• Natural Gas News

    EU Energy Transition Means Tariff Surge: VEMW


Dutch gas and power network operators will have to work together to minimise the costs implied by the energy transition and the closure of Groningen, argues the industrial users' lobby group.

by: William Powell

Posted in:

Natural Gas & LNG News, Europe, Premium, Energy Transition, Hydrogen, Carbon, Renewables, Gas to Power, Political, Infrastructure, Pipelines, News By Country, EU

EU Energy Transition Means Tariff Surge: VEMW

Electricity and gas network tariffs are likely to surge in the coming decade as the energy transition gets underway in Europe and the Groningen gas field is closed, Dutch industrial users' body VEMW said January 27.

In order to control this cost explosion and tariff increases, a strong effort will have to be made to integrate systems and use efficient flexibility resources, it said, following a presentation made for its members by network operators January 24.

The energy transition means "billions in investments in the electricity networks." State power grid operator TenneT, plans to invest around €5.5 ($6.1)bn in its high-voltage grids on land and €7bn in the offshore grids by 2030. That compares with the current asset value of €5bn.

Operational costs, in particular for electricity and power, are also rising sharply owing to the shift between supply and demand, with intermittency and decentralisation of production being the most important drivers. The costs for regional network operators are also rising, thanks to the electrification of energy requirements and major investments in infrastructure: €5bn of new infrastructure and €15-25bn of replacement.

The need for natural gas transport will drop with the termination of the domestic Groningen field and substitution by electrification, hydrogen and green gas. The gas transport costs of €800mn/yr nationally and €1.2bn/yr regionally will be borne by fewer parties, who will have to pay more. However the existing infrastructure can at least be used to carry other kinds of gas.

VEMW head Hans Grunfeld said the focus must be on system integration between the various carriers, such as electricity, hydrogen, green gas, heat and CO2, in order to keep tariffs lower. "VEMW argues for the use of all efficient means of flexibility in order to avoid unnecessarily expensive investments. We are pleased that the network operators TenneT, Gasunie Transport Services, Stedin and Liander are entering into open and transparent discussions with us and want to think along with us about taking advantage of opportunities, including a tariff differentiation aimed at removing barriers that frustrate and inhibit the desired energy transition."

Gasunie and TenneT published a study into the new investments needed and the impact of the energy transition on their business January 22, arguing there for close co-operation. Both operators are state-owned.