Table of contents
In our previous article we covered the current market conditions of Hungarian gas storage facilities and the difficulties they face. Our first article expands this analysis to the countries within the Danube river basin. On top of portraying regional storage capacities, we evaluate the adequacy of storage capacities from the perspective of the security of supply, with use of the REKK gas market model. According to our results, due to the tighter integration of regional markets, the storage capacities within the region will be able to ensure undisturbed gas supply until 2020 without the expansion of capacities. Without coupling markets, however, a gas crisis, similar to the 2009 emergency, may again take place in the region.
Our article looks at the reasons behind the distressed market position of our natural gas fired power plants. Due to the trends in world energy prices for the last two years gas based producers are not only unable to recover their investment costs, they cannot even pay for the variable costs of production any more. This lead to the expansion of coal based production in Europe, and increased imports to Hungary.
From the perspective of both the long term operation of electricity systems with growing renewable capacities and system security it is important that sufficient regulating capacity is available for system level regulation and to meet peak demand. Under the current business model of electricity generation power plants mainly receive a compensation only for the produced electricity, which may interfere with the realisation of investments needed for the long run. Capacity mechanisms may offer a solution to this problem, the operation of which is the topic of our working paper.
Our article sums up the conclusions from our March workshop where we examined the opportunities for gas market integration within the Visegrad Four group and the advance the group has made so far. At the workshop, among others, the Polish V4 presidency described the priorities of the draft gas market target model.
