23.7.2020

ACER finds no market interest to invest in gas network expansion

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​​Market players are not interested in expanding gas networks in the European Union (EU) according to a report published today by the EU Agency for the Cooperation of Energy Regulators (ACER). To achieve better-integrated gas markets the EU introduced in 2017 a process to identify every two years the market demand for incremental capacity by Transmission System Operators (TSOs). ACER has analysed the related projects initiated in the first biennium and included an update on virtual interconnection points for a better management of cross-border gas capacity. 

The Incremental capacity projects serve to expand efficiently network capacity in a market-based way where market players commit to buying capacity to demonstrate the economic viability of the project. None of the projects fulfilling the criteria of the process attracted sufficient commitments to pass the economic test that determines their economic viability. 

The lack of interest indicates that market participants deem that the current capacity addresses their future needs. “In view of the Green Deal -aiming at making Europe climate neutral by 2050- it will be even more important to base capacity expansion of the gas ne​​twork on robust identification of market needs”, ACER highlights in the report.  

Virtual Interconnection Points

The Report also gives an update on virtual interconnection points, which simplify the entry-exit model by reducing the number of physical points where capacity between two markets can be booked, instead offering capacity products at a single point. 

The number of virtual points have increased greatly since the first ACER report on the matter in 2016: from three operational virtual points back then to 16 of them throughout Europe. Further virtual interconnection points may be established at the borders of the EU and neighbouring countries such as Ukraine, where the application is voluntary. 

Access the report.