NMa and DTe: Barriers to Entry to the Gas Market in the Netherlands Are Too High
There are too few opportunities for new entrants to enter the wholesale market for gas in the Netherlands. This is due, for instance, to a lack of 'flexibility'. As a result, newcomers to this market cannot use their supply of gas adequately to take advantage of demand during peak and off-peak moments, according to the report of the British consultancy firm, Brattle, commissioned by the Netherlands Competition Authority (NMa) and the Office for Energy Regulation (DTe). DTe will further analyse the bottlenecks which have been noted and will then draw up a plan of action to deal with these.
Suppliers of gas must be able to take advantage of variations in the consumption profiles of customers throughout the day (flexibility). To take advantage of these variations in these consumption profiles, the supplier must, for instance, be able to make use of gas storage facilities and flexible sources of gas, such as a gas field. These instruments are not sufficiently accessible to newcomers on the Dutch gas market.
It also appears from the report that newcomers have difficulty obtaining access to the so-called quality conversion stations, which convert gas into the desired composition. The possibilities for importing gas from abroad are also limited. These and other bottlenecks described in the report result in higher barriers to entry for newcomers to the Dutch wholesale market for gas.
NMa and DTe regards eliminating these bottlenecks experienced by new entrants to the gas market as an important step towards the successful liberalisation of the gas market. The bottlenecks which have to be dealt with include, for instance, the best way of allocating imported gas to the parties, and the extent to which unused import capacity and the capacity at quality conversion stations can be made available to new market players.
The division of Gasunie, announced by the Minister of Economic Affairs, is another important step in the process of liberalisation.
The report can be obtained from today from the websites of NMa and DTe: www.acm.nl.