TIGF TRANSMISSION GRID TEN-YEAR NETWORK DEVELOPMENT …€¦ · The BP Energy Outlook 2016 and the...

TIGF TRANSMISSION GRID

TEN-YEAR NETWORK

DEVELOPMENT PLAN

2016-2025

TIGF Long Term Plan 2016-2025

CHAPTER

PAGE

CONTENTS

•A WORD FROM THE

MANAGEMENT

•TIGF IN BRIEF

•BACKGROUND INFORMATION..5

The energy transition law

The merger of French marketplaces

•FLOWS FORECAST ……………….8

Demand

Supply

•THE LONG-TERM PLAN ……....14

Key events

Fluidity investments

Public service obligation - Regional grid

Public service obligation - Safety and maintenance

Support for energy transition

2

REGULATORY

FRAMEWORK

Extract from Article L431-6 of

the Energy Code:

“Every year, transport

system operators created

from the legal separation

provided under Article L.

111-7, and following

consultation with

interested parties, in

accordance with

arrangements determined

by them, shall draw up a

ten-year development

plan for their transmission

network based on existing

supply and demand as

well as reasonable

medium-term forecasts

for the development of

gas infrastructures, gas

consumption and

international exchanges.

That plan must take into

account hypotheses and

requirements identified in

the report relating to the

planning of investment in

the gas sector prepared

by the minister with

responsibility for energy.

The ten-year plan shall

mention the main

transmission

infrastructures which

must be constructed or

modified in a significant

manner over the following

ten years and list

investment already

committed along with new

investments which must

be made within the

following three years,

providing a provisional

schedule for the

completion of all planned

investment.

Every year, the plan is

submitted for examination

by the Commission de

Régulation de l’Energie.”


CHAPTER

PAGE

A WORD FROM THE MANAGEMENT

3

This year, it is TIGF’s intention to publish this brochure presenting its Ten-

Year Development Plan as a supplement to the presentation given at the

Concertation Gaz meeting in November 2016.

TIGF, now a national player in the transport of natural gas in France,

particularly through the merger of marketplaces sought by the Regulator,

thus wishes to share its vision and analysis of a European market

undergoing significant changes.

It is this prospect of progressive integration of markets which has enabled

us to construct the investment programme presented in this document.

This document therefore sets out the way in which demand for gas will

change over the coming years, but also those aspects which help us

establish the context in which those changes will take place.

We very much hope this document will help you and can be shared with all

players in the industry so that they can understand and use it in their own

decision-making.

TIGF thus hopes it will fully exercise its role as a responsible player on its

local market, but also at the national and European level. The recent joint

publications to the various system operators (Bilan Prévisionnel

Pluriannuel Gaz and Winter Outlook) are concrete evidence of that desire.

I hope you find it interesting.

Dominique Mockly

CEO, TIGF


CHAPTER

PAGE

TIGF IN BRIEF

4

TIGF

is a company with

582 employees,

established for 70

years in the

southwest of France,

with its registered

office in Pau

(Pyrénées-

Atlantiques). At the

heart of

interconnections

between France and

Spain, halfway

between the North

Sea and Algerian gas

reserves, TIGF

occupies a strategic

place in Europe.

STORAGE

TIGF operates two underground

natural gas storage facilities, at our

Lussagnet (Landes) and Izaute

(Gers) sites. The two underground

storage sites represent nearly one

quarter of France’s underground

natural gas storage capacity.

Withdrawn gas can supply

consumers in the whole of TIGF

perimeter as well as in neighbouring

networks. Thanks to their geographic

position, Lussagnet and Izaute are at

a crossroads of south European gas

exchanges.

TRANSPORT

The transport business allows

shippers to direct volumes of gas

from one point on the grid to another.

The gas may be consumed directly

within the area by public distribution

or industrial customers directly

connected to the network. It can also

simply pass through the TIGF area to

other consumption areas. Through its

activities as a gas transporter, TIGF

is bound by a public service

obligation (OSP decree, 19 March

2004).


BACKGROUND

INFORMATION

CHAPTER 1

The energy transition law

The merger of French marketplaces


CHAPTER

PAGE

THE ENERGY TRANSITION LAW

The “Loi de Transition Energétique pour la Croissance Verte” (LTECV) was

passed on 17 August 2015. It establishes France’s energy policy

framework along with precise targets by means of specific medium-term

objectives.

Source : Ministère de l’Ecologie, du Développement Durable et de l’Energie

The LTECV is broken down into two implementing decrees:

• The Long Term Energy Schedule (PPE), which sets out priority actions

by industry (published on 27 October 2016)

• The National Low Carbon Strategy (SNBC), which sets out strategic

principles for implementing the transition to a low-carbon economy

6

• 1

EUROPEAN

TARGETS FOR

2030

The climate and

energy framework

adopted by EU

leaders in October

2014 (*) sets three

main targets for

2030:

to reduce

greenhouse gas

emissions by at least

40% (compared with

levels in 1990);

to increase the

share of renewable

energy consumed to

at least 27%;

to improve energy

efficiency by at least

27%.

(*) see the conclusions of the

European Council on 23 and

24 October 2014

(www.consilium.europa.eu)

GAS AND ENERGY TRANSITION

Natural gas is the fossil fuel best placed to meet the challenges of the Energy

Transition

• Moderate carbon content (combustion)

• Efficiency of the energy chain

• Abundance and diversity of supply sources

• Significantly reduced emission of pollutants, particularly profitable to

the transport sector

Gas can also come from renewable sources, for injection into networks or for

use as a fuel:

• Biomethane, with a target set in the PPE of 8 TWh/year in 2023, for

injection into networks

• Synthesised methane or hydrogen obtained through power-to-gas

technology, enabling the integration of electricity and gas grids and

providing a solution to the crucial problem of storing surplus

electricity production

- 40% greenhouse

gas emission in

2030 compared

with 1990

- 30% fossil fuel

consumption in

2030 compared

with 2012

Raise the share of

renewable energy to

32% of final energy

consumption in 2030

and 40% of electricity

production

Reduce final energy

consumption by 50%

in 2050 compared

with 2012

-50% waste sent to

landfill by 2025Diversify electricity

production and reduce

the share of nuclear to

50% by 2025


CHAPTER

PAGE

THE MERGER OF FRENCH MARKETPLACES

• TOWARDS A SINGLE MARKETPLACE

On the first of April 2015, in accordance with the schedule approved by the

Energy Regulatory Commission (CRE), TIGF merged its market area with that of

GRTgaz Sud, thus creating a single area identified by the acronym TRS, for

Trading Region South.

The TRS market area is based on a so-called “Trading Region” model. It is one of

the European market integration models identified by the regulators. The Trading

Region model, with the creation of TRS, has made it possible to maintain two

independent balancing areas within a single enlarged Entry/Exit tariff area.

Following the completion of the Val de Saone (GRTgaz) and Gascogne-Midi

(TIGF) projects approved with a view to creating a single marketplace in France

by 2018, the Trading Region model in its “France” version will allow the merger of

the PEG North and TRS market areas, while still maintaining the GRTgaz and

TIGF balancing areas.

7

• 1

KEY FIGURES

FOR TRS

2 adjacent gas

markets

Consumption 12bn

m³/yr

2 LNG terminals

3 storage groups

3 interconnection

points

200 TWh

exchanged since

01/04/15

+46% on the spot

market over the first

quarter


FLOWS FORECAST

CHAPTER 2

Demand

Supply


CHAPTER

PAGE

DEMAND

• BACKGROUND

The LTECV Law modifies Article L141-10 of the Energy Code, and requires

transport and distribution system operators to publish a “Bilan Prévisionnel

Pluriannuel” (BPP) at least once every two years, taking changes in consumption

into account.

• Against this background, TIGF, GRTgaz and GRDF, in coordination with

SPEGNN, have established consumption scenarios running until 2035, presented

to the market at a consultation meeting on June 23rd 2016.

• CONSUMPTION SCENARIOS

The prospective scenarios were established in harmony with those of

ENTSOG, which were used to create the Ten Year Network Development

Plan (TYNDP 2017).

ENTSOG developed 3 scenarios, where the main factors were economic

growth and energy ambitions.

Source : ENTSOG

Each ENTSOG scenario develops a vision based on a certain number of

parameters (use of gas for transport, oil prices, renewable energy development

etc.).

The scenarios developed as part of the BPP can be summarised as follows:

• The central reference scenario A corresponds to current trends in

renewable energy and energy saving

• High scenario B, supported by renewed economic activity, encourages

energy saving and the development of renewable energy. In this scenario,

electricity production and the development of gas-powered transport play

an important role.

• Low scenario C assumes a gloomy economic context, leading to a

slowdown in energy saving measures.

9

• 2

EUROPEAN

DEMAND

The BP Energy

Outlook 2016 and the

World Energy

Outlook estimate

average annual

growth rates in

demand for gas to be

0.9% and 1.7%

respectively (by

2025).


CHAPTER

PAGE

Scenario AScenario B Scenario C

(central)

Demographics Tracking of growth in number of households

Economic growth Moderate Stronger Weaker

Energy efficiency High Greater Less

Renovation of building

stockHigh Greater Less

Development of

renewable energiesHigh Significant Less significant

Substitution Moderate High Low

DEMAND

• RESULTS

• Results are expressed as Average Annual Growth Rate (AAGR) for the period 2015

to 2025

• For the residential and tertiary sectors, TIGF’s AAGR sits within the same range as

those for France, the differences originating in the regional specificities which

have been taken into account.

•

10

• 2

GROWTH

FACTORS

GROWTH IN

CONSUMPTION

Segment Scenario A Scenario B Scenario C

AAGR 2015-2025

France

Residential & Tertiary -1.0% -0.7% -1.4%

Industry -0.7% -0.2% -1.6%

Elec. Prod. 3.6% 4.2% 3.6%

Gas-powered transport 12.2 TWh in 2025 22.2 TWh in 2025 6.1 TWh in 2025

Total -0.1% 0.5% -0.7%

AAGR 2015-2025

TIGF

Residential & Tertiary -0.8% -0.7% -1.3%

Industry -0.3% 0.7% -1.2%

Elec. Prod. N/A 4 TWh in 2025 N/A

Gas-powered transport 1.4 TWh in 2025 3.1 TWh in 2025 0.7 TWh in 2025

Total -0.2% 1.9% -1.0%


CHAPTER

PAGE

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

20152016

20172018

20192020

20212022

20232024

2025

Scénario C (low) Scénario A (référence) Scénario B (high)

12,3

7,0

7,2

0,7

12,9

7,5

8,7

4,0

3,1

12,9

7,4

7,8

1,4

DEMAND

11

• 2

Scenario A Scenario B Scenario C

AAGR 2015-2025

-0.2%

AAGR 2015-2025

1.9% with CCG

(0.7% without CCG)

AAGR 2015-2025

-1%

Installation of a

Combined Cycle Gas

power plant

2025 VISION

Scenario A : 29,5 TWh

Scenario B : 36,2 TWh

Scenario C : 27,2 TWh

TIGF VISION

2016-2025

12,9

7,4

7,8

1,4

Scénario A (référence)

Residential Tertiary Industry CEP + Cogen Gas-powered transport


CHAPTER

PAGE

SUPPLY

• A MARKET DOMINATED BY SUPPLIES VIA GAS PIPELINES

More than 75% of gas arriving in France is piped gas, chiefly from Norway, Russia

and the Netherlands.

LNG arriving in France is mainly Algerian, accounting for 9% of the total supply,

with other sources such as Nigeria, Peru and Qatar making up just 5%.

12

• 2

EUROPEAN MARKET SUPPLY

Production:

European natural gas production is basically assured by the Netherlands and

the United Kingdom (71% of the total). Biomethane production has seen rapid

growth but remains marginal in European supply.

European gas production is falling by about 2.5% per year, reaching 102 bcm

in 2020 and 90 bcm in 2025, due to numerous production fields reaching the

end of their life.

Imports:

European gas imports chiefly comprise piped gas from Russia (43%) and

Norway (35%), and LNG (13%).

The market share of Russian gas in EU consumption should hold at 32% by

2025. Meanwhile, Norwegian exports should decrease at a rate of 0.9% per

year over the next ten years.

Production from US and Australian projects will lead to a big rise in world LNG

production capacity and by 2020 will generate an excess for Europe of

approximately 110bn m³ according to BG/Shell estimates.

Sources: World Energy Outlook, Oxford Energy Institute, Wood Mackenie, BP

Statistical Review 2016

17%

38%21%

10%

5%

9%

French gas suppliesN(atural) G(as)Netherlands

NG Norway

NG Russia

NG Other

L(iquefied) N(atural)G(as) Other

LNG Algeria


CHAPTER

PAGE

FOCUS

COMPARISON OF VOLUMES 2015-2016

Having increased by 30% between 2014 and 2015, entries of regasified

LNG into the Iberian peninsula remained stable between 2015 and

2016.

Coupled with stable Spanish consumption and slightly increased

entries of Algerian gas, flows into Spain have remained stable, and

South to North flows have increased.

ON THE TRANSIT WITH SPAIN

13

• 2

South to North physical flows in TWh

North to South physical flows in TWh

0

5

10

15

20

25

30

35

40

2015 cumulated exit 2016 cumulated exit

0

1

2

3

4

5

6

7

2015 cumulated entry 2016 cumulated entry


THE LONG-TERM PLAN

CHAPTER 3

Key events in 2016

Fluidity investments

Public service obligation - Regional grid

Public service obligation - Safety and

maintenance

Support for energy transition


CHAPTER

PAGE

ACHIEVEMENTS IN 2016

• COMMISSIONING OF THE ADOUR ARTERY

The Adour Artery, a pipeline between Coudures and Arcangues, was brought into

service in December 2015.

This new interconnection allows transit capacities to be increased at Biriatou, one of

the two border point between France and Spain, with Spanish operators able to

connect directly to the French storage site at Lussagnet.

• REGIONAL NETWORK REINFORCEMENT

• 2016 saw two regionally important projects being brought online:

- - Reinforcement of the Parentis-en-Born branch, an area fed since 1984 by a

pipeline which is now saturated, given the growth in consumption and particularly

in public distribution. The project, comprising a DN 100 pipeline approximately 10

km in length, was brought into service in November.

- - The resumption of public distribution supplies to Salies-du-Salat after the

pipeline which historically supplied the commune was taken out of service due to

safety concerns. This project, which consisted in the construction of a DN 100

pipeline approximately 4 km in length, was brought online in November.

• BIOMETHANE INJECTION

• Since the start of 2016, the Biovilleneuvois plant, now functioning at its nominal rate

of 45/50 GWh/yr, injects its production in TIGF network.

15

• 3

Salies du Salat

Parentis en Born

Biomethane


CHAPTER

PAGE

• SHORT AND MEDIUM TERM

TIGF completes the delivery of development projects approved for the West

Corridor with the commissioning of a 5.5 MW compressor at Sauveterre-de-

Guyenne in 2017.

TIGF also conducts the development of the Gascogne-Midi infrastructures

required for the implementation of a single French marketplace. The

commissioning of these infrastructures is planned for the end of 2018.

Coupled with the Val de Saône project (GRTgaz), these infrastructures will make

it possible to eliminate partially the congestion on the French grid in the North to

South direction, and reduce the dependency on LNG in the South East of France.

Additional contractual mechanisms will be put in place in order to avoid eventual

tensions on the grid.

In the medium term, TIGF conducts the conceptual studies of the reinforcement of

its AGU compression station to satisfy flow variability and fluidity constraints.

FLUIDITY INVESTMENTS

16

• 3

2016

2017

2018

2019

2020

2021

2022

Gascogne Midi

AGU

Compression

Sauveterre

Compression


CHAPTER

PAGE

FLUIDITY INVESTMENTS

• LONG TERM

In the European context, TIGF is studying the opportunity for a new

interconnection between France and Spain in the east of the Pyrenees by 2022.

This project is known as the STEP (South Transit East Pyrenees) project.

The French part consist in a 120km pipeline between the Barbaira compression

station near Carcassonne, and the border at Le Perthus. Further construction is

planned on the Spanish side, to be undertaken by the Spanish gas system

operator, Enagas.

This project has received the support of the European Commission in the form of

grants for the study phase, covering 50% of the costs, on both sides of the border.

These studies will make it possible to confirm the feasibility of the project from the

technical, planning and financial point of view.

17

• 3

2016

2017

2018

2019

2020

2021

2022 STEP


CHAPTER

PAGE

FOCUS

Following the signing of the Madrid Declaration in 2015, a High LevelGroup steered by the European Commission was established to monitorthe implementation of that Declaration.

Regulators and Ministries from the countries involved (Spain, France andPortugal) along with transmission system operators are involved in theGroup.

As part of the scheme, and at the request of the competent authorities, ajoint technical study by Enagas, GRTgaz and TIGF was launchedconcerning the MIDCAT project.

In mid-2015, that study identified two technical solutions:

- One solution which guarantees fixed capacities at the French-Spanishborder. Part of the associated infrastructures solves the pre-existingFrench South to north congestions (the MIDCAT project).

- One simplified solution which consists in connecting the French andSpanish networks, and offers interruptible capacities to the market (theSTEP project).

The conclusions shared by the three operators were presented to the HighLevel Group in April 2016.

To summarise:

MIDCAT project

In the South → North direction, the identified infrastructure generates690 GWh/d firm capacity on the French side, a third of which (i.e 230GWh/d) is dedicated to the cross border capacity.

In the North → South direction, the firm capacity generated (i.e. 160GWh/d) is dedicated to the cross border capacity.

Its total cost is approximately €2,500m.

STEP project

The STEP project meanwhile generates interruptible capacities at theFrench-Spanish border: up to 230 GWh/d South → North and 180GWh/d North → South.

Its total cost is approximately €320m.

These two projects will each be the subject of a Cost/Benefit analysisin 2017.

ON STEP AND MIDCAT

18

• 3

THE MADRID

DECLARATION

On 4 March 2015, the

French, Spanish and

Portuguese heads of

state and

government signed

the Madrid

Declaration

alongside the

European

Commission.

That declaration

identifies a list of

strategic projects to

study, including the

MIDCAT project,

which would allow

the Iberian

Peninsular to come

out of its energy

isolation.


CHAPTER

PAGE

PUBLIC SERVICE OBLIGATION – REGIONAL NETWORK

• PROJECTS NOT YET APPROVED

Limited capacity branches allowing for positive changes in consumption:

• Rion-des-Landes branch: This project was initiated due to strong prospects

of growth in public distribution in Rion-des-Landes. Preliminary and design

studies were conducted in 2015 and detailed design studies are under way.

It will consist in constructing a DN 200 pipeline approximately 27 kilometres

in length to connect the Castet and Rion-des-Landes branches.

• Capens – Pamiers branch (declassified pipe network): In view of its

declassification, this historic pipeline (1947) of limited capacity must be

renewed very quickly for reasons of safety and rising business demand

(commissioning planned for 2018). The project will consist in constructing

approximately 45 kilometres of pipeline and abandoning the existing pipeline

along a 50 kilometre length.

• Montauban - Albi - Rodez area: study with a view to increasing the supply of

the three branches with growing consumption at their extremities.

19

• 3

2016

2017

2018

2019

2020

2021

2022

Montauban –

Rodez - Albi

Rion des Landes

Capens - Pamiers


CHAPTER

PAGE

PUBLIC SERVICE OBLIGATION - SAFETY AND MAINTENANCE

Due to regulatory changes, stakeholder requirements and its own safety

policy, TIGF conducts a multiyear modernisation program on its network to

ensure its safety and reliability (€30m/yr on average over the last five

years).

Work involved:

• Exits from towns and urban areas

• Replacement of overhead crossings and replacement of underground

crossings

• Reconstruction following damage or findings from the 10-year inspection

plan

• Improvements to limit affected areas (Hazard study)

• Improvements following third party projects

• TIGF will continue its effort on an aging network at

the same rate over the next ten years (50% of the

network is more than 50 years old).

20

• 3

0

5

10

15

20

25

30

35

40

RD 2012 RD 2013 RD 2014 RD 2015 RD 2016

26,2

36,3

25,728,9

34,2

M€

Safety and Maintenance


CHAPTER

PAGE

SUPPORT FOR ENERGY TRANSITION

• BIOMETHANE

TIGF manages the register of biomethane injection capacities over the 15

departments of the Southwest. That register is designed for the administration of

the injection capacities declared by project owners on both the transmission and

distribution grids.

To date, tens of prospects have been declared and a plant has been in production

since 2015 (Biovilleneuvois).

To meet the targets of the energy transition law, and bearing in mind the short-

term forecasts, TIGF plans to connect one production plant per year until 2023,

then two per year between 2023 and 2025. It is also planned to commission one

backflow unit per year from 2023 onwards.

• NGV

TIGF is an active player in the development of NGV, particularly through:

• Participation in AFGNV activities

• Urban transport project support and studies

• Contacts for supplying motorway stations

To date, tens of prospects have been identified across the distribution grid. TIGF

plans an average of one NGV station connection per year directly to the

transmission grid from 2018.

• POWER TO GAS

Power to Gas (P2G) technology enables integration of the gas and electricity grids,

and provides a solution to the intermittency problems of renewable energy.

Unconsumed electricity is used to produce renewable and local gas : hydrogen

(H2) and methane (CH4). Industrial plants could be developed from 2025

onwards.

TIGF is involved in a pilot project, JUPITER 1000, with 8 other industrial partners.

Operation is scheduled for 2018 to 2020.

21

• 3

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