​Gas Target Model

 

Gas Target Model: the ideal single market
 
The Gas Regulation puts forward objectives and principles describing the ideal single energy market with a focus on non-discriminatory access arrangements applying to gas infrastructure. The Gas Target Model (‘GTM’)​ takes this as a starting point and strongly builds on access issues and gas demand and supply considerations. Using a broad analytical context, the Gas Target Model links infrastructure access issues to the needs of wholesale markets and their development.
 
The GTM 1 put forward that efficient markets provide investment signals in both gas production and in gas network infrastructure, including transmission and storage, in order to meet the demands of European gas consumers. Non-discriminatory and fair arrangements for shippers to access the gas infrastructure are basic requirements for competition to develop and for the network to be used efficiently.

 
GTM and regulatory policies
 
The regulatory policies (designed by the Framework Guidelines) following the objectives of the Gas Regulation aim at improving access arrangements in the internal market in the following areas:
·        Congestion Management Procedures (Commission Guidelines)
·         Capacity Allocation Mechanisms (Network Code)
·         Gas Balancing (Network Code)
·         Interoperability and Data Exchange Rules (Network Code under adoption, expected publication Q1/2015)
·         Harmonised Transmission Tariff Structures (draft Network Code under development by ENTSOG)
 
These areas were considered to be the critical ones by the first Gas Target Model.
 
 
GTM and efficient investments
The Gas Target Model was developed by using three pillars: enabling functioning wholesale markets, the tight connection of markets, and the enabling of secure supply patterns.
The common underpinning of the three pillars is the assuring of market effectiveness via efficient investments. The fact is that at this time the wholesale markets are yet emerging, the degree of “connectivity” of gas markets is in need of improvement, and security of supply is in the focus of attention. For example, not all wholesale markets are very liquid and volumes traded on them may be relatively small compared to long-term contracts and other ways of trading gas; furthermore there are still “islands” in Europe which are not connected to the rest of the Union, and security of supply is constantly assessed and re-assessed in connection to countries with non-diversified gas supplies.
The Agency’s work in the context of the GTM is maybe best described as supporting connected and competitive wholesale markets.
 
The review of GTM
 
The review of the Gas Target Model shall ensure that changes in the supply - demand conditions are appropriately analyzed as well as offers further analysis for gas wholesale markets and hub trading to identify the most appropriate measures required to develop liquid gas hubs.
 
In the past three years, gas wholesale markets became more integrated as a consequence of the gradual and early implementation of the network codes and greater cross-border cooperation. The gas sector in the same time remained dominated by uncertainties over the future patterns of demand and supply. The review of the Gas Target Model takes into account these uncertainties and aims to ensure that appropriate steps are foreseen and taken to create well-functioning wholesale markets to the benefit of all gas customers. In particular, the Gas Target Model update looks into the issues of hub liquidity and regional market integration, the links between electricity and gas market regulations with regard to the functioning of gas-fired power plants, and the impact of the use of gas for transportation on existing gas regulations.
 
In September 2010, the European energy regulators were mandated to initiate a process to establish a target model for European gas markets. CEER published the Vision for a European Gas Target Model and Conclusions Paper on 1 December 2011. The review of this paper is undertaken by ACER with a deadline of September 2014.
Links to GTM workshops:
1.    Workshop on the Gas Target Model: review and update, 8 October 2013 in Vienna.
 
2.  2nd ACER Gas Target Model Stakeholder Workshop,  ACER Premises, Ljubljana, Slovenia, 19 March 2014
 
3.  3rd Gas Target Model Stakeholders Workshop, CEER Premises, Brussels, 15 May, 2014
 
4.    Launch of "Energy Regulation: A Bridge to 2025",  CEER premises, Cours Saint Michel 30a, 1040 Brussels, 29 April, 2014
5. Presentation of ACER’s Conclusions Paper ‘Energy Regulation: A Bridge to 2025’, Musées Royaux d'Art et d'Histoire (Royal Museums of Art and History), 10 parc du Cinquantenaire,1000 Brussels, 23 September, 2014
6.   Presentation of ACER Gas Target Model
Charlemagne Building, room Lord Jenkins, Wetstraat 170 Rue de la Loi, ground floor, 1049 Brussels, Belgium, 16 January, 2015.
7.   ACER-CEER Bridge to 2025 - One Year Anniversary,  The Cinquantenaire Museum, 10 Parc du Cinquantenaire,1000 Brussels, 24 September 2015