Exclusive Gas Foresight Report

Inside a flat gas demand in Europe, the contribution of the power sector will keep growing

In its latest World Energy Outlook, the International Energy Agency announced an upcoming golden age for natural gas with the strong growth of gas demand expected in the coming years, especially in Asia and with the development of shale gas resources.
But the picture varies by region; in Europe, while gas consumption increased over the last 20 years, it has been stagnating since 2005, limited by a sluggish economic growth and stringent regulations promoting energy efficiency. We have seen during the last 5 years a real re-definition of sectoral demand for gas, with growing inputs in the power sector. Between 2000 and 2011, 100 GW of gas-fired capacities were installed in Europe; this trend will certainly continue with the expected commissioning of 50 GW of additional gas-fired plants by 2020 in our central scenario (Balance). However, the current high competitiveness of gas plants is more and more under threat. A weakening of CO₂ policies in Europe would strengthen the position of coal as a fuel of choice in the power sector. In the same time, a strong commitment to a climate target would make necessary the development of very stringent energy efficiency policies and very strong CO₂ taxation that would therefore lower gas demand over the long-term.

Interested in our exclusive Gas Forecast Report report?

As gas promises to gain ground in Europe in the next couple of decades, our newly published report analyses the current environment as well as emerging issues and uncertainties about the pace at which this will happen, with focus on:

• Expected growth of gas demand in the power sector, compared to a flat trend in other sectors
• Booming LNG infrastructures easing access to natural gas at a competitive price and shifting the origin of gas imports
• Important opportunities for shale gas although geologically uncertain and subject to very contrasted legislations between member states

Our insightful analysis is based on outputs from the globally recognised POLES model.

> Read More

Global Canadian Crude Oil Trading & Markets Conference

22^nd - 23^rd of May: Global Canadian Crude Oil Trading & Markets Conference

Canadian Enerdata Ltd. is holding a conference on the opportunities and challenges facing Canadian crude oil from both a global and domestic standpoint. The forum is to take place from the 22^nd - 23^rd of May in Calgary, Canada.
> Register to conference
 
Meet our Key Speakers:

   Joe Oliver, P.C., M.P.
   (Minister of Natural Resources, Canada)

 

   Doug Horner, P.C., M.L.A.
   (Minister of Finance, Alberta)

   
  

Turkey - Natural Gas

Discover the latest developments in the Turkey Energy Market, with focus on natural gas. 



Turkey expected the natural gas demand to rise to 85 bcm in 2015, and planned to greatly develop the electricity production capacity from gas. To supply that demand, the country signed many gas supply contracts. However, the 2001 economic crisis and the postponement of the price deregulation led to a much lower demand, and the country found itself in a situation of surplus supply (the signed contracts were ¼ higher than the country's demand). However, Turkey took advantage of that situation and of its geographical position as a strategic player for the supply of gas to Europe, and in recent years its domestic consumption has increased sufficiently for it to seek new supply contracts.

There are three contracts signed with Russia. Under a first contract, 6 bcm/year was to be supplied between 1987 and the end of 2012, although in mid-2011 Botas gave Gazprom notice that it was ending the contract due to pricing disagreements. Under a second contract, signed in 1999, 8 bcm/year will be supplied until 2021. A third contract, signed with the Blue Stream gas pipeline, provides for the supply of 16 bcm/year between 2009 and 2028 (initial supply of 2 bcm/year in 2003, gradually increased to the plateau volume).

Algeria supplies Turkey under a long-term contract of 4 bcm/year over a 20-year period that will be extended of 10 years to 2024; a first contract signed in 1988 for the supply of 2 bcm/year from 1994 was extended in 1995 for the delivery of an additional 2 bcm/year.

Iran supplies Turkey within a contract for total amount of 228 bcm over 23 years starting in January 2003, following the commissioning of the 325 km-long gas pipeline connecting Iran to Ankara.

Nigeria supplies Turkey within one contract, signed in 1995, for a supply of 1.2 bcm/year from 1999 over 22 years.

Since the completion of a gas pipeline connecting Azerbaijan (field of Shah Deniz) to Turkey via Georgia (Baku-Tbilissi-Erzurum) in April 2007, Azerbaijan has grown into a significant exporter to Turkey. The pipe's initial capacity was 2.2 bcm/year, and has reach 6 bcm/year up to now.

The gas pipeline connecting Greece to Turkey, which is part of the ITGI project, was commissioned in December 2007. The strategic purpose of this 296 km-long pipeline is to diversify the EU's supply sources by transporting gas from Caucasus countries to Europe. It has a capacity of 11.5 bcm/year. This gas pipeline cost Turkey approximately €250m and Greece between €30m and €40m. There are plans for an extension of this pipeline from Greece to Italy (IGI project). That subsea line, which will be 800 km long, will supply 8 bcm/year to Italy in 2015; this section is being developed by Depa and Edison.

The Future lies in Smart Grids but...

An analysis of the Challenges ahead for Smart Grids

Smart grids are seen by many as an effective solution to address some of the toughest challenges the electricity industry has faced so far; the integration of renewables on a very large scale, the promised rise in number of electric vehicles, the necessity of energy efficiency, the improved security of supply or the arrival of the ‘prosumer’. Equipment manufacturers and IT solution providers are eagerly awaiting the hundreds of billions of euros to be invested over the next decades.

In this article, we advocate that smart grid technologies have the potential to transform the electricity markets given they are for the most part readily available, but, the correct regulatory framework first needs to be put in place. Failure to recognise the need for a regulatory overhaul can only hamper and delay the deployment of smart grids and their expected benefits.

From vertical integration to network unbundling

The present European electricity system is the result of a process that started shortly after World War II. National or regional vertically integrated monopolies rapidly became the dominant business model in the electricity industry. This model proved highly efficient in developing the numerous European electricity networks in times of vigorous growth.

To this day, the European electricity system has been characterised by a high degree of centralisation with mostly unidirectional electricity flows. In the current configuration, large-scale power plants generate electricity that is transported over long distances through a high voltage grid and distributed locally to end-customers through medium and low voltage distribution grids.

Following the market liberalisation experience initiated in the UK and the US in the 80’s and 90’s, continental European electricity markets have been progressively liberalised. The European Commission itself has pushed the European electricity supply industry towards unbundling through a series of Directives, the last of which - the so-called “third energy package” - came into effect in March 2011. As a result, European electricity systems now comprise a mix of regulated and competitive elements. Power generation, wholesale supply and retail supply have become competitive segments of the value chain while transmission and distribution have remained regulated businesses because of their natural monopoly characteristics.

Evolution of network regulation objectives Source: Enerdata

The primary objective of market liberalisation was to lower costs for users. Accordingly, the first regulatory phase that followed unbundling was geared towards a cost-efficient management of existing grids through the minimisation of operational expenditure (OPEX) and the rationalisation of investments. This economic objective was to be achieved without endangering the quality of power and the security of supply.

For regulators, the main challenge is how to introduce new objectives such as the integration of renewables on a large scale, the enabling of demand side response (DSR) and energy efficiency.

Read the entire article: http://goo.gl/BUftu

Free webinar on Smart Grids

Tuesday, 22nd of January, 15.00 - 16.00 GMT: Online Training on Smart Grids

Enerdata has partnered with The Clean Energy Solutions Center to offer you free online training on key regulatory issues associated with the deployment of smart grids. Drawing on case studies from Europe, this training will delve into the regulatory regimes, anticipated costs and benefits of smart grids, best practices that foster grid integration, and regulatory frameworks that support (or hinder) smart grids.
> Register to webinar
Meet our Panelists:

Bruno Lapillonne
(Enerdata Senior Expert of International Policy & Regulation)

Bruno is the co-founder of Enerdata. With over 30 years of experience in the analysis of energy markets for governmental bodies and international organisations, he is a recognised expert of energy policies and regulatory frameworks. Amongst others Bruno has been the for two decades the technical coordinator of the EU's Odyssee project on energy efficiency indicators. In addition he wrote numerous articles on energy prospective. Bruno graduated from a major Electrical Engineering School and holds a PhD in Energy Economics.