Gasunie improves operation of gas market with new balancing system

01 Apr 2011

Dutch gas market achieves ‘first’

Today is a historic day for gas transport in the Netherlands, since it marks the official start of the new balancing regime. The Netherlands will convert to a system in which the market players are themselves responsible for keeping the national gas transmission network in balance. To keep in balance, market players can either buy or sell gas themselves on the TTF (Title Transfer Facility), the Dutch virtual gas trading platform. The TTF will consequently operate more effectively, thereby further consolidating its number one position on the European continent. Both the new balancing regime and the growing attractiveness of the TTF will give a major boost to the further development of the Netherlands as the gas roundabout of northwest Europe. Paul van Gelder, Gasunie CEO, said of the new situation: ‘Through this new balancing system, Gasunie’s subsidiary Gas Transport Services and its partners will be able to make a substantial contribution to the gas market in the context of the gas roundabout strategy. Domestic and industrial users will be able to continue to depend on a reliable and smoothly functioning gas market which is increasingly interconnected with the gas markets around us. This new, unique regime removes barriers for market parties and will boost trade in gas in the Netherlands, which will help to stabilise the price of gas. ’

Due to the size and complexity of the new system, national network operator Gas Transport Services (GTS) began preparations as early as 2008. Right from the start regular consultation took place between GTS, the relevant market players, the Ministry of Economic Affairs, Agriculture and Innovation and the Dutch Competition Authority. It can therefore justifiably be said that the new balancing regime is the result of an extensive and wide-ranging joint initiative that will further promote the development of the Dutch gas market.

New regime
In order to transport gas safely and reliably, the volume of gas injected into the network must be in balance with the volume that is extracted. In the new regime, each party that transports gas can now contribute to keeping the network in balance. These players will be known as ‘programme responsible parties’. Previously, GTS was the only player that was both authorised and capable of keeping the network in balance.

Thanks to the new system all programme responsible parties will have continuous insight into their own current position. The total balance of the national network as a whole – or rather, the aggregate position of all the programme responsible parties – will be constantly visible to everyone. This results in the transparency all parties desired. As long as the position of the overall network remains within the maximum allowable limits, the network will be in balance and none of the parties will be required to take action. The same will apply even if an individual programme responsible party is not in balance. However, if the network as a whole is no longer in balance, the market players can intervene by injecting extra gas into or extracting extra gas from the system. If they fail to do so adequately and the imbalance is allowed to rise to unacceptable levels, a market correction mechanism will kick in.

Bid ladder
GTS has developed a bid ladder for such situations. If the network enters imbalance, market players will use the ladder to offer gas for sale or to bid for it. When the bid ladder is called, the costs will be charged to the causers of the imbalance. The programme responsible parties who have helped to rebalance the system will be rewarded. This will encourage all the parties to play an active role.

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About Gasunie
Gasunie is a European gas infrastructure company. The Gasunie network ranks among the largest high pressure gas pipeline grids in Europe, consisting of over 15,000 kilometres of pipeline in the Netherlands and northern Germany, dozens of installations and approximately 1,300 gas receiving stations. The annual gas throughput totals approximately 125 billion cubic metres. We serve the public interest in the markets in which we are active and work to create optimum value for our stakeholders. We are the first independent gas transport provider with a cross-border network in Europe.
Gasunie offers transport services via its subsidiaries Gas Transport Services B.V. (GTS) in the Netherlands and Gasunie Deutschland Transport Services GmbH in Germany.
We also offer other services in the gas infrastructure field, including gas storage and LNG. We consider the wishes of our customers to be of prime importance.
We aim for the highest standards in safety, reliability, efficiency and sustainability. Due to the reliability and strategic location of the Gasunie network in relation to expanding international gas flows, the Gasunie network forms the core of what is called the northwest European 'gas roundabout'.

About Gas Transport Services B.V. (GTS)
Gas Transport Services BV is a wholly-owned subsidiary of Gasunie and the designated national transmission system operator. One of GTS's key missions is the non-discriminatory provision of gas transmission services. Such services should enhance security of supply and the proper functioning of the gas market.