
50
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LITHUANIA
Rolandas Zukas
General Director at UAB “EPSO-G”
51
Creation of Regional Gas Market: Objectives, Steps, Effects
Rolandas Zukas, General Director at UAB “EPSO-G”
3rd WEC Baltic Sea Roundtable, September 22,
2016
Strategic Objective: Well Interconnected
Competitive Baltic Gas Market
53
Demand, bcm/y 2010 2015
Finland 4.5 2.4 -46%
Estonia 0.7 0.5 -29%
Latvia 1.7 1.3 -24%
Lithuania 3.1 2.3 -26%
Total Region 10.0 6.5 -35%
Implementation:
Creation of single entry-exit zone - with liquid virtual trading point, - where market integration is served by appropriate levels of
infrastructure, - which is utilized efficiently and enabling all consumers to
benefit from secure gas supplies and effective retail competition
Regional Gas Market Integration: Infrastructure
54
Balticconnector 2019
Enhancement of Estonia - Latvia interconnection (reverse flow) 2019
Modernisation and expansion of Incukalns Underground Gas Storage 2025?
Enhancement of Latvia - Lithuania interconnection 2021?
Capacity enhancement of Klaipeda - Kiemenai pipeline in Lithuania (KKP) 2015
Gas Interconnection Poland - Lithuania (GIPL) 2019* New technical proposal from PL received, therefore slight delay possible
Regional Gas Market Integration: Common Rules
55
Single market zone
• A single entry-exit zone between LT, LV, EE can be formed immediately and with FI – when Balticconnector is built
• IPs between the Member States are commercially removed
• No capacity products are sold and booked there
Single virtual trading point
• A virtual area between all the entry points and all the exit points in the merged market zone
• All trade of gas is conducted in this area
Single balancing zone
• Harmonised balancing and settlement regime
Market area manager – one stop shop
• A joint venture of the TSOs of the merged market zone
• The company manages balancing and settlement
• Potentially: provides gas exchange services and manages capacity allocation
United tariff regime and inter-TSO compensation
• Regime that minimises distributional impacts
• Facilitates competitive gas price formation
Interim stages of market reform possible
GIPL – Key Role as Regional Gas Market Integrator
56
• Integration of the isolated gas markets of the Baltic countries (and Finland) into a single EU gas market
Effects:
• Price convergence
• Interconnection of LNG terminals in Baltic Sea – higher flexibility for LNG supplies
• Diversification of gas supply sources, routes and counterparties
• Increased security and reliability of gas supplies
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GERMANY
57
Dr. Hans-Peter Boehm
Vice President Government Affairs, Siemens AG
Dr. Carsten Rolle
World Energy Council Germany
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SWEDEN
58
Maria Sunér Fleming
Director Energy and Climate Policies, Confederation of
Swedish Enterprise
Birgitta Resvik
Head of Corporate Relations, Fortum
Inge Pierre
Secretary, Swedish Member Committee of the World
Energy Council
Natural gas in Sweden
M Hedgran
Swedish gas grid
Gothenburg
Key data
Gas system built 1985 – 1988
Supplied by Danish sources during the whole period – the only supplier
3% of end-use energy in Sweden
Customers: 45 % industry, 35 % CHP
First connected biogas plant late 1990 - today 8 plants
The development of the CNG market for transportation is based stand-alone filling stations outside the grid area. Southern part of Sweden is covered.
A few LNG harbours have been built last years – for transport and industrial use primarely
M Hedgran
Outlook for gas in Sweden
• No political support for natural gas or LNG at all – rather the opposite
• Taxes for natural gas not benefiting use – eg. users pays full carbon tax (> 100 Euro/ton CO2) outside EU ETS
• Most probably only one CHP using natural gas plant in operation this winter
• Biogas production under development for transport sector, but expensive today
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FINLAND
63
Martti Kätkä
Senior Advisor, Technology Industries of Finland
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LATVIA
64
Dr. sc. ing. Ivars Scerbickis
Head of Operation unit "Incukalns underground storage" of
JSC "Latvijas Gaze", Member of Latvian MC/WEC
Indra Niedrīte
Ph.D candidate, Riga Technical University
Namejs Zeltiņš
President of Latvian MC/WEC
Overview of Latvia’s natural gas market
3rd WEC Baltic Sea Roundtable
22nd September 2016 in Vilnius
65
Dr. sc. ing. Ivars Scerbickis, Head of Operation unit "Incukalns underground storage" of JSC "Latvijas Gaze",
Member of Latvian MC/WEC
NATURAL GAS MARKET IN LATVIA
66
67% 64% 68% 68% 69%
14% 14% 12% 12% 12%
11% 12% 12% 10% 9%
9% 9% 9% 10% 9%
2011 2012 2013 2014 2015
CONSUMPTION BY ECONOMIC SECTORS POWER INDUSTRY
OTHER INDUSTRIES
MUNICIPAL UTILITIES
HAUSEHOLDS
1 561 1 464 1 452 1 294 1 318
2011 2012 2013 2014 2015
NATURAL GAS SALES (million m 3 )
67
2017 December 31
Every shareholder that cannot keep its share in the new gas storage and transmission company will have to consider selling its shares or stay only as Financial investor
Financial investors; Other shareholders
(without control in one or another company)
Trade and distribution
Transmission and storage
Conexus Baltic Grid
Electricity and natural gas producers and traders;
Other shareholders (without control in
transmission and storage)
Other shareholders (without control in
electricity and natural gas producing and trading)
Permitted shareholders
TRANSMISSION SYSTEM OPERATOR (TSO)
• System created in 1962 • Length of the pipelines
– 1 242 km
• Number of the gas regulation stations - 40
• Income from transit 20% - 30% of the annual income (depends on storage activity)
STORAGE SYSTEM OPERATOR (SSO)
69
12 Demand (MCM per day)
Gas Metering Station (GMS)
Cross border gas transmission pipeline Gas flow in winter
INCUKALNS UGS Storage type - aquifer Total capacity: 4,5 BCM Working gas: 2,3 BCM
Possible to increase up to 6,2 BCM Injection capacity: 17 MCM
Withdrawal capacity: 30 MCM
Possible to increase up to 40 MCM Power of GCU: 33,5 MW Number of wells: 180 pcs Deposit area: 25 km2
70
0
400
800
1.200
1.600
2.000
2.400
2010 2011 2012 2013 2014 2015 2016 2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
AFTER INJECTION SEASON
(active gas)
AFTER UTILIZATION SEASON
(active gas)
1 992
2 300 2 300 2 300 2 300
1997
1530
1280
1081 1164
1263
1240
1180
1196
REGIONAL ROLE OF INCUKALNS UGS
ACTIONS FOR BOOSTING OF THE GAS MARKET IN LATVIA AND THE WHOLE BALTIC REGION
• Creation of the single market area in the Baltic Counties;
• Creation of a simplified gas market model, which is specially adjusted to the needs of the Baltic Countries;
• Changing of the storage access rules from regulated to negotiated (at least for the 3rd countries);
• Defining of the criteria of the strategic gas reserve for the Baltic market area;
• Implementation of the new projects strictly based on their economic performance and the general needs of the region.
71
72
Natural gas market development
in Latvia
Indra Niedrīte
PhD candidate, Riga Technical University
Namejs Zeltiņš
Dr. habil. sc. ing., Professor
3rd WEC Baltic Sea Roundtable, 22nd September 2016
Vilnius, in National Lithuanian Energy Association, Juozapavicius 13
73
Latvian natural gas market
One supplier state - Russia and one market player -
AS «Latvijas Gaze».
Privatization agreement of AS «Latvijas Gaze»
determines:
exclusive rights for AS «Latvijas Gaze» on
transmission, storage, distribution until 2 April
2017 and license for sale of natural gas;
unlimited and exclusive right for AS «Latvijas
Gaze» to use Incukalns Underground Gas
Storage for the period of twenty years starting
1997.
Incukalns UGS – total volume 4.45 BCM working gas
volume 2.3 BCM .
Consumption of natural gas:
in 2013 – 1.452 BCM;
in 2014 – 1.293 BCM;
in 2015 – 1.318 BCM.
The natural gas system operates without congestions
(40% backup capacity).
Starting from 2015 Latvian natural gas system is
connected to the global gas market via Klaipeda LNG
terminal.
74
PJSC Gazprom – 34.00 %
Marguerite Gas I S.à r.l. – 28.97 %
Uniper Ruhrgas International GmbH – 18.26 %
LLC ITERA Latvija – 16.00 %
Other shareholders – 2.77 %
Composition of Shareholders of
JSC «Latvijas gāze» (01.09.2016)
Total number of securities: 39,900,000. Nominal value: 1.42 EUR
75
Implementation of
3rd energy package
According to the Law “Amendments to the Energy Law” adopted by the Parliament on
20 February 2014 third-party access to the Latvian gas supply system including LNG
system is granted and managed from 4 April 2014.
Law “Amendments to the Energy Law” adopted by the Parliament on 11 February,
2016. Amendments provides that:
on 3 April 2017 the existing natural gas merchant JSC “Latvijas Gaze” has to
be split up into two independent sister companies whose shareholders
composition and structure adequate to the current JSC “Latvijas Gaze”
shareholder composition and structure; and one of the sister companies is
equipped with the natural gas transmission and storage infrastructure;
unbundling of transmission system operators and storage system operator
shall be completed by 31 December 2017;
state have pre-emptive right on the assets and shares of the natural gas
transmission and storage system operator;
starting 3 April 2017 all natural gas users will have the right to freely choose
a natural gas trader. Households have a right to choose to become a market
players or receive gas at a regulated price;
unbundling of distribution system operators shall be completed by 1 January
2018.
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Spin-off of JSC «Latvijas Gaze»
Conexus Baltic Grid will :
provide regulated services;
is planning to become leader of
the Baltic region taking advantage
of the storage and the
geographical situation.
Latvijas Gaze will:
provide regulated distribution
service;
compete with other gas traders;
till 2019 as public trader will
provide gas for households on
regulated tariffs.
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Challenges of Latvia’s gas market
Reduced natural gas demand due to the energy efficiency measures and strong
competition with other energy recourses especially RES due to subsidies;
Maintenance of the strategic importance of Incukalns UGS:
storage represents a positive value for the system, nevertheless it is very difficult
to quantify it;
gas market expects sufficient flexibility being available at any time;
Currently, if not operated in cyclical manner, pressure of the Incukalns UGS drops to the
level of hydrostatic pressure: in case of Incukalns UGS it is ~70 bar (instead of current
max 105 bar) and total volume of gas that can be kept in the storage drops from 4.4
BCM to 3.1 BCM)
competition with other forms of flexibility including new regional infrastructure
such as Klaipeda LNG terminal, GIPL (Gas Interconnection Poland-Lithuania),
Paldiski LNG terminal and Balticconnector (Estonian - Finish interconnection);
since utilization of storage comes with high costs giving preference to other
flexibility sources in the market there could be a necessity to assess the storage
costs socialization;
security of gas supply and the necessity to impose obligation of strategic storage.
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-6.0 mcm/d
Natural gas flow in Eastern Baltic natural gas
transmission system deliveries from Inčukalns
UGS case of interruption (baseline scenario)
- not covered demand
of natural gas per day (
million m3/day)
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Thank you for attention!
© World Energy Council Lithuanian member committee 2016 | www.wec.lt | Twitter handle - @WEC_Lithuania
ESTONIA
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Prof. Arvi Hamburg
Tallinn University of Technology
Mihkel Härm
Secretary General, WEC Estonia
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Gas Market Design
• Aspects hindering gas market developments:
– Lack of common regulations
– Lack of single market zone
• Gas infrastructure that would boost Baltic Sea regional gas market:
– Infrastructure is mostly sufficient, regulation is insufficient.
Balticconnector and Estonian LNG terminal could be useful.
– Most important is to have rules and regulations harmonized.
– Lithuanian LNG terminal and Latvian underground storage need clear regional
regulation.
• How these developments would impact power markets?
– Gas will have a growing role, unless regional electricity market is properly
regulated.
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Discussion
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