German gas TSOs plan Polish, Russian capacity upgrades

Several gas transmission system operators (TSOs) plan to convert German interruptible entry capacity into firm capacity at the German-Polish border and on entry from Russian state-controlled Gazprom's Nord Stream and planned Nord Stream 2 pipelines.

German operators Gascade and Ontras Gastransport, as well as Poland's Gaz System, plan to build additional infrastructure that would boost firm entry capacity to Germany from Poland later this decade.

Gascade plans to turn 407 GWh/d of dynamically allocable capacity (DZK) into freely allocable capacity (FZK) in addition to 261 GWh/d of existing FZK at Mallnow — where Russian gas arrives through the Yamal Europe pipeline. Entry FZK is due to fall to 261 GWh/d from 932 GWh/d following the merger of Germany's two gas markets, NCG and Gaspool, planned for 1 October 2021.

The merger is expected to cut Germany's firm entry capacity by 78pc because of internal infrastructure congestion. Regulator Bnetza has finalised plans to prevent offered capacity from falling. It will introduce a capacity overbooking and buy-back system, as well as additional market-based measures, rather than developing additional infrastructure. But the regime will only be in force until the end of the 2023-24 gas year.

From the 2024-25 gas year onwards, the amount of firm FZK considered to have been sufficient up to that point will be offered to Trading Hub Europe, Bnetza has said. Market behaviour following the merger will help identify this required capacity, and it will be included in Germany's network development plan for 2024-34.

Gaz System would not need to complete any additional physical upgrade to accompany the Gascade works, as existing technical exit capacity from Poland of 932 GWh/d would already be sufficient to meet the requested demand. But the Polish operator is participating in the process in order to market the incremental capacity as a bundled product, the operators said.

The operators will offer 534 GWh/d bundled together for the gas years from 2027-28 to 2041-42 at the auction for annual capacity in July, with 134 GWh/d set aside for future shorter-term auctions. Gascade plans to proceed with the required infrastructure works if there is sufficient uptake at the auction.

Ontras and Gaz System also plan to expand Polish exit and German entry capacity at the neighbouring GCP Gaz-System/Ontras virtual interconnection point to 48.7 GWh/d from just 87 MWh/d following the merger. The operators will offer just under 39 GWh/d for the 2026-27 to 2040-41 gas years, with remaining capacity also set aside for shorter-term auctions (see table).

Firming up Russian entry capacity

German operators plan to upgrade booked DZK to FZK at both Greifswald — where Gazprom's 55bn m³/yr Nord Stream 1 pipeline connects to the German network — and Lubmin 2 — where the firm's 55bn m³/yr Nord Stream 2 pipeline is planned to connect to the German network.

There is a "permanent need" for a capacity upgrade to FZK from DZK on German entry, the operators said. Gascade, GUD, Ontras and Fluxys Deutschland have received a request to convert around 155 GWh/d of already booked DZK to FZK. Gascade would convert 78.5 GWh/d of DZK to FZK, while the other three operators would convert 25.6 GWh/d each.

Gascade plans to offer 72.4 GWh/d at the July auction for the 2027-28 to 2035-36 gas years, while the other three operators are to offer 25.6 GWh/d each. Offered capacity would fall in the 2036-37 to 2041-42 gas years.

And Nel Gastransport — which operates the Nel pipeline, one of Nord Stream 1's onshore continuations — plans to convert 209 GWh/d of previously booked DZK to FZK. The operator will offer all 209 GWh/d at the July auction for 2027-28 to 2031-32, falling to 194 GWh/d for 2032-33 and 2033-34 and to 167 GWh/d for 2034-35 to 2041-42.

The operators plan to use in their economic test the reference FZK price published in regulator Bnetza's draft for the merged market in 2023 of €3.78/kWh/h/yr, or €0.432/MWh.

Market participants can submit comments on the proposals to system operators association FNB until 10 September, including a proposal for new capacity at the Swiss border. The consultation for new German exit capacity to Switzerland had previously been scheduled to end on 20 August.

Plans for new German exit FZK to the Dutch TTF market tied to a separate request for entry FZK at Greifswald and Lubmin 2 will be published on FNB's website on 31 August. The association will accept comments on this proposal until 30 September.

The proposed capacity changes are based on non-binding demand indications received in the first stage of the incremental capacity procedure, as laid out by the EU's network code on the capacity allocation mechanism (NC CAM).

Requested demand at a number of other German border points was insufficient to proceed with the process, including capacity connecting Germany with the French, Austria VTP, Belgian, Norwegian, Czech and Austrian Voralberg networks.

European regulatory body Acer has questioned the value of the biannual procedure, noting that the scheme has not yet led to decisions to expand European grid capacity since its introduction in 2017.

By Jacob Mandel