16.12.2021

ACER assesses ENTSOG’s gas supply Outlook for this winter

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ACER assesses ENTSOG’s gas supply Outlook for this winter

The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today its Opinion on the European Network of Transmission System Operators for Gas (ENTSOG) Winter Supply Outlook 2021/2022.

What are the main highlights of ENTSOG Winter Supply Outlook?

ACER highlights the following findings from ENTSOG’s Outlook:

  • The EU storage level on 1st October 2021 (75% of overall storage capacity) is one of the lowest in recent years, with varying situations among countries.

This is primarily due to a record high use of storage flexibility during the previous winter and a low injection during the summer with record-high gas wholesale prices.

  • The European gas infrastructure offers sufficient flexibility to supply volumes to meet demand in Europe, assuming that gas supply is available in similar volumes as in recent years.

However, in case of a cold winter, the gas market would need to increase imports from pipelines and/or LNG by 5% to 10% more than the maximum volumes observed in recent years.

  • Early and significant gas withdrawals from storages would result in low storage levels at the end of the winter season, with a negative impact on the gas system flexibility.
  • South-Eastern Europe has significantly reduced its exposure to demand curtailment following the commissioning of new infrastructures, such as the Trans Adriatic Pipeline, Turk stream and other investments.

Despite this improvement, the Outlook’s supply route disruption simulations show that some demand curtailment under extreme temperatures are possible in selected regions.

What is ACER’s assessment?

ACER welcomes the timely publication of the ENTSOG Winter Outlook and finds it contributes to the objectives of the EU Regulations.

In particular, the Agency:

  • notes with concern that, in case of a cold winter, the gas market would need to increase its gas imports from pipelines and/or LNG compared to maximum volumes observed in recent years, creating a risk of exposure to high gas wholesale prices.
  • welcomes ENTSOG’s willingness to monitor the storage levels’ evolution and import volumes throughout the upcoming winter and to report on a regular basis and when anomalies appear.
  • highlights the critical importance of counting with adequate storage levels towards the end of the winter season in anticipation of possible high demand or system stress situations.
    • Early and significant withdrawal would result in low storage levels at the end of the winter, with a negative impact on the flexibility of the EU gas system.
    • ACER expects storage users to prudently withdraw gas from storage to contribute to safeguarding the continuity of gas deliveries throughout the winter, in compliance with the contractual commitments and storage obligations, where applicable.
  • identifies the existence of specific risk factors for the upcoming winter season (not always factored or mentioned in the Outlook), such as:
    • uncertainty on the availability of additional volumes from major sources of gas imports going beyond the contracted volumes,
    • very high gas wholesale prices.

ACER calls on ENTSOG and all actors with responsibilities related to gas supply continuity and price monitoring to remain vigilant for the upcoming winter in regards of those risk factors.

What does ACER recommend?

ENTSOG should consider improving future Outlook’s assumptions and methodology to better identify potential supply risks, including exposure to very high gas wholesale prices.

In particular, ACER encourages ENTSOG to consider using a complementary scenario based on expected gas supply and booked capacities in addition to the current scenarios based on historical values of gas supply. ACER also suggests to  include embedding expected gas prices and gas price demand elasticity into ENTSOG’s modelling.