03 Recent developments

In the first six months of this year, Gasunie generated net revenue totalling € 717.2 million, up 1% on the first half of 2020. The operating result of € 296.2 million is down 11% on the first half of 2020 due to rising prices for energy procurement and the pre-investment in the energy transition.

In the second week of February, it was remarkably cold, causing demand for natural gas in our service areas to skyrocket. Our subsidiaries Gasunie Transport Services (GTS, Netherlands) and Gasunie Deutschland (GUD, Germany) handled these volumes without any problems. On Wednesday 10 February 2021, we transported as much as 420 million cubic metres of gas per hour through our Dutch networks. It was, however, not cold enough for a new gas transport record. The current record dates back to 2 January 1997, when the average hourly volume reached 527 million cubic metres.

GTS transported 459 TWh of natural gas in the first half of 2021, which is 4% more than the 441 TWh transported in the first half of 2020. At the exit points, more low-calorific gas was supplied due to the low temperatures, especially during the first quarter. The domestic exit of high-calorific gas was higher following the acquisition of the Zebra pipeline as of 31 December 2020. In the second quarter, the exit for the filling of storage facilities was lower. GTS blended 201 TWh of high-calorific gas with nitrogen to produce low-calorific gas (Groningen-quality gas) in the first half-year of 2021. This is 5% more than in the first half-year of 2020 (193 TWh). The amount of nitrogen used for conversion increased by 7% from 1.68 billion m³ to 1.80 billion m³.

In the period from January to the end of May 2021 inclusive, market parties traded a total of 20,338 TWh of gas on the TTF, which is around 5% less than the 21,507 TWh traded over the same period in 2020. Even so, TTF still increased its lead over other European gas trading hubs. TTF saw its market share grow to 77% (72% in 2020). As production from the Groningen field was further reduced, TTF’s role as a gas trading platform grew once again, confirming the importance of a liquid hub for a properly functioning gas market.

Over the first six months of the year, GUD transported 133 TWh of natural gas, down 4% on the 138 TWh transported over the first half of 2020. GUD is receiving large numbers of applications for new or larger-scale connections. As Germany is switching to natural gas, there is still great scope for carbon emission reduction ahead of the switch to green molecules before 2050.

On 1 February 2021, ACM published the 2022-2026 method decision, setting the boundaries within which GTS can charge its tariffs. ACM has opted to change the way in which GTS’ capital costs are spread over time, so as to factor in the future reduction in gas consumption as a result of the energy transition. GTS and several parties from the market have appealed the method decision on certain points. The Dutch Trade and Industry Appeals Tribunal (CBb) has decided not to hear the case before publication of the method decisions for TenneT and the regional transmission system operators in the autumn. In May, ACM published the GTS tariff decision for 2022.

As a result of the German Federal Ministry for Economic Affairs and Energy’s intention to harmonise regulation of the transmission system operators with that of the regional distribution system operators, simplify the legislation and incentivise acceleration of the development of the German network, an amendment to the regulation regime was approved in late June. This amendment will enter into force in early 2023 and means, among other things, that the current set of investment measures will be replaced by a system of annual capital cost comparisons. A transitional arrangement will be implemented.

At the end of June, the Total Reportable Frequency Index (TRFI), our twelve-month moving ratio for the number of reportable incidents compared to the total number of hours worked, stood at 2.5, i.e. below our signal value of 2.7. It is our ambition to keep lowering the TRFI.

Uncontrolled events are incidents involving gas leaks (of natural gas, hydrogen, nitrogen or air) of over 14,000m³ from a Gasunie-operated pressure holder with a rated pressure of 8 bar or higher. So far in 2021, there have been no uncontrolled events, just like in the first half of 2020. We have set the signal value for 2021 at 3. Four transport disruptions occurred during the first six months of the year. Our signal value for transport disruptions is 6 for the whole year.

On 1 April, the Europäische Gas-Anbindungsleitung, EUGAL for short, reached its maximum transport capacity for the first time. This gas pipeline runs from the Baltic Sea down to the southern part of Saxony and from there on to the Czech border, covering a distance of approximately 485 kilometres. Participation in this project bolsters the position of Gasunie’s network in international transit flows. EUGAL is a joint project by GASCADE, ONTRAS, Fluxys and GUD. Various branches to the west link the pipeline to gas markets in Germany, the Netherlands, Belgium and the UK.

In January, GTS advised that, from the 2022/2023 gas year onwards, the Groningen gas field will only be needed in the event of extremely cold weather or system outages. The Groningen gas field will then only be used as a back-up for other production assets. This back-up role means production volumes can be kept down to a minimum. Aside from that, we have indicated that final closure of the Groningen gas field can take place between mid-2025 and mid-2028, because this field will then no longer be needed as a back-up facility either.

Belgium subsequently announced that it can stop using low-calorific gas ahead of time. A study into the possibility of switching the Grijpskerk gas storage facility from high-calorific gas to low-calorific gas was also completed. Following these developments, we advised the Dutch minister of Economic Affairs and Climate Policy that final closure of the Groningen gas field can be brought forward. If the Grijpskerk gas storage facility is indeed switched to low-calorific gas, the Groningen gas field can be closed in the third quarter of 2023 or the third quarter of 2024. Another key factor in making this possible is the Zuidbroek nitrogen installation, which would have to be ready in time.

With the installation of three distillation columns in March and April, the new Zuidbroek nitrogen installation received its ‘heart’. It is expected to be commissioned in April 2022. Building this facility involves a total investment of € 500 million.

Due to the closure of the Groningen gas field, the Netherlands will become a great deal more dependent on pipeline-based gas imports from Norway and Russia. We already got a taste of that during the past winter. Great demand for liquefied natural gas (LNG) in Asia meant considerably lower supply of LNG to the European market. There were also large volumes of transit gas passing through the Dutch network en route to the UK market, whereas we still received relatively large volumes of gas from the UK last year. Gas storage facility occupancy rates had, therefore, dropped to 18% by the end of winter, even though the winter showed an average temperature profile. Due to the cold spring and high gas prices, gas storage facilities’ occupancy rates continue to be low. The storage facilities in the Netherlands (Bergermeer, Alkmaar, Grijpskerk, Norg and Zuidwending) recorded an occupancy rate of 29% at the end of June, compared to 73% on the same date last year. ENTSOG, the European association of gas transmission system operators, is currently conducting a study into the adequacy of Europe’s existing gas storage infrastructure. The results of this study are expected in the second half of the year.

The availability of high-calorific gas plays an essential role in being able to definitively close the Groningen gas field. There needs to be sufficient supply and storage capacity and demand for this type of natural gas. With this in mind, we are pleased that the German 2020-2030 Netzentwicklungsplan (Grid Development Plan) takes security of supply in the Netherlands into account and that key steps have been taken in the Netherlands to preserve the gas storage facilities of the parties in the Gasgebouw joint venture for the Dutch market. Over the coming years, these topics, and especially the ratio of low-calorific gas feed-in to high-calorific gas feed-in (gas quality balancing), will continue to merit our attention.

Our current assessment is that there will be sufficient infrastructure in the future, but the responsibility to ensure sufficient gas for Dutch customers lies with the parties operating in the Dutch gas market. In other words, once this gas can no longer be sourced from the Groningen gas field, it will be even more important that (all) market parties take this responsibility.

In April, the first German natural gas storage facility switched from low-calorific gas to high-calorific gas. The Storengy natural gas storage facility near Lesum (Bremen) has been connected to the GUD grid.

In April, GUD signed a collaboration agreement with ten other German network operators, under which they will merge the two gas market areas of GASPOOL and NetConnect Germany into a single market area called Trading Hub Europe (THE). This merger will make Germany a more attractive (transit) market for shippers. The merger of the virtual interconnection points for low-calorific gas will take effect on 1 October 2021, and the merger of physical interconnection points for high-calorific gas will follow on 1 April 2022. The THE market area covers a total length of around 40,000 kilometres and is connected to over 700 downstream networks.

In March, the German regulator BNetzA approved the 2020 Netzentwicklungsplan (NEP, Grid Development plan). This approval is important to GUD mainly because of their network expansion projects, which are related to, on the one hand, the connection of planned LNG terminals in Brunsbüttel and Stade and on the other hand to the need for greater transit capacity to the Netherlands. This will require expansion of the GUD network, which involves a total investment of approximately € 630 million.

How do we get 2 billion cubic metres of green gas flowing through the Dutch gas networks by 2030, multiplying the current volume by ten? Working together on a local and regional level will enable us to overcome any obstacles. In June, we partnered with the 2bcm Alliance in organising a webinar for local authorities, presenting a range of successful real-life examples.

The Netherlands is set to become the first country in Europe to repurpose its existing natural gas network for hydrogen transport, as Gasunie has officially been tasked with developing nationwide hydrogen transport infrastructure. The HyWay 27 report details the economic and technical reasoning behind building this hydrogen backbone.

The hydrogen network, which should be ready in 2027, will consist of 85% repurposed natural gas pipelines, supplemented by newly built pipelines. The costs are four times lower than those involved in building a network made up entirely of new pipelines. The capacity of the network is 10GW, equal to 25% of current energy usage by Dutch industry. This can be expanded further over time by applying compression techniques and because even more pipelines will become available in the future as the consumption of natural gas decreases.

In January, the Council for the Environment and Infrastructure advised the Dutch House of Representatives to invest in the production, storage and transport of hydrogen. This advice represents an important backing for the development of the hydrogen market and for the projects that Gasunie is working on in the Netherlands.

The HyTransPort.RTM hydrogen pipeline in the Port of Rotterdam has come one step closer to becoming a reality. In March, companies based in the Rijnmond area were invited to sign up as future consumers. The open-access hydrogen pipeline that will be laid will become the basis of the hydrogen infrastructure in Europe’s largest port. The plans for this pipeline are now in the final phase ahead of the final investment decision. The aim is for the HyTransPort.RTM to be taken into use in the second quarter of 2024.

Through the Clean Hydrogen Coastline partnership, ArcelorMittal Bremen, EWE, FAUN, Gasunie, SWB and TenneT have set out to integrate up to 400MW of electrolysis capacity with associated hydrogen storage capacity into the existing energy system in northern Germany by 2026. This initiative was announced in March.

In May, the German government nominated GUD’s future hydrogen pipeline HyPerLink as an Important Project of Common European Interest (IPCEI). This decision is an important advance towards the realisation of a north-western European hydrogen backbone. HyPerLink creates a connection in northern Germany between hydrogen onshoring and production locations on the one hand and the major industrial hydrogen consumption centres near Bremen, Hamburg and Hanover, as well as to underground storage facilities, on the other.

In April, Energinet and Gasunie published a pre-feasibility study on the transport of hydrogen through a 350 to 450km pipeline from Esbjerg or Holstebro in Denmark to Hamburg in Germany. This pipeline can be built gradually and cost-efficiently by repurposing existing gas pipelines. With this study, Gasunie and Energinet intend to get a market dialogue going and develop the export potential for green hydrogen from Denmark to demand centres in Germany.

Not only the Netherlands and Germany have plans for a hydrogen backbone in the making, ten other countries have previously joined forces to develop a 23,000km European backbone. This joint venture called European Hydrogen Backbone (EHB) announced in April that eleven more countries are set to join the initiative. Together, these countries propose a backbone of nearly 40,000km that should be up and running by 2040. 

In order to transport residual heat from the Port of Rotterdam to consumers’ homes, Gasunie is developing the WarmtelinQ pipeline with help from the Dutch Ministry of Economic Affairs and Climate Policy and the Zuid-Holland provincial authority. The WarmtelinQ will be a heat pipeline that will initially run from Vlaardingen to The Hague. In order to actually get the heat to consumers’ homes, Gasunie, the Zuid-Holland provincial authority, the local authorities of Vlaardingen, Delft, Midden-Delfland, Rijswijk, and the joint housing corporations signed a declaration with collaboration arrangements in March. Gasunie is currently exploring, together with and at the request of stakeholders, ways to extend WarmtelinQ to the Leiden area.

Preparations for Porthos are nearing the final stage. The environmental impact assessment published in February did not identify any impediments in the project organisation that will delay the decision-making process. The four companies that intend to have CO₂ stored saw their application for SDE++ granted. The construction of the planned compressor station on the Maasvlakte site, which will transport captured CO₂ to the empty P18 gas field on a large scale, has been put out to tender. Gasunie will make a final investment decision on its share in the Porthos project in 2022.

COVID-19 has significantly changed the way we work. A number of our people had been working from home for some time already, while others continued (sometimes with certain changes) to work from the office, plant or field. We decided to stick with this ‘home working unless’ policy over the past six months. In Germany, COVID-19 restrictions dictate that simultaneous use of work areas has to be kept to a minimum until 10 September.

Where will we go from here, now that we are allowed back at the office? Through a hybrid way of working, we are trying to strike a new balance in both the Netherlands and Germany, so that we can keep enjoying the benefits of working from home. Hybrid working means that, for part of the time, employees work together in a way that is not tied to a specific place or time. The basic principle here is that the company’s best interests and proper performance of the work must never be undermined by when and where the work is performed.

Gasunie’s new Corporate Social Responsibility (CSR) policy, which ties in with the United Nations’ Sustainable Development Goals, is increasingly gaining shape. Last year, Gasunie identified nine Green Deals. For these Green Deals, which include zero-emission construction, circular procurement and methane emission reduction, we have meanwhile defined most of the KPIs for the years 2023 and 2030. In the second half of this year, we will be setting up the monitoring of and reporting on these KPIs.  

In April, Gasunie and several other Dutch infrastructure companies joined the Verbond Brede Welvaart, a pact for broad prosperity. In this pact, we promise to not only approach our activities from a financial and economic perspective, but also to adopt a broader focus on what we add to society. The concept of Broad Prosperity encompasses everything that people consider to be of value: health, education, the environment and living environment, freedom of political expression, social cohesion, personal development and safety.