This document discusses three academic issues with the EU internal gas market from the perspective of transmission services.
1. Local border barriers can be reduced by optimizing the size of entry-exit zones through potential zone mergers or improved market coupling.
2. Distance border barriers could be reduced through an EU-wide bundled transmission product and centralized booking platform.
3. Balancing gas market distortions may occur between users with very high versus very low linepack needs, so cross-subsidies between these groups should be avoided.
1. Any market mark in the EU?
An academic perspective
GIE Annual Conference
Krakow – 25 May 2012
Jean Michel Glachant
Florence School of Regulation and Loyola de Palacio Chair
European University Institute
2. Any need to design any market?
Consumer
Producer
Consumer
B
Producer
B
3. Consumer
Consumer
A
A
Producer
Producer A
A
Consumer
Consumer Producer B
Producer B B
B
8 in the morning 8:07 in the morning
May we choose network simplification to ease trade?
4. How EU Entry/Exit zones do promote gas trade?
Straight TRANSMISSION SERVICE
(= Straight US market)
Simple Point-to-point
A B
6. Another type of flexible TRANSMISSION
SERVICES enlarge size of market area
Straight Entry-Exit
(= Locational flexibility) Bn
B4
B3
B2
A B1
T=1
7. Highly flexible TRANSMISSION SERVICES
highly enlarge market area
(EU ‘Third Package’ market)
Entry-Exit + time Bn
flexibility B4
B3
B2
A B1
T=1
time
T=max
8. Market borders back with TRANSMISSION SERVICES shift
(local) Intra zone trade vs (EU) inter zones trade
9. Three academic issues with EU internal market
Issues Key words
1-Local border barriers ¤size of E/E zones matters
* merger of zones?
** market coupling?
2-Distance border barriers ¤EU bundled product offer
& EU booking platform?
3-Balancing Gas (& Elec) ¤No cross subsidies
Market distortions between Very High / Very
Low linepack users