Balazs Tatar - Product and Market Development Manager, FGSZ – Hungary

1. Capacity Allocation in the Central
and Southeast Europe Gas
Transmission Capacity Auctions
Balázs Tatár
Head of Sales and Customer Support
FGSZ Ltd
Milano, 30 May 2017

2. 2
• FGSZ is the major TSO of
Hungary
– FGSZ aims to enable connectivity
with all neighbouring TSO networks
• FGSZ operates one of the three
EU cross-border capacity
booking platforms (Regional
Booking Platform, RBP)
– RBP covers 8 TSOs in 7 EU
Member States
Short Intro

3. 3
Phased Implementation of CAM
2013
Mid-2015
End-2015
End-2014
Mid-2011
The first stable draft of the
Capacity Allocation Mechanisms
Network Code (CAM NC)
FGSZ decision to create RBP
End-2011
EU pilot project started
with Romania
Hungary-Romania pilot
project goes live
Full implementation
in Hungary
New TSOs join RBP
2016, 2017

4. 4
• Domestic primary or secondary legislation incompatible with
CAM NC
– Network access rules
– Capacity allocation rules
– Licensing – why license passporting is not working yet?
– Different interpretation of bundling – process or product bundling?
• Use of multiple booking platforms – competition or
cooperation?
– CAM: at any single IP, only one platform can be used
– Both models are possible
• Interfacing existing TSO/NU platforms with booking platforms
– TSOs and network users have a wide range of IT systems
– Automated IT interoperability is desired but costly
Challenges in CEE/SEE

5. 5
• Pre-CAM situation: domestic legislation incompatible with..
– Auctions (products, procedure, timing)
– Electronic vs. paper-based contracting
– Equal access to all network points (quantitative and administrative
constraints)
– Market based capacity allocation rules in case of the AT/HU IP
– Booking platform
• Post-CAM situation:
– Auctions introduced for cross-border and domestic points as well
– Red tape significantly cut
Case Study Hungary

6. Regular CAM NC Auctions

7. 7
100 MWh/h+ Yearly Bookings 17/18
Source: RBP, PRISMA
From=>To
Bundled
Booking
(MWh/h/y)
UK=>NI 657
UK=>IE 2 147
AT=>SK 290
CZ=>SK 370
AT=>SI 505
ES=>PT 580
SI=>CR 373
AT=>HU 3 653
HU=>CR 1 735
Total 10 310
Auction Results

8. 8
• Effective competition
on the national
market at wholesale
and/or retail level
• Existence and quality
of information
provision regarding
within-day portfolio
balance
• Level of short term
tariff multipliers
Possible Reasons
Most liquid hubs AND
Diversified gas sources

9. 9
Unbundled CEE/SEE 17/18
Source: RBP
From=>To
Unbundled
Booking
(MWh/h/y)
RO=>BG (RO) 3 492
RO=>BG (BG) 3 081
BG=>GR (GR) 4 548
UA=>HU (HU) 6 819
HU=>UA (HU) 412
Total 18 353
Auction Results

10. 10
Within-day Auctions of FGSZ
Source: FGSZ
Source: FGSZ
• Data collection period:
1.11.2015-18.05.2017
• A total of 1,121 bookings
• A total of 4,393,440 WD
auctions
68%
32%
WD portfolio balancing

11. Incremental Capacity Auctions

12. 12
• Historically, long-term bookings were associated with new
infrastructure development
• Prior to NewCAM NC: no European framework, nationally
regulated and internationally coordinated projects
• After NewCAM NC: European framework, set procedure:
– Non-binding demand collection phase
– Design phase
– Non-binding market test
– Binding market test
• Auctions
• Open Season (alternative allocation mechanism)
Incremental Capacity Processes
Takes at least 2 years
if strictly followed,
implementation
begins after this
(may be too slow
for the market?)

13. 13
• Long-term commitments are much harder to secure
• Practical evidence shows from ongoing projects that
mostly producers are willing to commit for long-term,
traders are less likely to assume such risks. See examples
of two recent projects:
– Nord Stream II „onshore section”
• Easily booked via incremental capacity auctions
• Hungarian regulatory intervention
– Major findings of the ROHUAT process (6-party coordination that
also included a number of open events going on for 3 years)
• Potential auction premium brings financial uncertainty
• Individual year (regular) auctions bring uncertainty for players
envisaging a flat booking profile
• Discussion on the short term quota (10% or higher?)
Long-term Bookings in CEE/SEE
• ROHUAT Open Season
is the most advanced
concept for the
opening of the
Southern Corridor
• 4.4. bcm/y capacity
RomaniaHungary
• 5.25 bcm/y capacity
HungaryAustria
• Open Season Rulebook
under finalisation

14. Thank you for your kind attention!
Contact: btatar@fgsz.hu