EU legislative proposals for gas storage

EU legislative proposals for gas storage

Gas Infrastructure Europe draws on Frontier’s study on legislative proposals for gas storage to engage in discussions with the Commission.

Deep decarbonisation in the energy sector is needed to achieve the EU 2050 climate goals and the way we produce, transport and use energy will have to evolve. Increasing amounts of renewable and low-carbon energy will be produced, and will need to be transported to major demand centres. It is now widely accepted that renewable and low carbon gases will be a key part of enabling decarbonisation, as conversion of renewable electricity to gas provides both a means of transporting energy and also potentially a route to balance short term fluctuations in renewable energy production and seasonal variations in energy demand.

A critical feature of today’s gas infrastructure in this respect is its storage capacity. But storage facilities may be at risk of closing prematurely if market failures prevent them from realising the value they bring to the system today and the option they create for managing the system in the future. In this context, Frontier, together with Baker Botts, has carried out a draft study for Gas Infrastructure Europe (GIE) to propose concrete European legislative proposals to address the market failures faced by gas storage facilities. GIE will start a discussion with the European Commission at the October 2020 Madrid regulatory forum for gas and will make 3 proposals drawn from our study:

  • Ensure better coordinated network planning across electricity, gas, hydrogen infrastructures and storage
  • Ensure the benefits gas storage facilities bring in terms of avoided investment costs in electricity generation are recognised
  • Allow for further government intervention to secure a reliable energy system in case residual market failures persist

Over the coming months, the Commission will develop proposals for energy market reforms through consultation with stakeholders, ahead of publishing draft legislation, expected in Q3 2021.

For more information, please contact us on media@frontier-economics.com or at  +44 (0) 20 7031 7000.