RO-HU-AT - a pilot project for incremental capacity GRI SEE 13 December 2016, Bucharest RO-HU-AT - a pilot project for incremental capacity How to develop functioning markets? Infrastructure needs and initiatives for Europe RO-HU-AT - a key project for Central and South-East Europe
Starting Point 2014 Network users indicated non-binding demand for long term transportation services potential natural gas supplies originating from an upstream project initiative in the Black Sea from Romania (RO) via/to Hungary (HU) and further on to Austria (AT)
Physical gas flows in the region
PCI 6.24 - ROHUAT Expansion and refurbishment of the existing gas transportation systems
New gas route - ROHUAT
Incremental capacity process To coordinate the process and to find suitable solutions in the framework of the incremental capacity Regulatory Authorities To express the need for new infrastructure To support the initiative to give valuable inputs Network users TSOs To prepare the open season/ incremental process To plan the necessary construction works
The following 3 allocation methods have been consulted Market survey A market survey on different capacity allocation methods was conducted by the TSOs in February 2016 The following 3 allocation methods have been consulted 13 responses form market participants
Method 1 Market integration Ascending clock auction algorithm according to Art. 17 of the CAM NC Bundled capacity offered as single years in the auctions
Allocation rule core logic: Market integration Method 2 3 allocation rounds foreseen Allocation rule core logic: Round 1: 15 year commitment for both IPs Round 2: 1 year commitments for both IPs Round 3: 1 year commitments for single IPs (same as Mechanism 1) Round 1 Round 2
preferred option according to outcome of market survey Market integration Method 3 Bundled capacity offered as single years in the auctions (same as Mechanism 1) If demand > offer, capacities shall be allocated on the basis of the highest individual bidder commitment in all auctions conducted throughout the period of 15 years at IP Csanádpalota and IP Mosonmagyaróvár Allocation rule core logic: NU contribution = price IP1 * demanded capacity IP1 * number of years + price IP2 * demanded capacity IP2 * number of years Method 3 preferred option according to outcome of market survey
Main milestones OS consultation phase
Main phases of the Binding OS Return countersigned contract to participants Confirmation customers registration by TSOs Pubblication of the first results by TSO 27.07.2018 Publication of the final results 24.04.2017 Confirmation of the final results 02.09.2017 18.06.2018 Customer registration announcement of the biding Open Season Procedure 02.04.2018 Operational start-up 1 October 2022 31.03.2017 Bid revision II Economic test II Bid revision I Economic test I Submission of bids Customer registration Consultation phase 02.04.2018 – 13.04.2018 29.11.2016 – 08.01.2017 28.04.2017 – 31.05.2017 30.06.2017 – 01.09.2017 16.04.2018 – 18.06.2018 01.06.2017 – 27.06.2017 31.03.2017 – 17.04.2017
Interconnection points Relevant interconnection points (IP) RO/HU border @ Csanádpalota (IP1) in both directions HU/AT border @ Mosonmagyaróvár (IP2) just in Austrian direction
Capacity products & tariffs
Capacity products & tariffs
Examples Routes & Tariffs
Tariffs overview (in local currency) 18 CZK/kWh/h/y 3,922 €/kWh/h/y 3,944 €/kWh/h/y 32,8 $/1000 m3 0,77 €/kWh/h/y 2,6 €/kWh/h/y 2,69 % m3 VTP 4,46 €/kWh/h/y 0,77 €/kWh/h/y 3,31 €/kWh/h/y 631,25 HUF/kWh/h/y 631,25 HUF/kWh/h/y 98,72 HUF/MWh 2539,15 HUF/kWh/h/y 15,873 Lei/MWh/h 12,47 $/1000 m3 ? 4,31 Lei/MWh 1,81 Lei/MWh/h ? 1,84 Lei/MWh/h
Tariffs overview (in Euro) 0,669 €/kWh/h/y 3,922 €/kWh/h/y 3,944 €/kWh/h/y 23,55 €/kWh/h/y 0,45 €/MWh VTP 0,77 €/kWh/h/y 2,6 €/kWh/h/y 4,46 €/kWh/h/y 0,77 €/kWh/h/y 3,31 €/kWh/h/y 2,016 €/kWh/h/y 0,296 €/MWh 2,016 €/kWh/h/y 0,296 €/MWh 8,111 €/kWh/h/y 3,535 €/kWh/h/y 0,96 €/MWh 9,17 €/kWh/h/y ? 1,58 €/kWh/h ? 0,96 €/MWh 1,82 €/kWh/h/y
Possible routs to VTP AT ROHUAT
Possible routs to VTP AT RO HU SK AT VTP
Possible routs to VTP AT RO UA SK AT VTP
Transportation cost different routs to VTP AT
Ranking of Bids results Examples Ranking of Bids results
Bid results with overbooking fill or kill
Bid results without overbooking fill or kill
Examples Austrian side Economic test
Austrian coordinated network development plan 2017-2026
Determination of the economic viability (Austrian side) The economic tests (Economic Test I and Economic Test II) for incremental capacity at the entry point Mosonmagyaróvár are based on the following parameters: PVAR = 156.325.000 EUR f = 0.75 PVUC ≥ 117.243.750 EUR The economic test will be positive if the value of binding commitments of network users is equal to or higher than 117.243.750 EUR. As the allocation of all incremental capacity at the reference price (i.e. 0.77 €/kWh/h/y) would not generate sufficient revenues for a positive economic test outcome, a mandatory minimum premium (i.e. 3.31 €/kWh/h/y) (supplement) is applied for the allocation of the incremental capacity. The mandatory minimum supplement has been calculated based on the assumption of 1.913.490 kWh/h/y minimum booked incremental capacity for 15 years in a row.
Determination of the economical viability Conditions for the calculation of the mandatory minimum premium: 30% of the technical capacity flat booked for 15 years 25% of the total costs socialized on existing IPs
Determination of the economical viability base case: generated revenues
Determination of the economical viability base case: generated revenues
Determination of the economical viability Tariff composition for the base case
Negative economic test
Negative economic test to be reallocated to top of the initial mandatory premium
Negative economic test Increasing of the minimum mandatory premium part of the tariff ∆ +1,64
Positive economic test
Positive economic test to be subtracted from the initial mandatory premium
Positive economic test decreasing of the minimum mandatory premium part of the tariff ∆−𝟎,𝟖𝟗𝟐
Overall economic tests The project will be realized if all the 4 economic tests in direction RO -> VTP AT will be positive the 2 economic tests at the IP Csanadpalota will be positive
alessandro.ischia@e-control.at www.e-control.at + 43 1 24 7 24 810 alessandro.ischia@e-control.at www.e-control.at Contact
Open season platform?
Main phases of of the Binding OS Milestone Date Consultation Phase 29.11.2016 – 09.01.2017 Announcement of the Binding Open Season Procedure 31.03.2017 Customer Registration 31.03.2017 – 17.04.2017 Confirmation Customer Registration (TSOs) by 24.04.2017 Submission of bids 28.04.2017 – 31.05.2017 Economic Test I 01.06.2017 – 27.06.2017 Bid revision I 30.06.2017 – 01.09.2017 Publication of first results (TSOs) 02.09.2017 Confirmation of final results (Participants) 02.04.2018 Economic Test II 02.04.2018 – 13.04.2018 Bid revision II 16.04.2018 – 18.06.2018 Publication of the final results (TSOs) 18.06.2018 Return countersigned contract to Participants 27.07.2018
Incremental process time line Execution of the open season Definition of the „rule book“ of the open season Market survey on different capacity allocation methods was conducted by the TSOs in February 2016, Project development TSO coordination PCI 6.24 capacity of 4,4 bcm is expected to be available at latest in 2022 Upstream project initiative 2015 Q1 2016 Q4 2016 Q1-Q2 2017 2014 Timeline
Next steps to provide tariffs applying the new methodology acc. to TAR NC by March 2017 “Rule book” prepared by TSOs Open season to be carried out in 2017 in parallel to the yearly auction in accordance with the CAM-auction calendar put into operation 2nd phase (4.4 bcm/y) depending on when the FID will be taken, latest for 2022
Possible routs to VTP AT