Abstract
European gas markets have gone through profound restructuring processes in the last 20 years. Directive 98/30/EC represented the first attempt to liberalize this market through the unbundling of gas supply and generation from the operation of transmission networks. The goal of this Directive was the creation of an internal market for gas by breaking up vertically integrated national companies. This commitment to integrate the European gas market was strengthened by Directive 2003/55/EC few years later and then confirmed by the Gas Target Model in 2011. This progressively increasing competition of the European gas market implies significant changes in the pricing system. In particular, it has been envisaged that long-term contracts, traditionally used to trade gas in Europe, could be partially substituted by short-term transactions operated in (liquid) spot markets, possibly organized as implicit auctions. Considering this framework, we investigate the problem of managing a dynamic system of spatially distributed spot markets where gas is traded on an auction basis. These markets are cleared taking into account transmissions, balance, and storage constraints. We propose a set of equilibrium type conditions for this system of markets and show that it is equivalent to a single-level variational inequality problem. In order to find its solution, which yields an equilibrium trajectory, we apply a dual type method. Numerical experiments are conducted on the gas spot markets developed in the Netherlands and in the United Kingdom.
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Directive 98/30/EC available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31998L0030&from=IT
Directive 2003/55/EC available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32003L0055&from=IT
The churn ratio is defined as “the multiple of traded volume to actual physical throughput: a measure of the number of times a “parcel” of gas is traded and re-traded between its initial sale by the producer and the final purchase by the consumer” (see Heather and Petrovich2017).
Figure 1 has been taken from the information document on the BBL interconnector available at https://www.bblcompany.com/
See the BBL technical information available at https://www.bblcompany.com/about-bbl/technical-informationhttps://www.bblcompany.com/about-bbl/technical-information
See Eurostat database at http://ec.europa.eu/eurostat/data/database
See Eurostat database at http://ec.europa.eu/eurostat/data/database
See Eurogas, Natural Gas Demand and Supply-Long Term Outlook to 2030. Available at http://www.eurogas.org/uploads/media/Statistics_Eurogas_long_term_outlook_to_2030_-_16.11.07_01.pdf
This percentage is obtained by own computations using data provided by ENTSO-E for 2016. Net generating capacity data for European countries are available at https://www.entsoe.eu/data/power-stats/net-gen-capacity/
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Acknowledgments
The results of the third author were obtained within the state assignment of the Ministry of Science and Education of Russia, project No. 1.460.2016/1.4.
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Appendix: Input data
Appendix: Input data
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Allevi, E., Gnudi, A., Konnov, I.V. et al. Dynamic Spatial Equilibrium Models: an Application to the Natural Gas Spot Markets. Netw Spat Econ 22, 205–241 (2022). https://doi.org/10.1007/s11067-019-09458-5
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DOI: https://doi.org/10.1007/s11067-019-09458-5