04/19/2023
Source: Energy & Management Powernews
The think tank Agora Energiewende sees no future for gas grids in view of the declining importance of natural gas and makes proposals for the transformation of grid operations.
"It is not about tearing down the gas networks," notes Simon Müller, Director Germany at Agora Energiewende, at the presentation of the study "A New Regulatory Framework for Natural Gas Distribution Networks. Analyses and options for action for an affordable and climate-target-compatible transformation." And adds, "One of the essential things we have worked out is that it makes much more sense to decommission networks instead of dismantling them."
But Müller left no doubt that the gas distribution networks in Germany will indeed no longer be needed on the current scale for much longer. In all goal-conformal climatic neutrality scenarios fossil sources of energy in the sectors traffic, warmth and industry would be replaced to a large extent by river. Gas demand for energy would fall by up to 97 percent, and even hydrogen demand would not compensate for this decline: On average, it is only 30 percent of today's demand for natural gas for energy. And that means that by 2045, natural gas networks will be "virtually superfluous. Even if hydrogen conversion is taken into account, the study states, gas network demand will fall by more than 90 percent.
In cooperation with the consulting firm BET, with legal advice from the law firm Rosin Büdenbender, and in exchange with 20 natural gas supply companies, a catalog of measures has therefore been developed that enables the corresponding transformation of the networks. This is based on three pillars:
1. Efficient transformation paths In further development of the municipal heat planning, it is necessary to create an energy distribution strategy and thus to identify in a linkage of municipal and nationwide planning where there is still a concrete need for a supply of gas. (Partial) networks that are no longer needed can then be decommissioned quickly. Coordinated planning could also ensure that local planning took into account the overall availability of hydrogen and biomass at the national level.
2. Viable regulatory framework for network operators Already today, the operation of gas networks generated considerable costs, which increased even more with the increasing age of the networks. For example, the total value of the infrastructure is around 60 billion euros, compared with annual costs of just under 10 billion euros. Forward-looking planning and orderly decommissioning, which could be stimulated by a bonus system, could reduce these high operating costs and halve the total annual costs of the network, which would also lead to a dampening of the increase in network charges.
In addition, Agora proposes an advanced depreciation period to 2045 and a shortened regulation period of a maximum of three years, so that cost savings could be passed on to customers quickly. For lines that are no longer needed, there should only be an obligation to dismantle them in individual cases according to clear criteria, and simple decommissioning should become the rule.
3. Social security If the current plans and regulations, which are geared towards permanent maintenance, were to be continued, grid charges could rise nine to sixteenfold by 2044, according to the think tank's calculations. But even if all the proposals were implemented, network charges for the remaining customers would rise due to the declining number of gas connections. "In the current regulatory framework, the last customer still connected to the grid would bear the entire grid costs in extreme cases," Müller said. Agora's proposal therefore provides for social security. "Complementing an efficient regulatory framework, a state subsidy system can specifically cushion the excessive increase in grid fees."
"This study is a package solution," Müller said in summary. On the one hand, he said, it recognizes that there is a massive decline in gas grid demand. "That is, this is where business models that have been extremely viable in the past end up." But at the same time, she said, the study also offers comprehensive proposals for carrying out the necessary transformation and continuing to enable grid operations.
The full study is available on the Agora Energiewende website.
Author: Katia Meyer-Tien
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