What happens when it gets cold?Planning for the winter

Chris Murray

GIE Annual Conference 2005

Athens, 3 November 2005

Presentation structure

Why is winter planning important?

Principal factors affecting winter planning and the GB experience

Liberalisation

Demand variability

Interconnectivity

Where are we now?

Conclusions

Why is winter planning important?

As a TSO, National Grid has two key responsibilities: provision of adequate and reliable capacity residual balancing

Overall responsibility for ensuring gas is delivered in a safe mannerNeed to understand the short and long term supply and demand positionsShort term picture informs winter operational plans

What principal factors affect winter planning?

Process of planning for the winter is not static, and will depend on many factors

Liberalisation has the largest impact on process, further complexity arises from increasing demand responseand interconnectivity

Integrated Companies

Large incumbents Limited trading

Liberalised markets

Multiple suppliers Significant trading

Roles and responsibilities become fragmented

Pre- liberalisation

GB Winter PlanningPre-privatisation

One company supplied all customers

Set own SOS standards

Network built to these standards

Gas contracted on long-term basis

Demand developed as considered appropriate

No gas for power generation

All indigenous natural gas

Planning for the winter almost inherent - everything controlled by one player

“From drill bit to burner tip”

GB Winter Planning:Come 1996

Network Code introduced

Business separation

Growth in TPA contracts and customer switching

TSO and market roles clarified

Growing use of gas for power

Increasing demand variability

No interconnections or LNG importation

Planning for the winter still relatively uncomplicated -limited trading, dominant supplier and long-term

contracts prevail

GB Winter Planning:Today

Over 35 active gas shippers

High levels of trading

High levels of power generation

Increased demand response

Growing number of interconnections

First of several potential LNG terminals

Highly complex process relying on good quality information from a multitude of players

1,000

1,100

1,200

1,300

1,400

1,500

1,600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

TW

h

Continental exports gas-fired power generation demand base

GB Winter Planning:Demand variability

Increasingly difficult to forecast demand

~+16%

~-6%

GB Winter Planning:Changing supply pattern (up to 2014/15)

Increasingly difficult to forecast supply

Demand:increasing from 100 to 120 bcm

UKCS: decreasing from 80 to 25 bcm

Imports required: increasing from 20 to 95 bcm

Potential import capacity: > 130 bcm

Vesterled and Tampden

(FLAGS) ~23 bcm

Langeled 25 bcm

BBL & IUK 39 bcm

Milford Haven 33 bcm

Grain 14 bcm

Where are we now?

Our role in planning the network is relatively unchanged

The location and availability of molecules is less certain

The process is now about collecting, assimilating and providing data

Scenarios allow market and policy makers to draw conclusions and take actions

Network Analysis

& Preliminary Plan

Long Term Auctions

& Review Plan

Ten Year

Statement

Development of

scenarios

Consultation

Revised

scenarios

Consultation

Supply & Demand

Forecasts

Supply &

Demand

Forecasts

Development

of scenarios

LONG TERM SHORT TERM

Conclusion

As markets liberalise the TSO’s role in planning for the winter changes

Demand & supply are no longer predictable, but increasingly determined by market forces

Fundamental issue is obtaining, assimilating and publishing accurate and timely data, which the market, policy makers and TSO can act upon

Information is no longer a national or even a European issue, but for most contains a global dimension