Transmission system operators can guarantee transport despite tight market situation

Current price developments on the major energy trading hubs testify to high demand for natural gas in Europe and the world. German transmission system operators nevertheless expect to be able to fulfill their transport task in the winter. “We can understand that people are worried in view of the unusually sharp rise in prices. We have no influence on prices, but at least we can tell them as shippers that supplies are secure,” says FNB Gas Chairman Dr. Thomas Gößmann.

The reasons for the exceptional market situation are manifold: from the recovery of the economy after the difficult pandemic year – combined with particularly strong demand, especially in Asia – to the gradual coal phase-out being implemented in many countries. The coal phase-out not only requires an increased expansion of renewable energies, but also assigns gas-fired power plants a stronger role in the energy mix, at least in the medium term. This is also reflected in the increased capacity requirements of distribution system operators and power plant operators in southern Germany.

The transmission system operators (TSOs) expect that the unusually high prices for natural gas on the European markets will continue to characterize the winter of 2021/2022. After peaking at 113.73 EUR/MWh on 07.10.2021[1], the price in the new Trading Hub Europe (THE) market area has stabilized at a still high level around 85 EUR/MWh.

Nevertheless, the TSOs see no cause for concern as far as security of supply in the winter months is concerned. “After assessing all parameters, we assume that the gas infrastructure operators will be able to ensure a safe and reliable supply for the coming cold period. The basis for this is our 40,000-kilometer network, the connected storage facilities, high-tech control systems and continuous monitoring. Last but not least, the approximately 5,000 employees of our member companies, who have implemented many projects and measures this year to ensure a reliable gas supply in Germany, stand for this,” says Gößmann. Storage levels are an important indicator of secure supply. As of Nov. 1, 2021, these stood at 68 percent. “Of course, we are keeping a careful eye on the current below-average levels throughout the winter so that we can react quickly in case of doubt and fall back on proven hedging instruments,” explains Gößmann. “At the moment, we see sufficient flexibility to cover peak demand in gas supply and in the procurement of balancing power.”

[1] PEGAS Average Price per Delivery THE