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Shippers’

Meeting

2019

2

Agenda

GRTgaz │ Shippers’ Meeting – March 14, 2019

09:30 COMMERCIAL NEWS

12:00

01:45

03:00

04:15

Introduction by Pierre Cotin

European regulation process overview

Upstream offer

ATRT7 propositions

Downstream offer: wrap-up of all changes ahead

2018: gas grid overview

ENEA study: strengthening the competitiveness of the French

biomethane sector

LUNCH

TRF NEWS

2018/2019 Winter feedbacks

TRF continuous training

Next summer 2019

Evolutions and propositions

WORKSHOPS

AFTERNOON SNACK & NETWORKING

Shippers’ Meeting - March 14, 2019

European regulation

process overview

4

ENTSOG works

2019/2020 auction calendar

Functionality Platform

Tariff Network Code

ENTSOG/GIE task force about Guarantees of Origin

Clean Energy Package

Gas Package 2020: European Commission study status update

European regulation:

the gas future is being built now

GRTgaz is

strongly

involved in

Paris as well as

in Brussels


GRTgaz │ Shippers’ Meeting – March 14, 2019 5

ENTSOG worksFunctionality platform www.gasncfunc.eu

No Description Outcome Step date

I.Communication protocol

encryption

• Approval of the issue solution

document

• Board approval

• Publication of the solution after

the board approval

January 2019

II. Gas role model• Approval of the issue solution

documentEnd December

III.Fallback solution for failed DA

auctions

• Preparation of the issue solution

document

• Publication of the solution

End December

IV. INT NC on IPs 3rd

• ACER is preparing a note on this

topic – listing possible options of

the solution

• Some arguments could be

considered as part of the issue

solution

Beginning 2019

V.Inconsistencies in publication of

reserve price information

• Suggestion: Joint ACER TF and

ENTSOG TAR KG meeting in

early March tbc

March 2019

http://www.gasncfunc.eu/

6

ENTSOG worksTariff Network Code:

ACER’s monitoring on tariff methodology



ENTSOG/GIE Task ForceIssues under discussion

The Guarantees of Origin should:

support sector coupling for electricity, heat and cooling

be exchangeable/interlinked

clarify their conversion for electricity and gas

The Guarantees of Origin shall be:

tradable cross-border

lifetime extended. This is not rational to limit it as gas can be stored.

able to replace / be compatible with ETS allowance

State members shall use their optional right to put in place

Guarantee of Origin for non-renewable low-carbon gas:

minimized side-effects

increase of traceability by providing as much information as possible

Differentiation of Guarantees of Origin:

“gaseous” gas should be exchangeable/equivalent to a GO of LNG

mass product approach VS market segmentation approach


ENTSOG/GIE Task ForceNext steps

Mid-March – Revised note taking into account Prime Movers

views and provisional recommendations

Early April – 2nd Prime Movers meeting

Late April / Early May – Open stakeholder workshop

Late May – Recommendations and propositions for the Forum of

Madrid

GIE and ENTSOG report back to the 32nd meeting of the Forum

of Madrid on June 5-6, 2019


Clean Energy PackageState of play

An interinstitutional agreement has been reached

(December 18th, 2018) for these texts:

ACER Regulation

Electricity Directive recast

partly transposition into national law by MS required by December

31, 2020, art. 70

previous directive repealed on January 1st, 2021 (just after

transposition)

Electricity Regulation recast

⇒ publication and coming into force estimated in 4 – 8 months

Texts already published in the EU Official Journal

(December 21st, 2018): Directive 2018/2001 on the promotion of the use of renewable

energy (“RED II”)

Directive 2018/2002 (Energy Efficiency Directive)

Regulation 2018/1999 (Energy Governance Regulation)


The scope of the European

Commission 2020 Gas Package3 main pillars of the package


1. The role of gas infra in 2050(final)

2. Sector coupling

3. Combined gas and capacity

release programs

4. Distortive effects of non

harmonized tariffs

5. Licensing and regulatory

requirements

6. Tailor made regulation

7. Regulatory framework for

LNG

8. Biogas and H2 injection into

gas grids

9. Methane leakage prevention

strategies

10. Reg. Support to Innovation &

SDES Study

ENTSOs’

interlinkage

study between

electricity and

gas scenarios

CEER follow up Future

Role of gas study (final)

MF 2018 follow up

tasks:

• Avoid unintended

interactions

between the

regulated and

contestable

activities – assess

potential role of

regulated entities

• Consider potential

decommissioning of

infrastructure

1. Costs of gas

disruption (ongoing)

2. Value of lost load(final)

The scope of the EC 2020 Gas PackageOngoing and upcoming studies


The scope of the EC 2020 Gas PackageExpected timeline

13

Gas infrastructures: Guarantee of decarbonised energy system

sustainability

Positive externalities to be well-addressed by the future

regulatory framework

Sector coupling: energy systems hybridisation fosters

guarantee for final consumers to use a decarbonised energy

Conclusion



Upstream offer:

Highlight in 2018

and news for 2019

15

Dunkirk

Oltingue

L gas

Redistribution of auction premiums

Agenda



Dunkirk

17

According to the deliberations of July 27th, 2017 and March 8th, 2018

Dunkirk New rules of sale as from June 2018


15 independent years from October to

October

Creation of quarterly capacity

Yearly and quarterly sold

one month before auctions

on PRISMA

OSP

Short term capacities sold same as before

GRTgaz │ Shippers’ Meeting – March 14, 2019 │ Accessibility Levels: Public: x 18

DunkirkNew rules of sale as from June 2018


Oltingue


According to the deliberation of July, 27th 2017:

Creation of 100GWh/d firm capacity and 100GWh/d interruptible capacity

without developing the network core

Firm capacity are sold after selling entry capacity at Virtualys and

Obergailbach.

Firm is commercialized according to interruptible calendar

(except for within day: firm slot)

OltingueNew entry capacities as from June, 1st 2018

GWh/d

GWh/d

Firm

Interruptible

GWh/d Virtualys Obergailbach Oltingue

Network core

capacity

common to the

three points

Firm capacity 640 620 100 1260

BackhaulGWh/d


GRTgaz has worked jointly with the Swiss operators to optimize operating

conditions at Oltingue in order to partially address the supply problems of

Switzerland and Italy since the reduction at Wallbach interconnection point.

OltingueStrengthening 30GWh/d interruptible exit capacities

From December, 1st 2018 to September, 30th 2019

GWh/d

GWh/d

Firm

Interruptible


L gas


L gasBackground

2005 2009 20232013 2018 2029

Contract

conclued with a

provider

covering an H

gas to L gas

swap service

Implementation

of the

contractual H

gas to L gas

conversion

service

This provider is

commited to

ensure

swap service

until 2023

Merge of L gas and H

gas balancing zone

L zone is gradually converted

to H gas between 2018 and 2029

Risk of:

Demerging of the H&L zone

Regressing in terms of supply

competition

Complex management for GRTgaz


For the security of supply of the L zone until the end of the conversion in 2029.

According to the deliberation of December, 13th 2018:

Shippers can still supply customers located on L zone but only with H gas.

H gas to L gas swap service is the only supply of L gas for all

consumption on L zone

L gas infrastructures remain opened to all shippers

As from April, 1st 2019, GRTgaz will sell

7.5 GWh/d of day-head backhaul capacity

at Taisnières B

L gasNew offer starting from April, 1st 2019

GWh/d Backhaul


Shippers who use L gas infrastructures will have to be balanced daily

in L zone.

Penalties will apply in case of imbalance in L zone:

L gasNew offer starting from April, 1st 2019

Balance sheet gap in scope B Threshold Price for Scope B

Positive (long) balance sheet gap

below the threshold5 GWh

€1/MWh

Positive (long) balance sheet gap

above the threshold

€30/MWh

Negative (short) balance sheet

gap below the threshold1 GWh

€3.35/MWh

Negative (short) balance sheet

gap above the threshold

€30/MWh


Redistribution of auction

premiums


Redistributed amount in €:

Rules of redistribution:

• Prorata of consumption* between October, 1st 2017 and September, 30th

2018.

• In the invoice of November 2018

*reduced by quantities excluded under capacity allocation phase at regulated price for gas-intensive site

Redistribution of auction premiums End of the former mechanism

Auction premiums

Jul 17 – Oct 18

Distribution difference

Jul 17 - Sep 18


Redistributed amount in €:

Rules of redistribution:

• Prorata of consumption during the same period

• Once a year in the invoice of November 2019

• Unitary amount will be published on the GRTgaz’ website

Redistribution of auction premiums New rule as from November, 1st 2018

Auction premiums

Nov 18 – Sept 19


Upstream capacities

ATRT7 propositions

30

ATRT7 context,

risks and challenges


31

During ATRT7, strong decrease of long term capacity

subscriptions on the entry PIR

At the end of the ATRT7 period, new optimized subscriptions

are expected to cover the market needs

ATRT7 context

0

500

1 000

1 500

2 000

2 500

3 000

0

500

1 000

1 500

2 000

2 500

3 000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Expected

subscriptionsFrance market needs Range depends on:

• Consumption scenario

• Transit supply

• Biomethane production

• LNG supply

Long term capacities on

entry IP (PIR and PITTM)

ATRT 7

GWh/j


32

The slow decrease of long term subscribed capacity level at the

North entry PIR should lead to:

An increase of spread between market places (in theory limited to

the tariff of the capacity between market places) and at the end

an increase of the PEG price.

A decrease of upstream capacity subscription incomes, thus a

potential increase of GRTgaz overall tariff.

ATRT7 risks


33

ATRT7 stakes and contemplated offers

Limiting PEG price increase:

Limiting spread increase

Attracting LNG, the single gas

pipe competitor

Limiting incomes reduction:

Attracting new subscriptions

(LNG, short term at PIR…)

Increasing transit incomes

Delivering more attractive and

easier to operate offer

ATRT7 stakes

Reshuffling

Modifying

short term

multipliers

Changing additional

subscription calculation

Pooling

Implicit

allocations

Contemplated offers

PIR DK

simplification

DKLNG firm

519GWh/d

Increasing

PIR Ober

backhaul

TRF

simplification


34

The 3 new offers for the

next CRE consultation

(March 2019)


Principle

Transferring a capacity from one PIR (source point) to another

(target point), on a determined period

Shippers benefit from reshuffling:

taking advantage of lower spreads over the capacity costs

valuing unbundled and unused capacities

Following the 2 GRTgaz objectives (for target points):

35

Reshuffling (PIR)


Reducing the PEG price

⇒ The offer only applies to

entry points

Without losing income opportunities

⇒ The offer only applies to points,

maturities and periods over which there

is no subscription potential:

• Obergailbach and Virtualys

• Annual, quarterly and monthly

• Until 2023

Creating value for the Shipper

Revalue unbundled capacity by transferring it to another point in

order to take advantage of a spread

Creating value for the Consumer

Increase liquidity and reduce the PEG price by encouraging

shippers to sale gas on the PEG as soon as the spread is effective

(but lower than the capacity price)

Creating value for GRTgaz

No loss of income if the offer is limited to points with a low re-

subscription potential

Revenue: fee of 10% of the reshuffled capacity amount

36

Reshuffling (PIR)


37

LNG advantages and specifities

LNG is a key gas to gas competitors and leads to PEG price

reduction

LNG offers some advantages for the network, to all market

stakeholders:

Compressor energy saving

Reduce congestion risks

Ease storages filling in summer

But LNG is hard to attract as:

It is arbitrated between worldwide market places

It is subjected to strong supply contingency (shipping

conditions, production, etc.)

GRTgaz wishes to deliver a more flexible PITTM offer to

increase

Offer value

Subscription opportunities


Within-month transfer of unused capacity from a PITTM to

another one

Allows shippers to take advantage of the 3 French coastlines

Allows France to better compete versus other LNG markets

PITTM offer is consistent with Elengy offer where pooling exists

(and also compatible with DKLNG)

Service fee = 10% of PITTM tariff

38

Pooling (PITTM)

Risk of loss of subscription at full

tariff is low compare to potential

benefits

Only applicable on within-

month

PITTM offer is more flexible,

thus more valuable: potential

for additional subscriptions

More LNG flowing in = less

congestions and less fuel gas

costs


As for today, shippers bear the risk of paying additional capacity

at PITTM beyond their control

Notice of subscriptions versus uncertainty on actual ship arrivals

Non optimal profile of subscription (“10+X” rule)

Send-out profile at the hand of regulated terminal operators

Calculating additional capacity on a day-by-day basis

Thus uncertainty on actual send-out costs can dissuade potential

subscriptions

Offers:

An ex ante flat subscription

An ex post additional capacity calculation, as the difference

between total send-out and total initial subscribed volume

39

Change of additional subscriptions

calculation


40

CRE ATRT7 timeline


2019

January February March April May June July August September October November December

41

CRE ATRT7 agenda

Public

consultation

tariff

framework

Public consultation

tariff structure for

gas infrastructures

(transport,

distribution,

storage)

Public

consultation

ATRT7 tariff ATRT7

deliberation

We need your support to convince the CRE about the interest of

our offer’s evolutions!



Downstream offer:

Wrap-up of all

changes ahead

43

1/ Changes in 2019

- Daily capacity lead-times

- Communicating the subscribed downstream capacity to the

final customer

2/ Evolutions proposed in ATRT7 :

- Penalty calculation

- Winter monthly factors

Those changes and proposed evolutions are motivated by :

- the ambition to simplify our offer

- the need the increase subscriptions (or lessen subscription

erosion) for a stabilizing effect on the tariff.

3/ Storage compensation : feedback and regulator’s announcement

4/ Unpaid interruptibility product

Summary

tariff


44

- To give its clients more time to book, we shift the daily downstream

capacity lead-time from 3 pm D-1 to 8 pm D-1.

As of April 1st 2019 (first affected delivery day will be April 2nd)

- We are also studying the possibility to shift even more the deadline

for daily capacity subscription : a new booking window during the

delivery day is under study.

As soon as possible (end of 2019) ?

- To ease communication with your clients, we will ask all shippers

supplying final customers via e-mail, on a yearly basis, if they allow

us to disclose the subscribed capacity to their client. For

operational reasons, we won’t be able to manage answers that are

not the same for all clients of your portfolio, for the whole year (« all

or nothing »)

As soon as possible

1/ Changes in 2019Easing capacity subscription

tariff

tariff


45

2/ Evolutions proposed in ATRT7Penalties and monthly factors

Penalties :

- We propose to end the yearly direct redistribution of the penalties for

exceeding capacity on the downstream network. These amounts would be

given back to the market through a decrease of the capacity tariff.

- We propose to harmonize the penalty calculation on all three terms of the

downstream capacity : no more distinct formula for the Main Network Exit

term.

- We propose to remove

the second tranche for penalty calculation.

Monthly factors :

- We propose to decrease the monthly capacity factors in January and

February from 8 to 4.

Example for Dailytariff

tariff


46

3/ Storage Compensation Current principles on the distribution network

Since April 1st 2018 :

- The CRE establishes a regulated revenue each year for

the storage operators

- Storage operators sell their capacity through auctions

- The missing amount between regulated revenue and

auctions revenue is perceived through the means of the

Storage Compensation, via the transmission agreement

(currently only for clients connected to the Distribution

Networks)

1

2

3

1

2

3

Storage compensation is paid by shippers proportionally to the

modulation of their customers, being is the difference between

their maximum capacity and their average consumption.

An exemption is made for counter-modulated customers

(Summer consumption > Winter consumption), and customers

they have declared they can be selectively cut without risks in

case of emergency (« délestables sans risques »)

Average

consumption

Capacity

Storage

Compensation

basis

Consumption

Amounts in 2018 (MEUR)


47

3/ Storage compensationFeedback on the first year

GRTgaz collects the compensation term on a monthly basis.

Each shipper who has unexempted customers on the distribution

networks during a month M (circa 30 shippers) receives from GRTgaz

before the 20th of M+1 three different invoices related to the 3 storage

operators.

For the delivery period April-December 2018, this represents roughly

480 M€ excluding VAT

For GRTgaz it is a difficult process based on heterogeneous data

sources from the distribution operators :

- GRTgaz is not yet in a position to make corrective invoices in case

of retroactive data information far in the past

- GRTgaz calls distribution operators for more accuracy and

homogeneity in their data transmission, and encourages shippers

to also pay cautious attention to data from the distribution

operators, so that more reliability is achieved for all parties.


48

3/ Storage CompensationRegulator’s announcement

During the last Downstream Offer concertation, the CRE has announced that

they consider to extend the storage compensation collection* to customers

connected to the transportation network, as of April 1st 2020.

In addition, in the event that DGEC has not published the decree on

interruptibility, the CRE has asked GRTgaz to work on a similar product.

* In case the extension of collection is confirmed, the amount for

2020 would then be split between distribution and transport

customersGRTgaz │ Shippers’ Meeting – March 14, 2019

49

Contract as close as possible to secondary interruptibility in the

works of the DGEC

Unpaid product

Contract directly signed with the final consumer

Open to any consumer offering a « capacity* » greater than

40 MWh/d

The « capacity » will not be used in the calculation of the

storage compensation

A similar proposal on the distribution network

4/ Unpaid interruptibility product

* Not in the meaning of the transmission agreementGRTgaz │ Shippers’ Meeting – March 14, 2019


2018: gas grid

overview

5151

2018: 442 TWh2017: 465 TWh

Public

supply

Industry

except

CCGT+CT*

CCGT+ CT

35 TWh

-35%

137 TWh

+2%

270 TWh

-2%

Gross gas consumption in 2018 GRTgaz zone

Reduction of gas consumption due to milder temperatures and to a lower demand

for power generation;

Growth of the industrial consumption for the 5th consecutive year (+4,4% between

2014 and 2018)

Stability of the climate-adjusted low pressure distribution consumptions (277 TWh).


5% decrease of natural gas consumption

*Combined cycle gas turbines + combustion turbines

52

8 TWh

21 TWh

46 TWh55 TWh

35 TWh

2014 2015 2016 2017 2018

Gas consumption of CCGT+CT

Plants in operation on January 1st, 2018

Planned plants

Groups by site

Decrease of CCGTs consumption due to

better availability of nuclear, hydraulic and wind

power power generations, as well as to milder

temperatures in 2018.

However, the utilization rate of gas-fired

power plants is important, due to their high

flexibility.


Gas: a flexible resource for power

generation

53

Near 2.5 TWh of gas consumption related to new substitutions from oil and coal

to gas carried out in 2018 for industrial customers. Substitutions carried out since

2012 have allowed to reduce the annual emission by 2.2 Mt of CO2 in 2018.


Some examples of conversions carried out in 2018

Glass sector: Saverglass in Feuquières (Oise) switch from oil

heating equipments to natural gas equipments. The Feuquières

glass factory (established in 1897) is one of the three Saverglass

production sites based in France (out of 5 in the world) and it is

an expert in luxury bottle manufacturing and decorating.

Chemistry: NAPHTACHIMIE in Martigues (Bouches-du-Rhône)

conversion of fuel boilers to natural gas-fired boilers.

Established in 1945, the NAPHTACHIMIE group is a subsidiary

equally owned by Total Raffinage Chimie and INEOS.

Sugar: Cristal Union in Villers-Faucon (Somme) conversion of

the fuel refinery to natural gas. Cristal Union is an agro-industrial

cooperative group, among the first European producers of sugar

and alcohol. It is mainly located in France.

News gas conversions in the industry

54

A more attractive market: an 8% increase

in the number of shippers in 2 months

A single price reference system:

Southern France industrial consumers

(almost 50 TWh) got a price reduction

of about 1.4 to 1.9€/MWh, representing

an gain of nearly €80 million yearly.

Strengthening of the security of supply:

+42% of gas transmission capacities

between the North and the South.


Creation of the TRF (Trading Region

France) on November 1st, 2018

55

2018 gas flows VS 2017Source : smartGRTgaz

447 TWh : slight decrease in gaspipeline entries in the North ofFrance.

117 TWh : 7 year high for LNGentries

33 TWh toward Switzerland/Italy: 6year record transit

31 TWh toward Spain: decrease inthe annual transit (but strongincrease since TRF creation on Nov1st 2018: + 50%)

of the TRF on 1/11/2018: + 50%)


+ 0 TWh

+0 %

+13 TWh

+45 %

+6 TWh

+22 %

-6 TWh

-3%

+20 TWh

+24 %

-21 TWh

-12%

-12 TWh

-27%

+2 TWh

+25% +++

+

+

+

+

Interconnections

with LNG terminals

Interconnections with

adjacent networks+

+ +

Growth of LNG entries

56

0

20

40

60

80

100

120

1401 n

ov.

1 d

éc.

1 jan

v.

1 f

évr.

1 m

ars

1 a

vr.

1 m

ai

1 juin

1 juil.

1 a

oû

t

1 s

ept.

1 o

ct.

TW

h o

f co

ntr

actu

al

sto

ck

Stock level – whole France

2015/2016 2016/2017 2017/2018

Injection campaign

Rate of injection

(GWh/j)

425

554

moyenne2013-2017

2018

+30%

average


Efficient storage regulation

Dynamic fill-in campaign due to the Dec. 2017 storage regulation reform.

57

714 GWh injected in 2018 in

France (+75%). 76 sites in

operation, 64% are agricultural

projects.

1.2 TWh of installed capacity at

Dec. 31st 2018.

Nearly 14 TWh in the capacity

register (+ 6 TWh compared to

2017).

Biomethane injection sites connected

to the gas grid


Biomethane: a real take-off…

58

…but contradictory signals for the future

Major breakthroughs in 2018 :

- Food Law enacted on Nov. 1st : recognition of « a right to inject » ; direct connection to

the transmission network possible, with polyethylene pipelines

- Anaerobic digestion ministerial workshop on Jan. 14th 2019 : 40% rebate in the

transmission network connection cost (up to € 400k).

Food Law decree promised for April 2019.

- Positive perception by local communities of renewable gas advantages : biomethane is

an efficient tool for decarbonation, agricultural policy, circular economy, land-use

planning policy.

But disappointing outcomes from the Multi Year National Energy Planning (« PPE ») :

- 2023 volume target reduced from 8 to 6 TWh, 2030 target reduced to 7% of gas

consumption

- Biomethane buy-back tariffs due to decrease by 30% in 2023 (67 €/MWh), by 40% in

2028 (60 €/MWh)

- Introduction of tenders for yearly 0.7 TWh


59

Annexes


60

-1,00

-0,50

0,00

0,50

1,00

1,50

2,00

2,50

2018/2017 gas consumption discrepancy

TW

h


Industry: evolution of gas consumption

2018/2017

61

Industry: review of the last five years of

consumption

128 000

129 000

130 000

131 000

132 000

133 000

134 000

135 000

136 000

137 000

138 000

2014 2015 2016 2017 2018

Industrial gas consumption except centralized production of electricity


62

Flows from France at the Spanish border

A strong increase in flows to Spain, partly due to the creation of the Trading

Region France on November 1, 2018.

Flows regularly beyond firm capacity, but without physical congestion except for 2

days in January 2019.


63

Flows from France at the Spanish border

Strong

increase of

the flows

A strong increase in flows to Spain, partly due to the creation of the Trading

Region France on November 1, 2018.

Flows regularly beyond firm capacity, but without physical congestion except for 2

days in January 2019.



Strengthening the

competitiveness of the

French biomethane sector

Renewable gas and ENEA study

65

A collective study

Board meeting 2

26/04

Board meeting 3

29/05

Board meeting 1

5/04

Board meeting 4

12/07

Debriefs about the project financing

Debriefs about positive externalities

A large group of players involved in this study

Debriefs about the technical levers

Short meeting outline for large diffusion

via the SER and the ATEE

Many feedbacks after the diffusion

Detailed executive summary in order to

approve the framework and hypothesis

with the board meeting and the review

committee

Delivered to Solagro and approved

Board meeting 6

26/09

Board meeting 5

23/08

Publication of a

public

executive

summary in

November 2018

and a public

report in

January 2019

Board meeting 7

19/10


66

Study of three types of unitAutonomous agricultural

(AA)

Territorial agricultural

(TA)

Territorial industrial

(TI)

Injection

capacity

100 Nm3/h

(9,180 MWh/year)

200 Nm3/h

(18,411 MWh/year)

300 Nm3/h

(27,640 MWh/year)

Inputs 21,860 tons 33,500 tons 45,000 tons

Mixed

inputs

Manure: 59%; Slurry: 27%;

Straws: 5%; CIVE: 9%

CIVE: 54%; Slurry: 24%; Food

industry waste (except animal

by-products) and bio-waste:

11%; Manure: 9%

CIVE: 47%; Food industry

waste and bio-waste: 33%;

Manure: 12%; Slurry: 8%

Main

characteristics

Unit with agricultural

effluents as main feature;

independent on bearings

Pool of a few farmers

Injection in the gas

distribution network

Unit with CIVE as main

feature plus slurry, manure,

food industry waste and bio-

waste

Pool of many farmers


distribution network

Unit focused on the reuse

of bio-waste and food

industry waste, with a high

proportion of CIVE and a

limited supply of manure

and slurry


transmission network Comments about the sample cases selection

Selection of cases: as each unit of biomethane is specific, these sample cases may not reflect the full diversity of the

situations encountered.

CIVE : intermediate crop for energy purposes are considered as one of the main bearings for the development of

medium term methanisation (ADEME).


67

Supporting the sector is more than ever

a necessity

AA TA TI

Withoutsubsidy

LCOE 122€/MWh 105€/MWh 94€/MWh

TRI Project 4.9% 3.8% 2.9%

DSCR 1.26 1.17 1.17

With subsidy(20% on the CAPEX)

LCOE 107€/MWh 94€/MWh 85€/MWh

TRI Project 8.9% 7.7% 6.6%

DSCR 1.35 1.30 1.27

The levelised cost of energy (LCOE) they have been valued over 15 years with a weighted average cost of capital (WACC) of 5 %.

Financial criteria usually expected by banks

TRI Project: between 6 and 8% minimum

DSCR: between 1.3 and 1.4 minimum


68

10 main themes to strengthen the

competitiveness of the biomethane

sector in France

Maximize

methanogenic power

of inputs

Maximize

production of

renewable gas

Limit

inputs costs

Strengthen

standardization

and pooling

Develop

operators’ formation and

optimize maintenance

Limit costs of

connection and

injection skids

Benefit from the scale

effects related to the

size of the units

Add value

to the units over an

extended life span

Optimize

costs and structure

of the financing

Limit

impact of exogenous

factors leading to a

potential costs increase


69

Expected competitiveness profits in

short and medium term

Medium term

(2025-2030)

For the three cases, a 20% decrease of the costs can be reached by 2020-

2025

Current Short term

(2020-2025)

Medium term

(2025-2030)

Current Short term

(2020-2025)

Medium term

(2025-2030)

Current Short term

(2020-2025)

Autonomous agricultural Territorial agricultural Territorial industrial

121.9€

- 25.2€

96.7€

- 14.3€

82.4€

105.3€

- 18.3€

87.0€

- 11.8€

75.2€

94.0€

- 18.3€

75.7€

- 10.1€

65.7€


70

Biomethane is still more expensive than

natural gas…

A discrepancy of 30 to 50€/MWh with the natural gas price in 2030

Comparison of the costs of natural gas and biomethane by 2030

Natural gas

IT biomethane

AT biomethane

AA biomethane

33€/MWh

66€/MWh

75€/MWh

82€/MWh

Source: IEA Outlook for Natural Gas


71

… but a lot of positive externalities

remains to be quantified

Farmers

Waste producers

(food industry

waste, community)

Energy

consumers

*monetization in a conservative case with a carbon tutelary value of 100€/tCO2e

Greenhouse gas emissions avoided*

Pollution of groundwater avoided

Job creation

Non-monetary additional advantages - -30% of natural gas importation (autonomy and trade balance)

- TE dynamics within the territories and the agricultural world

- Job creation in rural areas

State

Production of a non-variable energy that can be stored (adaptation costs of the network

reduced)

Adding value to gas networks (limiting the distribution and transport costs increase)

Reducing bio-waste treatment costs

Decreasing the use of nitrogenous mineral fertilizers

Non-monetary additional advantages - Reducing the use of mineral inputs (phosphorus, potassium, etc.)

- CIVE positive impact on the main crop

- Biodiversity protection (pollinators)

- Diversification of the source of income


72

Biomethane production costs are expected to decrease in the coming years

But the goals defined by the PPE (French energy multiannual programming) seem difficult to reach

Implementation of calls for tenders from 2019

Goals of feed-in tariff decrease

- 67€/MWh in 2023

- 60€/MWh in 2028

The positive externalities of methanisation must be economically valued

How to give an economic value to the

services freely provided by the nature?

GRTgaz defends:

The implementation of calls for tenders for sufficient-sized projects with a notice

The revision of biomethane feed-in tariffs, but at an appropriate pace and in consultation with the biomethane sector

Conclusion


TRF feedbacks and

evolutions


74

2018/2019 Winter feedbacks

TRF commissioning

New PEG figures

Winter supply and limit situations


Next summer 2019

The maintenance schedule for 2019

New superpoints, managed with Teréga (1/4/2019)

Evolutions and propositions for summer 2020

Concertation in May/June 2019

New publication timing

Content



2018/2019 Winter feedbacks TRF commissioning

New PEG figures



The different stakeholders of the project were ready:

Infrastructures

SI

Operational teams (Shippers and TSO)

The 1/11 switchover worked well for a high majority of shippers.

Nominations / Programmations

Balancing / Nominations to the PEG

Vigilance outlook

And a record of LNG send-out in the first days

of November!

Thank you all for this collective success!

TRF commissioning


The price and liquidity figures show that the PEG is attractive

and competitive

New PEG figures

average end-of-day spread between PEG and TTF.

PEG price very correlated and close to TTF price.

But increase in January and beginning of February (0,4 €/MWh).

*: from January 2017 to October 2018

traded each day on the PEG, close to the volumes previously traded

on the PEG North and TRS combined

*: from Novmber 2017 to February 2018

active actors at the PEG on January 2019.

In addition, 15 new transmission contracts were signed with GRTgaz,

bringing the number of shippers to 154

*: active actors on average from January 2017 to October 2018

PEGN-TTF :

0,00€/MWh*

TRS-TTF :

1,68€/MWh*

0,1 €

/MWh

PEGN (2260

GWh) + TRS

(550 GWh) =

2 810 GWh*

2 648

GWh

105*

109


More LNG this winter than the other years (507 GWh/d

compared to 227 for the 3 last winters…)

A continuous and high withdrawal of storages, especially

when LNG send-out was low

Winter supply

-400

-200

0

200

400

600

800

1000

1200

1400

01/11/2018 01/12/2018 01/01/2019 01/02/2019

Supply flows downstream of limits

Net storage withdrawal (Atlantique, Sud-Est and Lussagnet)

LNG send-out (Montoir and Fos)

Pirineos exit

A very high level of

outputs at Pirineos

during all winter

(around 180 GWh/d,

even during the

Elengy strike)


Vigilance Outlook : Green Alert Level during almost all the winter…

Limit situations

Excepted on

03/12/2018 on

the S1 limit.

No tension on

any limit….


Initial supply situation :

High output in Pirineos

Low consumption

Low withdrawal of North storages

Injection in Lussagnet storages


Focus on 3/12/2018

The market were long during the

day

Rebalance in the afternoon, with

an increase of injection in

Lussagnet (168 GWh/d)

Red Alert on S1 Limit

Interruption of interruptible

capacity in Pirineos

Back to the green


TRF mechanisms rely on storage flexibility.

Storage levels downstream TRF limits are monitored in order to

anticipate possible gas shortage:

Monitoring of storage levels

described in the Winter

Outlook

weekly study with an

outlook on 2 and 4 weeks

use of demand forecast on

the next 21 days

various winter scenarios

use of LNG forecast on the

next 15 days

actual level in storages

Weekly publication on grtgaz.com : Green for this winter

Low storage level

Call for tenders

Flow commitment


If a potential gas shortage is detected, TSOs launch a call for

tenders for a flow commitment service.

Flow commitment is sending gas into the grid from selected points

according to TSOs’ need.

Flow commitment

Find the contractual framework of the flow commitment on

grtgaz.com in the TRF section

And do not hesitate to look at the Find Out More sheet about

flow commitment

http://www.grtgaz.com/


The mechanisms are already operational…

… with the vigilance outlook online since

November 1st…

… one limit reached and managed by

interrupting interruptible capacities…… two tests of the Locational Spread to

validate our IT systems…

Shipper … and many webinars to exchange with you

about these topics.


…but have not yet been used, so we invite

you to:

A training quiz, operationally oriented, for large

part about the Locational Spread (in your mailbox

next week)

A full-scale test to allow you to experience

a congestion management situation before

a potential triggering event

April 10, 2019


« Full-scale test »

April 10th in working hours

No physical impact:

•NS1 upstream, so no interruption of interruptible capacities

•Cancellation of PEGAS trades, so no physical renomination expected

•No RMUT triggered

For all signatories of the Locational Spread contract (via the usual operational contacts)


Next Summer 2019 The maintenance schedule for 2019

New superpoints, managed with Teréga

(1/4/2019)


Summer capacity restriction indicators

Capacity restriction rate published in the February schedule

(summer)

2016Reference

2019

Core Network (ex N>S) 10,3% 6,9%

Entry Points 10,0% 3,9%

Exit Points 7,6% 3,8%

Global capacity weighted indicator 9,4% 4,2%

Main works and maintenance improvements leading to this result:

Improvements in expertizing of defects with less cutting scheduling

Temporary repair

Less new investment projects

Maintenance works coordination

-55%

GRTgaz goal: reduce over 50% the summer capacity restrictions

between 2016 and 2020


The CPRTt: The probably available capacity

New superpoints: For the works impacting before the N>S link

Some of them are co-managed with Teréga

(new)

Only 2 superpoints will be active on

GRTgaz side next summer

Maintenance schedule for 2019

What’s new?

The publication planning To be consolidated in collaboration with the storage auctions


GRTgaz and Teréga co-manage 3 superpoints

NS2 downstream and NS3 downstream:

These superpoints are divided in 2 sub-superpoints

(SSP) with the same restriction rate.

These 2 SSP « communicate » with the 2 following

tools:

COE transfer (per shipper) from one TSO to the

another (nominated by the shipper)

UIOLI mutualization between GRTgaz and

Teréga (transparent for the shippers)

NS4 downstream:

There is no restricted point for GRTgaz.

Fos « bonus » is automatically transferred from GRTgaz to Teréga, by the shipper (transparent

for the shipper)


Atlantic storage an be filled with this maintenance programme

And LNG flows relieve the constraints on Atlantic, allowing more UIOLI

Optimization of storage injection

thanks to Superpoints’ flexibility

Very prudent assumptions

with no LNG. GRTgaz

maintenance delays 100%

filling by one month

Reasonable

assumptions

relieves all or almost

all constraints

-0,55 -0,72

-1,51

-2,00 -2,15

-2,57

April May June July August September

Cargoes from this source are expected to go to Asia rather than France

Cargoes from this source are expected to go to France rather than Asia but margin is slim

Cargoes from this source are expected to go to France rather than Asia

Spread PEG-JKM (€/MWh)


The PEG - JKM spread might give a trend of LNG volume that

would flow to France (indicative only, prices can evolve quickly,

other factors are involved)

LNG send-out outlook

Qatar

Nigeria

US (Gulf

of Mexico)

Algeria

Norway

Market prices anticipate a healthy supply of LNG in Europe at least

until August

Market prices as of 05/03 settlements. Charter rate at 46 kusd/day

Egypt


Maintenance schedule for 2019:

To help you:

Shipper Data PITTM Montoir PITS Atlantique PITTM FOS PITS Sud-Est

ID IT0002 PSC000CA IT0001/03 PS000SA

COS (Exit) 50

COE(Exit)

COS (Entry) 20

COE (Entry)

COSsp(Exit) max -35

COEsp(Exit)transfer

nomination-15

COE with bonus

and transfert

transfer

confirmation-15

-40 10

-20 10

20

25

Confirmation

Nomination

50

Transfert GRTgaz ->

Teréga

Transfert Teréga ->

GRTgaz

SSPNS3D

A superpoint simulator

2 Webinars

Link to watch the rurun and

download the simulator

http://www.grtgaz.com/en/acces-direct/customer/single-marketplace-2018/webinar-maintenance-programme-transfers-between-grtgaz-and-terega.html


Evolutions and propositions

for summer 2020


A Concertation meeting will be scheduled in June 2019

Feedback on 2019 summer planning

Proposition: new publication timing, better coordinated with

the storage auctions

Feedback on the first months of works and maintenance

Proposition: challenge the use of Locational Spread to

reduce the capacities restrictions:

Increase the threshold of « low impact works » (> 30GWh/d)

Increase the climatic risk (over 10%)

A scoop :

Merger of PITS North East and PITS North West into

one single PITS North for the 1/4/2020

Evolutions and propositions for summer 2020


A first publication in October, before the first storage auctions and

later than the previous years (August), in order to have a more

consolidated publication and avoid big changes.

An update in December, in case of significant changes

An final publication in February, on T@

New publication planning

October

Y-1

Storages

auctions in

November

End of

Feb. YD-60 WD-5 D-1

(3pm)

E-mail

publication of the

provisional

program

First

Publicationon

Trans@ctions

Restrictions

Updates

December

Y-1

If needed,

update sent

by E-mail

Storages auctions in

January & February

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