Transcript Document

GIE Annual Conference
3 November 2005, Athens
How trading contributes to
security of gas supply
Colin Lyle
Chairman of the Gas Committee
European Federation of Energy Traders
[email protected]
www.EFET.org
EFET’s basic position
“Proper long-term functioning of markets
will guarantee energy security of supply
and attract investors”
EFET (Electricity committee)
Press statement 24 February 2005
www.EFET.org
Reliability and diversity are
risk management issues
“security of supply comes down to a risk
management strategy…
there is ample of evidence that the market
can be an efficient tool for achieving
security of supply”
Centre for European Policy Studies
Reports and articles 2004/5
www.EFET.org
Security of supply is not absolute
What is the cost of reducing the risk of
disruption (to consumers) compared with
the value of improved continuity of
delivered supplies?
… are we paying too much already?
www.EFET.org
Were integrated ‘single buyers’ successful
in delivering supply security?
Integrated grid and merchant Monopolies had
some clear advantages regarding supply security
• Purchasing power & economies of scale … but
with all costs (good or bad) passed to consumer
• Centralised operation, supply planning and
system design … but did this lead to the right
investments and the most efficient operation?
• Sole responsibility for emergency response
… used frequently for managing blackouts!
www.EFET.org
Integrated Monopoly model is gone
2003/55/EC changed EU gas market structure,
with unbundling of infrastructure from supply.
• The old security of supply model is no longer available
to the European gas industry
• The competitive market has the potential to provide at
least the same level of supply security more efficiently.
• Half turning back to old ways could lead to disaster.
www.EFET.org
And new combinations exist…
•Governments can set the required outputs in
Security of Supply Policy
•Markets can deliver more cost-effective and
innovative energy supply solutions
•The TSOs must still provide timely capacity to
deliver energy to consumers through sufficiently
diverse routes.
www.EFET.org
How can trading help?
•Transparency provides confidence, and ensures
capacity is made available.
•Ability of market to use resources more efficiently
than by central planning.
•Market price signals & freedom to invest brings
forward supplies and infrastructure.
•Demand signals become meaningful and
customers respond.
www.EFET.org
Trading is essential for
Europe’s gas security of supply
“The greatest danger to the future security
of Europe’s gas supplies is the continuing
uncertainty and delay in implementing a
single energy market.”
EFET (Gas Committee)
Position paper October 2002.
www.EFET.org