The completion of the Italian commercial platform and the development of the market

Transcription

1 The Implementation of the Third Package in the Gas Sector: the European Approach and the Italian Market The completion of the Italian commercial platform and the development of the market Clara Poletti, Director DREG Regulatory Department Bruxelles, September 17 th 2013 Disclaimer: the opinions expressed in this presentation are those of the author and do not necessarily represent the official views of Autorità per l energia elettrica e il gas unless explicitly stated otherwise 1

2 SUMMARY 1.Some data on the Italian market 2.Issues to be addressed for the development of the market 3.Regulatory measures taken, first results and vision for the future 2

3 A declining internal demand (Mcm) 3

4 Some recent data on the Italian market - Net imports declined to 67,5 bcm - 50% of imports from Northern interconnections, Tarvisio being the most important entry point covering 37,5% of the total - Despite lower consumption Italy s dependency on foreign suppliers remained substantially unchanged (90%) 4

5 Incrising import capacity (Mcm) In 2013: new Livorno LNG (+4 bcm) In the near future: -Other LNG terminals -TAP 5

6 New development scenarios - Potential new gas volumes available for the European market: a revolution for a so far import only market! - Pipeline investments are needed: Snam fully committed, 2 strategic projects in the current PCI lists (Adriatica pipeline and Reverse flow to CH/DE/FR) - Evolution of market design (regulation) is needed to make PSV an efficient and liquid hub facilitating gas exchanges 6

7 Main issues to be addressed for the development of the market Contractual congestion - Punitive cashout for imbalances, making trading unreasonably risky - Lack of liquidity at the hub 7

8 1 Contractual congestion - CAM NC and CMP mechanisms - daily capacity allocation since 1st April 2013 between the Austrian exchange point and the Italian gas system via Tarvisio (first allocations under a temporary arrangement took place already in 2012) - Daily bundled products allocated through PRISMA - Daily allocations through PRISMA also for Gries and Gorizia Entry points - During 2014 also monthly and yearly bundled products will start to be auctioned 8

9 But is there capacity available? Gries: strategic entry linking to the most liquid hubs (TTF, NBP, ZEE) 9

10 Favourable situation also at Tarvisio entry 10

11 More critical situation in the upstream pipelines though (CMP will be fundamental) 11

12 First important signals of an evolving situation: PSV lowering the price spread with other hubs 12

13 More recent prices - PSV still trading at a premium - spread may be justified by transport cost - New infrastructures may change the picture 13

14 2 Punitive cashout for imbalances - The Authority introduced the first kernel of the balancing market in late 2011 to overcome the punitive administrative charges. System users and the TSO are now able to access balancing resources through a market mechanism. Only storage is currently used as flexibility source. - Since 2012 trading between operators is possible, Snam intervenes buying and selling as a residual operator - Compulsory participation for storage capacity holders + TSO = most liquid Italian market 14

15 Balancing market, becoming a new spot price reference 15

16 Volumes in other EU gas exchanges (GWh) Italy Pb-gas Austria CEGH Germany EEX France Powernext

17 Next steps - The balancing market should now evolve along the design of the future balancing network code - In December 2012 AEEG issued a decision marking a first step in this direction: during 2013 also flexibility from entry points may be activated for balancing purposes (even though not in continuous) - Next steps: improvement of the current IT system of the TSO to allow for renomination at all relevant network points, alignment needed with upstream systems 17

18 23 Lack of liquidity at the hub - Since 2004 a virtual trading point has been established (PSV) - Growing number of market participants and growing number of (bilateral) transactions - Transactions (despite still low volumes) tends to concentrate at the virtual hub 18

19 Total players active on PSV 19

20 Number of transactions at the hub / Entries 20

21 Virtual hub trading (GWh) 21

22 The Gas exchange - In order to foster hub liquidity a gas exchange has been implemented (managed by GME) - Providing standard contracts and central counterpart trading the gas exchange should reduce counterpart risk and facilitate trading also for small market players - At the end of 2010 the gas exchange started its operation with 2 platforms for daily and intraday trading (day ahead MGP: continuous + closing auction, intraday MI: continuous only) - The gas exchange still lacks liquidity (in 2012 MGP: 135 GWh, MI: 36 GWh) 22

23 Trading future contracts - The new market platform (MT-GAS) started its operation on 2 nd of September Products traded: gas year, solar year, season, quarter, monthly, balance of month - GME acts as central counterpart - Several books of negotiations of the different products in continuous trading. Cascading is applied: at the end of its negotiation period each product is transformed into products of shorter duration - Single system of guarantees for all GME platforms 23

24 The new design of the Gas Exchange 2 September 2013 MGAS MP-GAS (prompt) MT-GAS (futures) DA Market ID Market 24

25 The new design of the Gas Exchange - It s too early to assess the results of the long term platform - The AEEG decision to link the reference price for domestic customers to the MT-GAS in the future (now TTF is used as a reference) may be an important element of success - GME is studying a system of guarantees integrated with the power market: this evolution may decrease the costs of guarantees at least for some players and foster liquidity (power generators are often buyers of gas and sellers of power and their financial positions could compensate) 25

26 Thank you! 26