THE BELGIAN NATURAL GAS MARKET MODEL. SMART GRID SCHOOL Huberte Bettonville Fluxys Belgium SA

Transcription

1 THE BELGIAN NATURAL GAS MARKET MODEL SMART GRID SCHOOL Huberte Bettonville Fluxys Belgium SA

2 AGENDA FLUXYS IN A NUTSHELL THE BELGIAN NATURAL GAS MARKET MODEL CONCLUSION Q&A

3 SHAREHOLDING & GROUP STRUCTURE Publigas Caisse de dépôt et placement du Québec Federal holding and Investment Company Employees and management 77.7% 20% 2.1% 0.2% 89.97% 100% 100% FLUXYS BELGIUM Regulated activities in Belgium FLUXYS FINANCE Centralized management of cash funds and financing FLUXYS EUROPE Non regulated activities in Belgium & activities outside Belgium 10.03% Listed shares NYSE Euronext Brussels Golden share Belgian state

4 SOLID FINANCIALS AND STRONG HUMAN CAPITAL BASE Key financial figures Employees by location Fluxys Belgium Europe Fluxys Belgium Europe 998 Turnover EBIT 2014 Fluxys consolidated IFRS in M Turnover 919 Operating profit Net profit (group share) 129 Equity (group share) 1879 Net debt 2131 Implicit grade A- or BBB+ 7

5 OUR VISION: EUROPE NEEDS GAS AND FLUXYS BRIDGES THE MARKETS Decline of indigenous European production Gas & gas infrastructure most appropriate to back-up renewable power generation Future gas flows to Europe > LNG from NW to East > Pipe gas from East to West and South to North Connect markets & gas trading places 72 bcm/y NBP PEG N 35 bcm/y ZEEBEACH/ZTP 39 bcm/y TTF 76 bcm/y Gaspool NCG PSV 61 bcm/y CEGH

6 FLUXYS: DEVELOPMENT OF A TENTACULAR ASSET & CAPACITY PORTFOLIO Interconnector pipeline ( ) Dunkirk LNG terminal project (2011) Balgzand-Bacton pipeline (2004) Developing new supply routes Connecting markets Shaping demand TENP pipeline (2011) Swedegas (2015) NEL pipeline ( ) Transitgas pipeline (2011) TAP pipeline project ( ) Belgium: continued investments to intensify crossroads role: ~ 1 billion investment Elsewhere in Europe Close cooperation with other TSOs Acquisitions and investments in greenfield and brownfield infrastructure: ~ 1.6 billion investment

7 OUR INFRASTRUCTURE IN BELGIUM UNITED KINGDOM NORWAY LNG NETHERLANDS ZELZATE ZANDVLIET Loenhout NETHERLANDS POPPEL ZEEBRUGGE Brugge Antwerpen Sint-Niklaas Mechelen DILSEN NORWAY / GERMANY 4,100 km pipelines High calorific gas Low calorific gas Kortrijk Tournai Gent Aalst Brussels Charleroi Mons Winksele Namur Genk Berneau Liège Sinsin S-GRAVENVOEREN NORWAY / GERMANY Verviers RUSSIA/ GERMANY EYNATTEN Interconnection points LNG terminal Compressor stations Blending stations BLAREGNIES FRANCE SPAIN ITALY Libramont BRAS LUXEMBOURG Bastogne Arlon PÉTANGE Storage LUXEMBOURG

8 FLUXYS ROLE ON THE BELGIAN MARKET 18 interconnection points 113 bcm/y entry capacity Fluxys grid 4,100 km High pressure ~ 60 active shippers Transmission for supply in Belgium 17 bcm/y 197 Large industrial end-users 17 Combined Heat & Power Units 19 power stations Grids of 17 Distribution System Operators 70,000 km Low pressure Transmission to neighbouring grids 80 bcm/y exit capacity 2.9 millions Households 100,000 SMEs Natural gas consumption EU28: ~ 410 bcm/y

9 FLUXYS BELGIUM ACTIVITIES Transmission Regulated activities 100% open access r-tpa Tariffs & GTCs approved by NRA Storage FLUXYS BELGIUM Our infrastructure 4100 km pipelines 18 IPs LNG Terminal, with a deliverability of 9 BCM/y 700+ MCM storage volume in Loenhout 402 TWh transported in 2014 LNG terminalling Transit 60% Domestic 40% Distribution 79.5 TWh Industry 41.2 TWh Power 39.7 TWh

10 STRONG COMPETITION ON THE BELGIAN MARKET REFLECTED IN GAS PRICE LEVEL FOR INDUSTRIAL END USERS Crossroads function of Belgian grid: large number of suppliers active on the Belgian market International development to support crossroads function Enhanced competition through new Entry/Exit system launched late 2012 ZTP: increased interest from industrial end users to source gas directly from ZTP

11 /m 3 (n)/h/y CONTINUOUS EFFORTS TO OFFER BETTER TRANSMISSION TARIFFS... /m³(n)/h/year % Fluxys Belgium's transmission tariff evolution (entry + HP supply tariff) Entry + HP supply tariff in real terms (basis 2010)

12 TRIGGER LOW FLUXYS PART IN GAS COST TO RESIDENTIAL END USER 3% Capacity Flexibility Security of supply Fluxys cost Gas cost

13 AGENDA FLUXYS IN A NUTSHELL THE BELGIAN NATURAL GAS MARKET MODEL CONCLUSION Q&A

14 BELGIAN BALANCING MODEL HAS EVOLVED OVER TIME DELIVERY Border-to-border transmission IZT EYN 2 REDELIVERY Entry Zone ZBG PSP ZPT IZT LNG HUB Domestic transmission Entry Zone ZELZATE BAP ZBG Zelz 1 Zelz 2 Entry Zone BLA Quevy Blaregnies H Entry Zone Zandvliet H Entry Zone Loenhout Transfo Blaregnies L Entry Zone Antwerp Zandvliet L Poppel BAP BLA BAP L-CAL Dilsen s Gravenvoeren BAP GRA Entry Zone GRA Eynatten 1 Entry Zone EYN Bras Eynatten 2 Transfer Segment ZPT Border-to-border transmission TML Zeebrugge Zone Hub + IZT West - South Entry/Exit Segment + ZZ 2 VTN_West Transit Segment ZZ 1 Blaregnies Zone Zelzate Zone + VTN_East East - South EYN 1 EYN 2 East Zone GRA + Low Pressure Entry Segment Entry Zone ZBG PSP ZPT IZT LNG HUB Domestic transmission Entry Zone ZELZATE BAP ZBG Zelz 1 Zelz 2 Entry Zone BLA Quevy Blaregnies H Entry Zone Zandvliet H Entry Zone Loenhout Transfo Blaregnies L Entry Zone Antwerp Zandvliet L Poppel BAP BLA BAP L-CAL Dilsen s Gravenvoeren BAP GRA Entry Zone GRA Eynatten 1 Entry Zone EYN Bras Eynatten 2 BLA TROLL BLA SEGEO Pétange Pétange 2012 Entry/Exit transmission model

15 ENTRY/EXIT EASY ACCESS MODEL TO THE TRANSMISSION GRID One Belgian gas market with 1 balancing zone for H-gas and 1 for L-gas Optimum flexibility for shippers in managing their capacity portfolio Shippers able to book and operate entry & exit capacity independently Unified access model for domestic and border-to-border transmission Easy access to downstream Belgian market, including sourcing options for large consumers

16 Shortfa ll Exces s ENTRY/EXIT WITHOUT DIRECT LINK IMPLIES A NEW BALANCING REGIME Entry Exit IP 1 IP 2 DE IP 3 Grid user balancing position We can track the gas balancing position of each Grid User in the system: Imbalance for hour h for a Grid User equals the sum of his entry quantities minus the sum of his exit quantities Each Grid User has a gas account in the system The gas account is the Balancing Position A Grid user can be short, long or in equilibrium at a given moment Opportunity to offer gas trading services within the system A trade between two parties is simply a transfer from the account of the seller to the account of the buyer this transfer takes place on a notional point in the center of the system: the Zeebrugge Trading Point (ZTP) (notional trading services or virtual trading point)

17 Shortfall Excess BALANCING THE NETWORK MADE EASIER, BASED ON MARKET BEHAVIOUR Past Future Fluxys Daily Market-Based Balancing Fluxys reaction zone Hourly update 1 Thresholds to limit the aggregated market imbalances, sized to domestic market needs Market threshold No Fluxys Belgium action intra-day and no impact on market parties as long as market 2 imbalance is within market threshold 3 Time 3 Residual action initiated by Fluxys Belgium on the exchange when market position goes beyond market threshold, with cash Day Day+1 compensation for causers Grid User Balancing Position Market Balancing Position Comprehensive hourly information provision to the market In line with EU Balancing Network Code 4 Residual end-of day imbalance settled in cash

18 BALANCING INFORMATION In order to enable shippers adjusting their WD positions in a timely manner, grid users: H+25 min Receive an hourly Balancing Message : contains its individual position and the market position Receive an hourly Allocation Message : contains for each IP, Domestic exit point the hourly allocation May revise its nominations by sending renominations at least H - 30 minutes (ZTP) or 2 hours before the change will take effect Advantages of hourly info for Grid User No exposure to unexpected financial settlement as all tools at its disposal to adapt its individual balancing position transparent and traceable Detailed allocation info available to steer its balancing position No cross-subsidization between different enduser profiles as all imbalances caused by certain types of End-users can be allocated to the causer New entrants can benefit of full flexibility (not limited to individual tolerances) Advantages of hourly information for TSO Grid Users are primarily responsible to balance their portfolio Residual balancing = role as Balancing Operator Directly relates the cost of a Within-Day residual balancing action to the commodity market price at the moment of such action and can allocate the cost to the responsible parties Encourages utilisation of cross-border trades and promotes the development of a liquid market

19 ADVANTAGES OF ENTRY-EXIT MODEL WITH SYSTEM-WIDE WITHIN DAY OBLIGATIONS Advantages for Grid User Through hourly data publication and short term renomination possibilities grid users are enabled to manage in a timely manner their WD/EoD positions in order to manage their financial exposure No cross-subsidization between different enduser profiles as all imbalances caused by certain types of End-users can be allocated to the causer Creates a level playing field for new grid users entering the market because new grid users with limited flexibility can enter the Belgian market and use the entire flexibility offered by Fluxys Belgium Advantages for TSO No reservation of significant physical buffer for balancing model without WDO The cost of this physical buffer doesn t have to be recovered on the grid users Low tariffs Encourages utilisation of cross-border trades and promotes the development of a liquid trading market Directly relates the cost or revenue of a residual balancing action to the actual commodity market prices at the moment of such action and can target those costs or revenues to responsible parties

20 Hourly Imbalance Cumulated Imbalance Shortfall Excess LEVEL PLAYING FIELD FOR NEW GRID USERS In case of Individual Tolerances In case of Market Tolerances Tolerances are normally calculated in function of the subscribed capacity or allocated volumes New entrant: normally small individual tolerances possibly no continues follow-up of individual balancing position financial exposure kwh/h Entry Consumption profile Tolerances can be used by entire market Impact of small shippers rather limited, if major shippers do a good steering, the entire market will stay within the market threshold no financial settlement Small shipper can benefit from the balancing actions of large shippers Fluxys reaction zone Market threshold 4,0 3,0 2,0 1,0 0,0-1,0-2,0-3,0-4,0 Imbalance Financial exposure Hourly Imbalance Cumulated Hourly Imbalance 15,0 12,0 9,0 6,0 3,0 0,0-3,0-6,0-9,0-12,0-15,0 6 Time Day 24 6 Day+1 Grid User Balancing Position Market Balancing Position

21 Fluxys Belgium, a wide range of arbitrage opportunities Belgian market natural gas trading ZTP notional trading services for the H Zone ZTPL notional trading services for the L Zone and/or Zeebrugge Beach physical trading services either over the counter through bilateral agreements with third parties, or anonymously on the PEGAS-platform or the web-ice platform. 20+ suppliers for the Belgian market 50+ border-to-border shippers and producers ZTP Industrial end users: various ways to source gas directly from ZTP 30+ multi commodity traders (currently on Zee Beach)

22 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 TWh/month HUB DEVELOPMENT 14 ZTP net traded volumes

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24 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 TWh/month HUB DEVELOPMENT ZBG beach net traded volumes

25 1/10/2012 1/11/2012 1/12/2012 1/01/2013 1/02/2013 1/03/2013 1/04/2013 1/05/2013 1/06/2013 1/07/2013 1/08/2013 1/09/2013 1/10/2013 1/11/2013 1/12/2013 1/01/2014 1/02/2014 1/03/2014 1/04/2014 1/05/2014 1/06/2014 1/07/2014 1/08/2014 1/09/2014 1/10/2014 1/11/2014 1/12/2014 1/01/2015 1/02/2015 1/03/2015 1/04/2015 1/05/2015 1/06/2015 1/07/2015 1/08/2015 1/09/2015 1/10/2015 GWh/d HUB DEVELOPMENT ZTP Evolution Exchanges ZTP-Exchanges ZTP vs ZBG Beach (rol av. 30 d) 60% 55% 50% 45% 40% 35% % 25% 20% 15% 10% 5% 0%

26 Oct-2012 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014 Oct-2014 Nov-2014 Dec-2014 Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 HUB DEVELOPMENT 55 Number of nominating parties (Rolling average 30 days) ZTP ZBG Beach ZTPL

27 PRICE INDICATORS SPREADS Gas year 2014: Oct 13 Sep 14 64% of the time more attractive to source from ZTP ZB Beach TTF 99% of the time more attractive to source from ZTP Gaspool NBP ZTP 100% of the time more attractive to source from ZTP 100% of the time more attractive to source from ZTP 100% of the time more attractive to source from ZTP PEG N NCG 100% of the time more attractive to source from ZTP Comparison: Day Ahead prices (EnergyMarketPrice) + transmission costs to ZTP

28 BELGIAN BALANCING MODEL HAS EVOLVED OVER TIME DELIVERY Border-to-border transmission IZT EYN 2 REDELIVERY Entry Zone ZBG PSP ZPT IZT LNG HUB Domestic transmission Entry Zone ZELZATE BAP ZBG Zelz 1 Zelz 2 Entry Zone BLA Quevy Blaregnies H Entry Zone Zandvliet H Entry Zone Loenhout Transfo Blaregnies L Entry Zone Antwerp Zandvliet L Poppel BAP BLA BAP L-CAL Dilsen s Gravenvoeren BAP GRA Entry Zone GRA Eynatten 1 Entry Zone EYN Bras Eynatten 2 Transfer Segment ZPT Border-to-border transmission TML Zeebrugge Zone Hub + IZT West - South Entry/Exit Segment + ZZ 2 VTN_West Transit Segment ZZ 1 Blaregnies Zone Zelzate Zone + VTN_East East - South EYN 1 EYN 2 East Zone GRA + Low Pressure Entry Segment Entry Zone ZBG PSP ZPT IZT LNG HUB Domestic transmission Entry Zone ZELZATE BAP ZBG Zelz 1 Zelz 2 Entry Zone BLA Quevy Blaregnies H Entry Zone Zandvliet H Entry Zone Loenhout Transfo Blaregnies L Entry Zone Antwerp Zandvliet L Poppel BAP BLA BAP L-CAL Dilsen s Gravenvoeren BAP GRA Entry Zone GRA Eynatten 1 Entry Zone EYN Bras Eynatten 2 BLA TROLL BLA SEGEO Pétange Pétange 2012 Entry/Exit transmission model 2015 BeLux Fluxys Belgium Eynatten ZTP Common entity GD Lux Bras / Pétange Creos Remich

29 BELUX: FIRST STEP TOWARDS MARKET MERGER MODEL 1 October 2015: Creos Luxembourg & Fluxys Belgium have integrated their national H-gas markets: First market integration between two EU Member States; Balancing within the BeLux area harmonized and operated by a common balancing operator: Fluxys Be in first instance, Balansys later on; Facilitated by fruitful cooperation with ILR & CREG; BeLux is not a merger of companies: Creos Luxembourg and Fluxys Belgium remain two TSOs, commercializing services in their respective transmission grids.

30 MARKET INTEGRATION: HOW? BELUX IN A NUTSHELL Situation today BeLux Fluxys Belgium Fluxys Belgium Eynatten Eynatten ZTP ZTP GD Lux Bras / Pétange Common entity GD Lux Bras / Pétange Creos Luxembourg Remich Remich Creos Luxembourg 2 Entry/Exit markets with capacity fees in-between Gas trading place in Belgium only 2 independent sets of balancing rules Single E/E market capitalizing on TSO existing means Single gas trading place in BeLux ZTP Harmonized balancing rules set: 1 common balancing contract

31 BENEFITS OF THE INTEGRATED BELGIUM-LUXEMBOURG GAS MARKET Improved market functioning & added value for customers Easier market access Opportunities to pool end-user and supplier portfolios Wider sourcing possibilities Realization of market integration in smart way Market integration without steel investments and with amount of (firm) capacity unaffected Improved Security of Supply in Luxembourg Efficient implementation of European network codes Synergies for TSOs to implement European network codes in an integrated setting Position at the forefront of European market integration First TSO cross-border gas market integration in EU Huge experience gain for Fluxys Belgium, Creos Luxembourg and the concerned regulators (CREG, ILR) Market integration will improve market fundamentals For information purposes only

32 Shortfall Excess BALANCING COSTS IN THE BELUX AREA WILL BE NEUTRAL Required market settlements performed for the integrated area (Within-Day & End-of-Day) BeLux reaction zone Market threshold GBP MBP Time Balancing Charges on BeLux area invoiced to grid user : 6 Grid user balancing settlements (Within-Day & End-of-Day) Neutrality Charge Fee: introduced to meet the European Balancing Network Code requirements; ensures neutrality of the balancing activity For information purposes only

33 BELUX MODEL FULLY COMPLIANT WITH EUROPEAN BALANCING NETWORK CODE Fluxys Belgium s balancing model has already been built with a view on the European Balancing Network Code* (BAL NC) BAL NC was under development when designing current Entry/Exit model in Belgium (launched in Oct 2012) Therefore, current Fluxys Belgium s EE model was already broadly compliant with BAL NC Since entry into force of BAL NC on 1st October 2015, minor adaptations brought to the balancing applied model, together with start BeLux, of which: Design of a neutrality charge Adaptation of imbalance charges to be applied to shippers for settlements of imbalance positions BeLux is a full cross-border balancing harmonisation based on BAL NC * Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of Transmission Networks

34 AGENDA FLUXYS IN A NUTSHELL THE BELGIAN NATURAL GAS MARKET MODEL CONCLUSION Q&A

35 CONCLUSION The Belgian natural gas transmission model has significantly evolved during the last decade going from a separated model for domestic and border-to-border transmission to a full entry-exit model, today being an integrated market with Luxembourg The model offers a comfortable playing field to market players, being suppliers but also industrials aiming to source their gas: A notional trading point with gas prices most frequently cheaper than neighbouring gas market places, and showing adequate liquidity in order to source gas and balance positions A system-wide balancing regime, having shown huge reliability since 2012 A high quality and frequency information stream to market players, allowing for a perfect steering of positions

36 AGENDA FLUXYS IN A NUTSHELL THE BELGIAN NATURAL GAS MARKET MODEL CONCLUSION Q&A

37 THANK YOU FOR YOUR ATTENTION!

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