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Changes to the Dutch gas market

If less gas is extracted from the Groningen field, more gas needs to be imported from abroad. In order to make that imported gas fit for cooking and heating in Dutch households, nitrogen needs to be added to it. That process requires the construction of a new nitrogen plant. The costs for this new plant have already been incorporated into the transmission tariffs for natural gas, which ACM sets every year. The magnitude of the impact such production changes have depends on the degree to which gas production is reduced. This may also affect the functioning of the gas market. This has been the conclusion of the speech that Remko Bos, Director of ACM’s Energy Department, gave at the 6th World Forum on Energy Regulation in Istanbul, Turkey.

Sustainable energy market

Natural gas is flexible and is a relatively clean source of energy. CO2 emissions of gas plants are less than half of those of coal plants, when generating the same amount of power. As fuel, natural gas is able to play a major role in the transition towards an affordable, secure, and clean energy supply. Natural gas is often branded as a suitable source of energy to generate electricity when sustainable sources such as wind and solar power are unable to generate any energy, for example, because the sun is not shining or the wind is not blowing.

“The European Commission recently presented its plans for an Energy Union, together with an ambitious climate strategy. National regulators will play an important role in the implementation process of those plans,” says Mr. Bos, who is also Vice President of the European network of energy regulators (CEER).

Close collaboration

The aim of the European energy regulators is to create an energy market that is not hindered by national borders, and where market participants and buyers are able to make optimal choices. Such a market will not only result in a good price for the energy you buy, but it also creates the right investment incentives, and is, as such, an important element in safeguarding security of supply. In that context, offering regulatory certainty is a fundamental prerequisite. Mr. Bos adds: “Ten years ago, the enforcement efforts of the Dutch energy regulator primarily concentrated on the Netherlands. Today’s questions, however, predominantly take place at a European level. More and more often, we need to work together at a more detailed level, trying to find regional and European solutions.”

The envisaged role of consumers

At the World Forum, Mr. Bos emphasized that the envisaged role of consumers becomes more important in the transition towards sustainable energy. As the production of sustainable energy is not constant over time, flexibility on the demand side (in addition to that on the supply side) must increase, too. Consumers are able to play a key role in that process, for example, by saving energy at times when networks are at maximum capacity. Regulators could inform consumers, and help them assume that envisaged role. They could, for example, increase transparency with regard to costs and tariffs, or they could show consumers the potential benefits of energy-saving. On the supply side, the role of electricity storage could become more important in order to increase flexibility.