European regulatory agencies want a single gas market in 2014, but face major obstacles in accomplishing that goal, the CEO of UK energy regulator Ofgem, Alistair Buchanan, said Wednesday.
One area, the Guidelines for New Infrastructure, involves building interconnectors between countries, but judging by one such, a link between Slovakia and southern Poland, the rate of progress is glacial.
"Nothing has moved; it is going to be a long, long, grind," Buchanan told the Flame conference in Amsterdam.
There are 43 such projects in the North-South corridor alone.
There was also too much vague language in the documents such as the Guidelines that would help to bring this single market about, so that lawyers would be kept busy deciding what "appropriate incentives" might mean in any context and what companies would need to do to "display" the approved behaviors relating to "social and economic visibility," Buchanan said.
This extends to other, related documents, such as the Regulations for Energy Market Integrity and Transparency, where the definition of a "market participant" remains unclear, according to some delegates at the conference.
The European Commission is also in disagreement with the Association for the Cooperation of Energy Regulators over the precedence of the Projects of Common Interest -- which Buchanan said added up to some GBP9 billion ($14billion) -- and the Ten Year Statements.
Apart from semantics, there are problems too facing the different member states' energy policies, which have been left to them to decide, he said.
The UK has no public service obligations; some countries have a storage obligation. In others leave shippers responsible for the PSO and in others again there is strategic storage, which the government takes control of. These PSOs can override all other considerations, he said.
Another difficulty is the gas-power markets link across Europe, Buchanan said. Power markets tend to be driven by politics and targets, he said. This might not sit easily with a gas market that is more driven by trading.
This combination of problems affecting the single gas market could leave the UK in difficulties in the coming years because it is facing a power capacity problem in the latter part of this decade, he said.
Under the European Large Combustion Plant Directive, some coal-fired plants will have to close earlier than was thought two years ago, as they have been worked harder than people imagined and the LCPD set a fixed number of remaining operating hours, he said.
Nor will new nuclear plants likely be up and running by 2020, he said, again marking a change from the view of two years ago.
The combined effect is to leave the UK relying on more gas, not less,in the coming years; an expected drop in gas use from 100 billion cubic meters a year to maybe 70 Bcm/year is now going to change to gas demand growing above 100 Bcm/year, at a time when there is much uncertainty over gas supply projects, both of LNG and pipeline gas.
"The single gas market idea has been hijacked by the power market and the speed of events," he added.
