Stranded Generation Assets & The Future Implications For The European Gas Network

This paper evaluates the investment case for gas generation and network assets in a future EU energy system. A detailed model-based analysis is developed under the assumptions of the European Commission Reference Scenario... [ view full abstract ]

This paper evaluates the investment case for gas generation and network assets in a future EU energy system. A detailed model-based analysis is developed under the assumptions of the European Commission Reference Scenario 2016, factoring in technical constraints for the effective operation of the European power system. An investment appraisal model assesses if returns to asset owners, generally utilities, in each EU member state are sufficient to incentivise investment and service debt for that asset. A high-level gas network investment and tariff allocation model is utilised to estimate the implications of the changes in gas demand from generation assets for owners of gas transmission assets. The results present a generally varied and uncertain investment case from one member state to another throughout Europe and a potential fragmentation in the established European gas network regulated return model. While the study concludes on the potential material risks to utilities to finance these assets and re-profile their risk in 2030.