ENTSOG GRIP South - Main Report

7.1 Main IssuesDetectedat NetworkAssessment

7.1.1 DivergenceofPricesatSouthRegion

Thisdivergenceonprices into theSouthRegionhasbeenhighlighted recentlycaus- ing peak differentials higher than 5€ /MWh between the Spanish AOC and PEG Sud and reachingup to9€/MWh comparingwithPEGNord. Prices in the southern area of the SouthRegion, IberianPeninsula and South of France, aremuch higher than prices in theNorth of France indicating the strong divergence on prices in the SouthRegion. TheLNG-prices ligature in theSouthof France (GRTgazSouthandTIGF zones) and the Iberian Peninsula as a consequence of the high LNG dependence in the area causes strong price divergence into the Region as well as with the rest of central Europe. 7.1.2 LackofSouthRegion Infrastructure’s Abilityto FaceVeryDifferentSupplyMixes andPriceConvergence In the South Region, during previous years, we have observed new trends in the supply mixes. The influence of price discrepancies in Europe and throughout the world has resulted in a new configuration of gas flows entering the network in the SouthRegion since the end of 2011 andwill continue in the following years. However, one of the main results obtained in the TYNDP 2013–2022 indicate “…the limitedability todecreaseLNG to IberianPeninsulaandSouthof Francedue to the lack of interconnection with Northern Europe…”, i.e., the lack of network transmission capacity to face very supplymixes. The adaptability of the network contributes to the optimization of shippers’ supply portfolios. Through the network flexibility, shippers will compensate the variations among cost of supplies source by the lesser or greater utilization of some of them.

7.2 KeyConclusions ofNetwork AssessmentAnswering to Main IssuesDetected

7.2.1 Remedytodivergenceofprices atSouthRegion

Annual dependenceonLNGsource in theSouthRegionwill diminishdeveloping the main n-FID transmission projects identified in the South Region, the new corridor “Bidirectional flows between Portugal, Spain, France and Germany”. The creation of newnetwork capacity, opening theway to reduce LNGdependence in the south- ern area of theRegion, is therefore crucial eliminating the divergence of prices into the SouthRegion andwith the rest of central Europe.

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ENTSOG–GRIPSouth 2013–2022