Cross-regional meeting of Gas Regional Groups Preparation of the 3rd PCI list - Identification of Infrastructure Needs Brussels, 22 September 2016 Chaired by Catharina SIKOW-MAGNY, Head of Unit European Commission, DG ENERY Unit B1 Networks & Regional Initiatives
Agenda overview 10:00-10:20 Introduction and presentation of the objectives for the meeting 10:20-11:15 TEN-E - recap of the policy context and the legal framework within which the Regional Groups work. Lessons learnt and expectations for the PCI process 11:15 11:45 Coffee break 11:45-13:00 First discussion on infrastructure related problems in the energy system - what may consist a need and what may not 13:00 14:30 Lunch break 14:30-15:30 First discussion on infrastructure related problems in the energy system cntd. 15:30 16:00 Coffee break 16:00-16:45 Towards the 3rd PCI list Monitoring of the 2nd PCI list in view of the 3rd one Working method - Role for Regional Groups and stakeholders in the identification of infrastructure needs Timeline for the process 16:45-17:00 AOB
INTRODUCTION AND PRESENTATION OF THE OBJECTIVES FOR THE MEETING European Commission DG Energy Networks & Regional Initiatives Catharina SIKOW-MAGNY
Introduction 1 st & 2 nd PCI lists are very good but suggestions received to improve the process Discussion on the needs to answer to the dynamic nature of the PCI programme Infrastructures to serve people and economies let us be receptive to various views Recognising the needs in Regions to be able to identify projects with a potential to address them
Objectives Take stock of the PCI programme development Ensure we are all on the same page Highlight the need for a close monitoring of PCIs Launch of the process Preparation of the Regional Groups for the months to come Start the reflection on energy system problems in regions An opportunity to ask questions!
TEN-E RECAP OF THE POLICY CONTEXT AND THE LEGAL FRAMEWORK European Commission DG Energy Networks & Regional Initiatives Adam ROMANOWSKI
FIRST DISCUSSION ON INFRASTRUCTURE RELATED PROBLEMS IN THE ENERGY SYSTEMS
Priority corridors: gas Southern gas corridor North-South interconnections Western EU infrastructure for the transmission of gas from the Caspian Basin, Central Asia, the Middle East and the Eastern Mediterranean Basin to the Union to enhance diversification of gas supply infrastructure for North-South gas flows to further diversify routes of supply and for increasing short-term gas deliverability BEMIP gas North-South interconnections CEE infrastructure to end the isolation of the three Baltic States and Finland and their dependency on a single supplier, to reinforce internal grid infrastructures accordingly, and to increase diversification and security of supplies in the Baltic Sea region infrastructure for regional connections between and in the Baltic Sea region, the Adriatic and Aegean Seas, the Eastern Mediterranean Sea and the Black Sea, and for enhancing diversification and security of gas supply
Projects of Common Interest Issues of Common Interest Cross-border relevance (cross-border impact) Significant contribution to Market Integration, Interoperability and System Flexibility, Security of Supply, Competition or Sustainability Not any gas asset (not upstream or distribution; storages connected to high-pressure pipelines; LNG/CNG reception)
Average wholesale prices during the first quarter of 2016 in /MWh Netherlands 12.88 Denmark 13.09 Austria 13.57 Belgium 13.74 From a problem to a need Existence of price differential France 14.11 Germany* 14.18 United Kingdom 14.37 Poland 14.84 Greece 17.05 EU average 17.19 Czech Republic 17.57 Spain 17.74 Italy 17.88 Slovak Republic 18.06 Hungary 18.16 Estonia 18.21 Bulgaria 18.32 Romania 19.58 Sweden 19.61 Finland 20.62 Lithuania 21.04 Slovenia 21.68 Latvia 21.86 Ireland Cyprus Luxembourg Malta Is it a problem? If high difference, likely yes symptom of a bottleneck/ deficiency in market integration [HOW HIGH?] Could infrastructure remedy the problem? In line with the objective of a Priority Corridor? If yes, there may be a need Are there PCI candidates to address this need?
Defining the needs Needs in terms of relevant criteria, such as of security of supply, market integration, system flexibility, interoperability, competition, or sustainability that are due to infrastructure shortcomings and that prevent the implementation of a given priority corridor or thematic area.
Problem >< a need to build infrastructure 22/09/2016 RG Meeting, Brussels
Measures to solve problems (1/2) Different lead times limit the available options System operation Better use of existing capacities (effective implementation of BAL, CMP, CAM) Hub and product development Market design & technical rules Optimise market/technical rules Develop and introduce new legislation Investments Small-scale capacity upgrades on existing infrastructure (e.g. RF, addtl. CS). Expanding capacity at existing interconnections (e.g. additional pipelines and ancillary equipment). New UGS and LNG projects. New trunk import pipelines for source diversification Time necessary for implementation 22/09/2016 RG Meeting, Brussels 13
Measures to solve problems (2/2).The (at best) stagnating European gas demand makes the prioritization of necessary infrastructure investments essential..operational and market measures have a shorter implementation time, higher cost-efficiency and can in some cases sufficiently cope with identified problems..cesec good example of matching regulatory/legislative actions and infrastructure development.when they are not sufficient, they could be used as interim measures before the necessary additional capacity is developed. 22/09/2016 RG Meeting, Brussels 14
15
Identification of needs - working together Introducing the process Bottom-up Regional Groups and stakeholders to openly discuss - multiangle - Everyone to have a say Consensus All ideas welcome but important to keep the TEN-E policy framework in mind Start from ideas; looking for evidence to confirm
'16 Sep Oct Nov Dec Cross regional mtg all RG Gas (22 Sept) Cross regional mtg all RG EL (21 Sept) Indicative planning Preparatory work (first two weeks of Oct) Documents on CIRCABC (by 18 Oct) RG mtgs - indentification of needs (week of 24 Oct) Preparatory work (10/11 Nov) Documents on CIRCABC (by 17 Nov) Cross regional mtg - all RG Gas (week of 21 Nov) Cross regional mtg - all RG EL (week of 21 Nov) Preliminary results needs identification of TYNDP-G Call for PCI candidates Cross-regional mtg G/E Objective: Agreement on process Dividing assignments Draft list of problems Homework mtgs (NRA/Promoters/Stakehol ders) per corridor Objective: Each sub-group coordinates its views on problems per Region RG mtgs Objective: Views of stakeholders Consensus on list of problems in the Region Discussion on thresholds/parameters to frame a need Homework mtgs (NRA/Promoters); possibly MSs Objective: Proposal on filtering the needs from the identified problems per Region Consensus on list of problems Cross-regional mtg G/E Objective: Discussion on the infrastructure needs per region Consensus on list of needs per Region
Identification of needs - working together indicative planning Cross-regional mtg G/E Objective: Agreement on process Dividing assignments Draft list of problems Homework mtgs (NRA/Promoters/Stakehol ders) per corridor Objective: Each sub-group coordinates its views on problems per Region RG mtgs Objective: Views of stakeholders Consensus on list of problems in the Region Discussion on thresholds/parameters to frame a need Homework mtgs (NRA/Promoters) [possibly MSs] Objective: Proposal on filtering the needs from the identified problems per Region [Consensus on list of problems] Cross-regional mtg G/E Objective: Discussion on the infrastructure needs per region Consensus on list of needs per Region Deliverables Process agreed First open-ended draft list of problems Who does what and when agreed Deliverables Lists of problems per region; possible evidence Presentations prepared Deliverables If possible, problems in each Region mapped Indication of thresholds to frame the needs Indication of relevance for countries Deliverables Proposal on the evidence to be used for determining the needs [The list of Problems in each Region agreed] Deliverables Agreed lists of needs per Region When, how, who When, how, who When, how, who When, how, who When, how, who TODAY Until 18 Oct Week of 24 Oct Week of 7 Nov Week of 21 Nov Everyone Promoters with ENTSOs NRAs with ACER Stakeholders Everyone per Region NRA/Promoters/COM [MS and COM] Everyone
Identification of needs - working together What is expected in preparation of the next meeting ACER/NRAs ENTSOs Stakeholders
Identification of needs - working together What is expected in preparation of the next meeting Stakeholders invited to submit written contribution specifically for a region or more general [ENER-B1-PROJECTS@ec.europa.eu] Stakeholders invited to prepare presentations for RG meetings
Planning of NRAs coordination in view of the 2nd Regional Group meeting a. Joint INF and GI TF expert group to draft a document regarding a proposal for a regional list of problems Date: by 27 September b. Meeting for discussing the proposal on regional list of problems Date: 4 October (tbc) Place: Ljubljana Tentative agenda: Presentation of the process and the input expected from ACER/NRAs for the 2 nd RG meeting (cross-regional, cross sectoral) Discussion on the regional list of problems to be proposed Appointment of coordinators per Regional Group to present ACER/NRAs views to the 2 nd RG meeting Discussion of indicators for each problem and possible thresholds (tbc) c. Discussion session within the October joint INF GI TF meeting (if necessary for some regions) Date: 13 October (tbc)
List of problems Collecting ideas Project Promoters welcome to start (ENTSO) Everyone is welcome to consider over lunch and propose an idea afterwards Exercise to continue in the afternoon
TOWARDS THE 3 rd PCI list
Monitoring PCI implementation - a shared responsibility European Commission DG Energy Networks & Regional Initiatives Kurt Glaeser
Monitoring key aspects Acknowledge importance of monitoring as an essential step for preparing the next PCI list Establish a commonly agreed process between the main stakeholders Communicate and take action when monitoring indicates delays in implementation Address causes of delay and apply appropriate remedies
Monitoring - main players involved Project promoters Yearly reporting ACER Consolidated Report Competent Authorities Yearly reporting Commission/INEA Transparency Platform (public) and progress watch (internal) ENTSOs Establishing the TYNDPs
Detecting and addressing delays Regional Groups to take note of and discuss findings of the yearly reports of ACER and of the Competent Authorities Commission to communicate results of the progress watch on an ad-hoc basis and when appropriate Regional Groups to identify the level on which the delay can be addressed and make recommendations Commission to propose an action plan in agreement with the directly involved parties
PCI implementation ACER Report Peter Pozsgai ACER Infrastructure Regulation Officer
Monitoring of the 2 nd PCI list Peter Pozsgai Infrastructure Regulation Officer Cross-regional meeting of the Gas Regional Groups Preparation of the 3 rd PCI list TITRE Identification of Infrastructure Needs Brussels, 22 September 2016 29
Legal basis Article 5(4) of the Regulation (EU) No 347/2013 By 31 March: project promoters submit an annual report for each PCI. Article 5(5) of the Regulation (EU) No 347/2013 By 30 June: the Agency submits a consolidated report to the Regional Groups: Evaluation of the progress achieved; Recommendations on how to overcome the delays and difficulties encountered; Evaluation of the consistent implementation of the Union-wide network development plans. 30
PCI monitoring a part of an integrated process TYNDP PROCESS Annual report Promoters of PCIs PCI selection Consolidated Report TYNDP Competent Authorities Reports Regional Groups 31
The PCI lists 2013 PCI list 2015 PCI list* 49 gas PCIs on both lists 103 gas PCIs 77 gas PCIs *The 2015 PCI list contains complementary, competing and potentially competing gas PCIs (the number of commissioned projects, as well as the related costs, will therefore be lower). 32
Hosting Countries 33
Overview of the submitted reports Almost all reports submitted by the deadline*. BUT The quality of reports is very heterogeneous e.g. est. benefits of the PCI provided only for 10 PCIs. 15 PCIs not present in the NDP of any hosting country and 7 PCIs present only in the NDP of only one hosting country. All gas PCIs are part of the ENTSOG TYNDP 2013. There are 6 TYNDP projects, which are assigned to 2 or more PCIs. (Issue of double counting the costs, benefits, capacity etc. of the same project) Several PCIs have been rearranged (split, merged) between the 2013 and 2015 PCI lists cross-list comparison not possible. Recommendations The quality PCI progress reports must be improved by many promoters. PCIs should be present at least in the NDP of the hosting country(ies) + need for a better alignment of the NDPs and the TYNDP. Need for a clear identification and characterisation of projects and ability to track changes in the PCI features. *For 1 PCI, no promoter could be identified and no report was submitted. 34
Implementation Status No commissioning and no cancellation of PCIs between 31 Jan 2015 31 Jan 2016. ~50-50% of PCIs in a less and in a more advanced stage Only 3 transmission PCIs are under construction. No PCIs are expected to be commissioned in 2016 or 2017 The implementation of old PCIs in 2015 (49 projects in total) 41 old PCIs have not changed their implementation status since January 2015. Most of these are in permitting or planned but not yet in permitting. Half of these PCIs not expected to change status before 2017 (3 rd PCI list). 3 PCIs do not show any signs of development since 2013 (they are still under consideration ). 6 old PCIs progressed (into permitting phase). For 2 old PCIs reverse development was reported. 35
Number of PCIs to be commissioned No. of PCIs to be commissioned per year* Promoters expect permitting to take not more than the max. length of the permitting procedures 3.5 years. 36
Number of PCIs to be commissioned In order to keep to the commissioning deadlines foreseen in the coming 4 years, construction must start for the following no. of PCIs*: 10 PCIs in 2016, 13 PCIs in 2017, 7 PCIs in 2018 and 6 PCIs in 2019**. * Includes potentially competing and competing projects, all of which are not expected to be constructed. **Overall figure is lower than the no. of PCIs to be commissioned due to missing information on construction date. 37
Schedule and time progress Roughly 50% are on time and 50 % are behind schedule. New PCIs slightly more than half on time, but rescheduling & delays also present. What about old PCIs? Delays and rescheduling do not appear as a one-off phenomenon but can span over several years and PCI lists. 38
Schedule and time progress Rescheduling Reasons Mostly because of the cancellation, rescheduling or uncertainty about the implementation of another complementary (dependent or enabler) project. Lack of market interest and the need for a better certainty on the technical aspects also mentioned. Average length Transmission 27 months. LNG 12 months. Delays Reasons Many various individual reasons for delays but not a clearly visible trend. Challenges related to obtaining licences and permits appear similarly as in 2015. Average length Transmission 12 months; LNG 38 months; UGS 18 months. 39
Schedule and time progress 40
Schedule and time progress Recommendations If the promoter does not report any activity during 2 years (of the PCI list) it should be considered at the next PCI selection process. The commissioning dates in light of actual developments appear overly optimistic. Promoters are invited to present a more realistic project planning. The coordinated planning and implementation of complementary PCIs is key. 41
CAPEX (per priority corridor) The total expected investment costs of all (including competing) gas PCIs on the 2015 PCI list: 54 billion NPV of expected life-cycle costs of all (including competing) PCIs on the 2015 PCI list: 7.8 billion* Annual level of actual investment reported: ~ 1.5 billion *not including all PCIs, including inconsistencies in the reports 42
Annual and Cumulative CAPEX* Recommendations Planned annual CAPEX of PCIs for 2019 and 2020 is 10x the level of actual annual investments. The highest possible degree of monetisation of benefits is necessary to be able to carry out a proper cost-benefit analysis. The updated CBA methodology from ENTSOG is expected to allow for a comprehensive monetisation of all benefits at individual PCI level. *100% of the CAPEX is assumed to be incurred in full in the year of commissioning 43
Progress and Challenges (1) PCIs are very diverse in project features and maturity Less mature projects are often rescheduled: Less mature projects may be dependent on network developments (i.e., on the progress of other projects) or market developments (e.g. evolution of supply/generation or demand) Such instances reflect that not all PCIs would/should necessarily be built Assessing the degree of maturity of projects should take place at the stage of the PCI selection, so that the uncertainties around the less mature projects are identified as such (while not necessarily preventing such projects to be included on the PCI list) Some projects do not show visible progress since 2013: Not necessarily a problem - lack of progress may be justified by external reasons (delays, dependence on network or market developments) or inherent reasons (large, complex projects may need more than 2-4 years to demonstrate progress, I.e. more time than the validity of a PCI list) Some PCIs are repeatedly rescheduled should they be reconsidered and/or removed from the PCI list? Only 2 rounds of PCI monitoring have taken place so far. Some patterns and features are visible but not long-term trends (observations are available for about 3 years or less). 44
Progress and Challenges (2) Future monitoring should: Build on more consistent, high quality data from promoters Lead to more coordination and information exchange among entities involved in the PCI process Differentiate reporting requirements for project promoters according to the degree of maturity of the projects PCI monitoring results should be taken into consideration in the PCI selection process. 45
Recommendations Recommendation Improving the integrity and consistency of the PCI selection and the PCI monitoring processes, including: - common data set for TYNDP, PCI sel., PCI monitoring - consistent data provided by promoters to RGs, ENTSOs, EC and ACER over the entire PCI process from selection to commissioning Maturity to be taken into account for PCI selection (inter alia, a less detailed implementation plan is needed for less advanced projects) Information on project progress (e.g. delays, rescheduling, no works reported) should be taken into account in the PCI selection Raising awareness of the difficulties in permit granting (in the RGs) and enhancing the permitting procedures PCIs to be listed in the relevant NDPs, RIPs and TYNDPs Improvement of the completeness and quality of the data reported by promoters CBA methodology to be improved and implemented at a PCI level (improved monitoring of benefits) Action needed Alignment of TYNDP 2016 with PCI monitoring requirements. Harmonisation of data set and definitions of indicators and parameters is needed. Needs further implementation. Needs further implementation. Further improvements need to be considered. Needs further implementation. Needs further implementation. CBA methodology review is in progress. 46
Thank you for your attention! Thank you for your attention www.acer.europa.eu
Infrastructure Forum conclusion "The Forum calls on the Regional Group to use information on project progress, including significant rescheduling or lack of advancement, as a factor in the PCI identification process" "URGENCY" criterion of the qualitative assessment (Art. 5(4)) (a) the urgency of each proposed project in order to meet the Union energy policy targets of market integration, inter alia through lifting the isolation of at least one Member State and competition, sustainability and security of supply
PCI identification - steps Introduction
Overview of the process 2016 2017 2017 End of April -> <- - May - June - -> <- June-Aug -> Oct/Nov -> ENTSOs (G/E) Project promoters NRAs (G/E) Regional Groups ACER (G/E) European Commission Prepare TYNDPs for gas and electricity Submit projects Criteria (Art4)/CBA methodology PS CBA (ENTSOs) Check application of criteria Crossborder relevance Evaluate projects [against needs] Rank Adopt regional lists Opinion Crossregional consistency (in CBA application) Adopt Union-wide list of PCI (no ranking) PCI identification process
'16 Sep Oct Nov Dec '17 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec '18 Jan Feb Cross regional mtg all RG Gas (22 Sept) Cross regional mtg all RG EL (21 Sept) RG mtgs - indentification of needs (week of 24 Oct and 21 Nov) Consultation on TYNDP-E finished (incl. PS CBA) Preliminary results needs identification of TYNDP-G call for PCI candidates stakeholder consultation on PCI candidates RG mtg Gas - grouping (if needed) PS CBA run by ENTSOG PCI candidates to complete PS CBA RG mtgs - assessment of PCI candidates against the needs RG mtgs - regional lists by the RGs submitted to ACER ACER opinion High Level Decision Making Body COM adoption of Delegated Act (3rd PCI list) 3rd PCI list adopted Council & EP scrutiny 3rd PCI list enters into force Cross-regional mtg G/E Objective: Agreement on process Dividing assignments Draft list of problems RG and Cross-regional mtgs Objective: Agreement on problems and corresponding infrastructure needs per Region Gas RG mtg Objective: Grouping of PCI candidates [if needed] RG mtgs (2 per RG) Objective: Assessment of PCI candidates in the framework of what Region needs RG mtg Use of Project Portals of ENTSOs to collect PCI candidates submissions under consideration Objective: Technical level DMB agree Regional lists
AOB
AOB Access to CIRCABC RG members contact data update Investment needs 2030 study CEF calls
For info - CIRCA BC - instructions If you are an external user of the CIRCA BC, you will have to first create an ECAS account. The procedure on how to do it is explained under https://circabc.europa.eu/webdav/circabc/informatics/infohub/information/en/authentication. html. After this, you will have to apply for membership to the group (and Corridor Leaders will accept you as member, after which you will have access). The relevant information can be found here: https://circabc.europa.eu/webdav/circabc/informatics/infohub/information/en/administration. html#how_apply. When you are on the CIRCABC website and click on the link "Browse categories" (upper left side) and afterwards, under European Commission please click on the link "Energy" (middle part of the website) and finally on the link "Library" (upper left side). The relevant Interest Groups (i.e. Regional Groups per corridor) are listed here (e.g. 01: Northern Seas offshore grid) If you have any technical questions please don't hesitate to ask technical support to the functional mailbox EC-CENTRAL-HELPDESK@ec.europa.eu and putting in copy DIGIT-CIRCABC- SUPPORT@ec.europa.eu.
Review of the Regional Groups contacts Online application form to participate in the workstreams carried out under the TEN-E Regulation https://ec.europa.eu/eusurvey/runner/updatedat abase2016 Please provide your professional contact details Indicate group(s) working under the TEN-E Regulation which you wish to follow ENER-B1-PROJECTS@ec.europa.eu (modifications or removals)
Connecting Europe Facility CEF-Energy call for proposals 2-2016: ongoing Actions under the second list of PCIs Deadline for submission: 8 November 2016 Targeting: works and studies Indicative Budget: 600 million Synergy call for proposals Actions with current and future synergies between energy and transport and contributing to PCIs on the second list Call Opening: 28 September 2016 Deadline for submission: 13 December 2016 Remote Info Day: 10 October 2016 Targeting: studies Indicative Budget: 40 million