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Underground gas storage area of Incukalns
Unless introducing new regulations, the underground storage of gas Inčukalns (Inčukalns UGS) may not be able to fulfill the functions of a strategic object badigned to it, guaranteeing energy security and energy efficiency. Independence of Latvia in the future. Thus, by launching a discussion on the development of a sustainable business model for UGS Incukalns, the unified manager of the AS natural gas transportation and storage system Conexus Baltic Grid.
The need for a viable solution at the conference "The contribution of underground natural gas storage to solving supply security issues" was discussed by industry experts and policymakers. During the conference, the current situation on the Latvian market and the international experience gained in France, Hungary and Poland, where natural gas storage operators are facing problems similar to those currently encountered in Latvia , have been discussed. The conference participants agreed that the solution had to be found.
"It makes sense that we are raising the discussion right now, because after the opening of the natural gas market in the spring of 2017, we have drawn the first conclusions.While the benchmark in Latvia is regulated, the country is not required to use it, and its performance is left to the market itself.Therefore, storage is 60% loaded, without covering infrastructure maintenance costs ", says AS Conexus Baltic Grid Chairman of the Board Zane Kotne.
It explains that the demand for storage services increases if the market creates a price gap between winter and summer that has declined significantly in recent years. For example, the summer / winter price difference of 2018 averaged 0.5 EUR / MWh, which covers only 30% of the cost of storing existing storage.
"These are serious signals that encourage the adoption of decisive and responsible decisions at the national level, clearly answering the question: do we want the UGS Incukalns to continue to have a resource that guarantees energy security and security? the independence of Latvia and the entire Baltic region? " Are we still convinced of the security of natural gas supply in Latvia and throughout the region, even in case of prolonged cold or problems of external supply of natural gas? International experience shows that Latvia is not in a unique position in its choices. Other countries have been confronted with such reforms and our most important task is to agree on a binding and viable long-term model. It should be noted that the conference marked a positive trend: market players want to continue negotiations and seek the best solution for Latvia, because the benefits of storage, such as security of supply, the ability to react flexibly to price fluctuations and rush hour, as well as the balance of products offered by merchants are irrevocable, "the discussion began is Kotaine.
The situation is similar in Europe – Gas Infrastructure Europe (GEI) conducted a study on a sustainable natural gas storage market, identifying the causes of the problem and illustrating possible solutions. The countries have opted for different solutions: national strategic reserves have been introduced in Hungary, which ensure the financial performance of the storage facilities and the energy security of the country; In Poland, operators have been obliged to guarantee the supply of natural gas from storage, with the exception of the LNG terminal, but in France, a complex solution has been introduced: the national decision to recognize the storage as an integral part of the transport system and to ensure that storage costs are covered by the transport tariffs.
It is expected that Conexus Baltic Grid, taking into account the experience and suggestions of other countries, will continue discussions with industry experts and market players in order to present shortly proposals for a solution adapted to the situation in Latvia, guaranteeing the continuous operation of the underground storage of Inčukalns. One of the other ways is to stimulate the amendments to the energy law.
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