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5.3.3. FINANCIAL ENVIRONMENT
Gas infrastructure projects are capital intensive assets with a very long economic
lifetime therefore project financing is a major part of the process of enabling the
investment. Financial tools put in place to support new investments are not
always attractive to investors.
The number of proposed projects submitted for TYNDP 2017 illustrates the willing-
ness of promoters to invest in European gas infrastructures. There is sufficient
capital in the financial market to fund a significant proportion of these projects, the
challenge is to ensure that these projects access funding. The main prerequisite to
unbridle this financial potential is a stable and attractive regulatory framework for
investors. However, as also mentioned before, not all Member States offer a regula-
tory environment with conditions favouring investments.
Project amortisation rates and long-term capacity contracts associated with projects
differ significantly. Infrastructure assets economic lifetime tends to last more than
capacity and supply contracts. The amendment of the Capacity Allocation
Mechanism Network Code (CAM) will introduce a new standard procedure for
allocating incremental capacity, this procedure will only allow to book incremental
capacity for a maximum duration of 15 years, in exceptional cases 20 years. Then,
there will be a gap of more than 30 years in which there is no explicit commercial
commitment for a new asset.
This raises the question of whether a project promoter should be entitled to recover
investment expenditures within a limited time-framework and recoup as much
commitments as possible in the available contractual timeframe, due to the lack of
certainty in the long term. The solution would also avoid cross-subsidies between
different categories of users (present/future, infrastructure users/general system
users, etc.). This situation of general uncertainty is also triggered by negative signals
from carbon emissions prices due to ongoing European ETS policies.
5.3.4. PERMITTING
The streamlined permit granting introduced by the Energy Infrastructure Guidelines
for Projects of Common Interest (PCI) is a concrete step in the right direction.
Nevertheless many Member States are late in establishing such arrangements,
especially when permits are expected at different levels (from local to national level).
Such situation results to be detrimental to the development of necessary infrastruc-
tures as streamlined permitting is especially important for cross-border projects
where the phasing of stages in each country is a key factor in delivering the benefits
of the projects.
These arrangements are intended to strike a balance between public consultation
and certainty on the duration of the process. If these arrangements deliver expect-
ed benefits, they should be enlarged to Non-PCI projects as well.
%
83
11
6
Availability of funds
Amortisation rates
Other
Figure 5.6:
Overview of the Financing related project barriers