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Issue title:

Interview with Bianca Dittmann and Jürgen Fuhlrott about the market area convergence Framework conditions

Publication date:
11.09.2019
In this issue:

I hope you have had a relaxing and enjoyable summer. The weather with its heat waves and the wood fires in Brazil has again intensified discussions regarding climate change. As politicians are more inclined to follow the short-term mood of the electorate rather than long-term rationality, a package of climate decrees – which at least looks ambitious – might be agreed in the cabinet in September. Whether this package really makes it possible to meet climate targets with efficient measures remains to be seen.

I have used this edition to put together everything I found during the last month on “Green Gases”. A good reason was the decision of the ministry of economic affairs in July on which power-to-x sandbox projects will be subsidised. The number of projects is higher than expected. I am not really sure whether this is good news, because the amount per project for the CAPEX is rather low. But the ministry wants to launch a new facility for the support of the OPEX. And if all projects are implemented, the ministry has made a wise decision. In general, I find it remarkable how prominent the topic green gas/hydrogen has become in some ministries.

TOPIC OF THE MONTH Interview with Bianca Dittmann and Jürgen Fuhlrott about the market area convergence Framework conditions

The “marco” (market area convergence) project of the German TSOs was launched roughly one and half years ago. This publication first reported about the project in May last year (ener|gate Gasmarkt 05/19) and has tried to follow the different developments since then. Initially, the whole process focussed mainly on the internal processes and communication among the TSOs, while external communication was rare. This changed substantially later on. As expected, the question of the capacity provision in the new joint market area proved to be the most significant issue. In February, the TSOs presented the capacity model NewCap during a workshop at the sidelines of the energy fair E-World in Essen. The main outcome: Only 22 per cent of the FZK entry capacity from the Network Development Plan (NEP) 2018 – 2028 can be provided as FZK at the entry points into the joint market area based on the physical capabilities of the networks (ener|gate Gasmarkt 03/19). The TSOs offered solutions as part of their presentation: Market Based Instruments (MBIs) could compensate the missing physical interconnection capacity between the two current market areas for a comparably small amount of money. The TSOs proposed two network or transportation-based instruments and one trading tool:

• Wheeling, i.e. short-haul transportation between two neighbouring flanges using the network of an adjacent foreign TSO.

• Long-distance transportation through thirdparty networks, i.e. the connection of two border points by longer transportation through the grid of an adjacent foreign TSO.

• Spread product, i.e. the simultaneous buying and selling of gas before and after a congested network part on an exchange platform.

2. Framework conditions2.2 Green gases/hydrogen

The term “Green Gases” usually refers to all products that are shipped in gaseous form through pipelines (or when liquified, transported by ship) and that are either carbon-free or carbon-low. This does not mean that the stakeholders are not aware of the differences and their implications. In the 06/19 edition, ener|gate Gasmarkt showed a graph with a classification of the different gases (figure 4 in that edition). But for the reporting here, the term Green Gases is absolutely sufficient. The topic is very high on every agenda. The list of initiatives, studies and proposals for an adjustment of the framework conditions has become endless. Nevertheless, here is an overview of the latest publications and proposals:

Quota for green gases

In the February edition of ener|gate Gasmarkt, Patrick Graichen, the director of Agora Energiewende, a think-tank, asked the gas industry to advocate for a green gas quota. This would be a credible commitment to the support of green gas. In May, Agora Energiewende itself included this proposal in its 15 key points for a Climate Protection Law (ener|gate Gasmarkt did not recognise it at the time). In 2021, all sales companies that supply final customers are to virtually blend 0.5 per cent of “green” or “blue” hydrogen to their natural sales gas portfolio. This quota is to increase to ten per cent by 2030...