EDI Quarterly Vol. 2 No. 3

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EDI Quarterly Volume 2, No. 3, September 2010

Editor’s Note

Q

by Leo Hoenders and Steven von Eije

EDGaR: The largest natural gas research project in Europe EDGaR is the working program for the next five years of a Dutch national research consortium. With a total budget of â‚Ź44 million this is the largest gas research program currently in Europe. In July 2010 about half of the budget has been assigned to proposals. This is the very reason that this edition of the EDI Quarterly is fully dedicated to this program.

1 EDGaR: The largest

natural gas research

project in Europe

EDGaR makes a case for the energy future of the Netherlands. It focuses on positioning the Dutch natural gas in an international perspective and, from this position, on achieving a sustainable energy supply. EDGaR’s main objective is to carry out research of fundamental, strategic and technological importance.

7 From Mono- to Multigas

9 Gas infrastructure of the

future

EDGaR addresses three themes: Theme 1 focuses on the complex process in which the traditional gas market, defined by a relatively distinct gas quality and composition, will develop to a multi gas system. This transition process, and all related questions are symbolised by the green arrow.

Theme 2 addresses the second challenge for the gas sector: to become part of an integrated energy system where technical and socio-economical changes are in a close relationship.

The research in this theme can be visualized as the roof of the building. This is done because the gas sector should not be seen less as a technical and economical stand alone energy sector, but instead, more as a sector that should strive for the optimal position

Contents

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Meeting the challenges of the future

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Organisation from EDGaR

11 Changing gas markets 14 Overview approved

research reports 18 Books, reports and

upcoming conferences

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Theme 2: New gas in a transition to a future proof energy system

Natural Gas Groningen LNG Imports Natural Gas

Biogas SNG Hydrogen

Gas Mixtures

Co2

Theme 1: from mono to multi gas

Theme 3: Changing gas markets within the overall energy system.

Theme 3 is about research into the changes in environmental factors of the gas sector and its consequences. This is symbolized as the base of the temple, since all other transition processes take place in the context of the changing (international) environment of the gas sector.

In total four theme leaders will oversee the three themes. Three themes leaders have already been assigned, a fourth theme leader will soon be appointed. This theme leader will be assigned from the Energy Research Centre of the Netherlands (ECN).

The theme leaders act on behalf of the participants in the project, they make sure the intent of the program is translated into research projects that address the issues that are raised in the themes. Their role is also to keep all researchers focussed on the right projects, in order to make

sure that all issues are addressed. Together with the evaluation committee they will guard the quality of the research that is performed.

The theme leaders that have already been assigned are: Prof. Levinsky from KEMA on behalf of Gasunie, associated professor Dr. Kunneke from Delft Technical University and Prof. Wolters from Kiwa Gas Technology. Dr. Kunneke and Prof. Wolters shared their ideas about the themes that they are most involved in. Even though the research projects have just started, we were allowed to contemplate with them on some of the issues within the theme they focus on. With Prof. Levinsky we discussed the two proposals he submitted, both of which were granted.

The following interviews held by the Editorial Board of the Quarterly will provide more detailed information on the content of the EDGaR program.

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Meeting the challenges of the future We will start with the scientific director of the program; Prof. Catrinus Jepma. As a member of the operational management of the EDGaR foundation he is responsible for guarding the quality within the EDGaR program. He will explain the importance of the research performed during the next five years and his vision on the gas future of the Netherlands.

What is your role within EDGaR and your responsibilities?

I’m the scientific director of the program, which means that I have to see to it that the quality of the program in terms of content meets the high standards set, that the program is being carried out as planned, that the gas sector and others are well informed about the program, that the program is linked to other related research activities elsewhere and that EDGaR continues after the 2010-2015 subsidy period.

What is the goal of the EDGaR program?

The main target of EDGaR is to make sure that the changes in the gas sector that are required for, amongst others, climate purposes are well and timely prepared. To just give an example, if the sector would consider gradually introducing green gas on the market, a significant number of preparatory measures need to be taken, most of which would require preparatory research. Questions such as how to feed-in green gas into the grid, what quality standards need to be set, legal liabilities, certificate trading systems and so on, all need to be addressed first before such a system can work. In fact many changes in the industry start with the underlying research issues being addressed.

Prof. Catrinus Jepma Scientific Director EDGaR

EDGAR tries to do the groundwork for being able to meet a number of challenges the gas industry is going to meet during the next decades.

What are these challenges?

There are many challenges but issues typically addressed by EDGaR relate to gas quality issues emerging from the introduction of new gasses into the system: biogas, hydrogen, syngasses, etc. It also prepares for a wider discussion within Europe about the gas quality margins that will need to be respected, and about the possibility of parallel gas systems with different gas qualities and different applications. A second major challenge addressed in EDGaR is very much technology related, i.e. how to design energy systems that optimize the use of gasses on the one hand with other primary energy sources, notably renewable sources on the other hand. Such optimality issues are increasingly providing scope for energy efficiency improvement, not only at the individual household or business firm level, but also by smart combinations of industrial activities and at wider, regional and national levels. Gas seems to be, precisely because it can be stored, an excellent partner of renewable energy in balancing the energy system. Optimizing energy systems, however, requires a lot of technology combining all the market information with technical applications. Smart metering obviously plays a crucial role in this respect and there are still great challenges in technically designing optimal energy systems, but also in making sure that they are working in actual practice given the interests of the various stakeholders. Addressing this is a second big challenge of the program.

Finally we have to better understand the functioning of the international gas market and the various vulnerabilities and uncertainties now and in the future. This requires research into how the gas market really works, how it has changed by the gas market liberalization, how it may change due to unconventional gas, what the role is of political and regulatory systems and international cooperation. So, many changes have taken place in the gas market during the last decade that research hardly could keep up. That is why EDGaR also addresses several aspects of this changing international gas market.

Why where these subjects selected?

“Preparing the gas industry for the future�

The above answer pretty much covers the three key themes that we distinguish within the EDGaR program, and which are subsequently labeled : from mono to multigas, future proof energy systems and changing gas markets. As private and public partners of the consortium, we believed that the gas industry is going to look quite a bit different say twenty years from now than it does today. There will be all kind of gas qualities and gas quality issues; biogas will have entered the stage and with it other types of gas. In fact CO2 will also be channeled towards underground storage facilities via pipeline systems, which is a completely new gas system still to be developed. Also the role of gas in balancing the power system may well dramatically increase. Gas is the cleanest fossil fuel, gas fired power plants are relatively efficient and moreover relatively flexible so that they are a fairly ideal backup system for an inherently unstable energy system based on renewable sources.

Therefore the role of gas storage is going to increase substantially also

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in combining gas with other energy sources. Twenty years from now unconventional gas will play a much bigger role, together with LNG. It seems likely that the gas market will become much more international and gas dependencies more critical. We believe that EDGaR basically addresses the changes that the future is likely to bring. But we have to be realistic, future will, most likely, bring various surprises and questions with it that we had not foreseen.

Why is such an initiative taken in the Netherlands?

The Netherlands, as you know, is currently the only EU Member State with a net export position on gas. Moreover we are sitting on the Groningen field, one of the few giant gas fields in Europe, the exploration of which started 50 years ago. There is no country with a higher gas penetration rate as far as I know then the Netherlands. As a result our country has developed into a key center of gas infrastructure, gas trading and gas exploration. Thus, an enormous amount of gas information has been built up in the past. We developed the concept of the Netherlands as a gas roundabout meaning that many gas functions, exploration, transport, storage, quality conversion and trading, come together as a service point for much of the surrounding region. Now

the Netherlands also wants to take up a leadership’s role in positioning gas in the energy transition towards more sustainable energy sources.

This first and for all requires that our country also tries to play a key role in addressing the research issues that are linked to this transition. If you try to be the center of gas infrastructure and trading, you should strive to be the same in gas research.

What are the deliverables of EDGaR? The EDGaR deliverables will be a mix of technical devices and applications, insights into how systems may work, studies and research papers explaining the functioning of the gas market, quality issues, etc, various suggestions to the gas market players and the government on how to prepare for changes, for new regulation and procedures. EDGaR may prepare for various pilots and applications of new energy combinations. A lot of empirical data will become available on how the gas system may respond to new gasses, or other gas specifications. In short, EDGaR will provide lots of information, most of which, but not all, will be made publicly available about what one needs to know in preparing the gas industry for the future.

The organisation of EDGaR Dr. Bert Wiersema is the scientific director of the EDGaR program. He will explain more about the organisation, the procedures and the history behind this program.

Who are the partners within this program?

The partners in the EDGaR program are the University of Groningen, Gasunie, TU Delft, GasTerra, ECN, Kiwa, Hanze University Groningen, Enexis, Liander and Stedin. The important and remarkable thing about this program is the combination of Universities, knowledge institutions and private parties.

How was this consortium created and how did it evolve?

We started with the first idea in 2005. At that time there was a new agreement from the government, the so called ‘Purple Agreement’ that included extra budgets for research, innovation and education. Mr. Kuipers and Mr. H. Dijkgraaf, chairman of respectively the University of Groningen and Gasunie, still an integrated company at that time, realized it was important to invest in gas knowledge in the Netherlands and therefore sent a letter to the Government, and the ministries of Economic affairs, Education and Culture and Sciences.

Unfortunately, this first call for a national consortium did not immediately lead to a subsidy from the authorities. In order to gain more political support and build a stronger network, we later on expanded the consortium to its current size. The new partners were

Bert Wiersema Business Director EDGaR

ECN, Hanze University of Applied Sciences, Kiwa, the network companies and GasTerra. In a very short time we had to draft a proposal for the FES – the national fund for large infrastructure project and innovative knowledge projects, financed from the Slochteren revenues. This first was unsuccessful, the second attempt in 2008 succeeded. The money came from three sources: European Funding (EFRD) via the Northern Provinces (SNN), the Ministry of Economic affairs and co-financing by the province of Groningen. All in all it took four years to obtain this budget.

What is the total budget of the EDGaR program? €44 million. Half of this money is subsidy and the other half is matched by the partners within the EGDaR program. By far the largest part of the money goes directly to research projects, €42 million. The rest of the budget, €2 million is the budget for the management of EDGaR: scientific coordination, business management and knowledge dissemination.

The University of Groningen (RUG) is the coordinator of the EDGaR program, what is their role as coordinator?

The Dutch term is ‘penvoerder’. The main tasks as coordinator are to provide the scientific director (Catrinus Jepma) and the business director (Bert Wiersema) and have the responsibility for the administration of the program. We have now set up the EDGaR foundation. This foundation has ten equal partners and is responsible for the coordination, administration, finance & control and PR. The

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staff is formally employed by the University of Groningen. All the liability is in essence with the foundation. The foundation receives the funds and distributes it among the partners.

As mentioned before, of the total budget of €44 million, €2 million is reserved for overhead costs of the program while €42 million goes to the research projects. The funds are assigned based on a critical selection of proposals, and then distributed according to the planning of accepted proposals. Each quarter money is transferred to project partners based on the overview of hours that are actually spent on the projects. This means that the partners have to pre-finance the work.

Do evaluations take place during the research projects?

Every six months there will be a formal evaluation. We have also assigned four theme leaders who, together with the scientific director prof. Jepma, will guard the content and progress within the projects. We estimate we will have about 30 projects in total. We want to ensure that the EDGaR program is actually one holistic program instead of thirty loose projects. To ensure this we will have abundant informal meetings between project leaders in order to make sure people know what their colleagues are working on.

What is your role as the business director within EDGaR and what are your responsibilities?

The role of business director of the program is to do everything to ensure the program is carried out as planned. This includes all formal steps necessary to start the foundation, getting a general agreement signed by the partners about the budget for projects, intellectual property rights and so on.

My role was to get together with the legal experts of the EDGaR-

partners and to get an agreement on the rules of the game for EDGaR. We had some help of Ernst & Young and of Plas & Bossinade in setting up the fiscal and legal frame and drafting the agreements. Furthermore I am responsible for preparation of the meetings of the EDGaR board and all other EDGaR-procedure, like the proposal selection process.

How was the selection of the proposals done?

Before we applied for the subsidy already between partners there had been many discussions about which topics should be researched. There are 3 main themes: 1.

From Mono- to Multigas 2.

Future-Proof Energy Systems 3.

Changing Gas Markets Each theme had sub-themes and partners had indicated beforehand how much money they were willing to spend on certain themes. This is how it originated. By now it is up to researchers to find each other and to make proposals together. The consortium tries to stimulate researchers from the partners to come up with proposals that match the predefined themes. The first round took place this year. In total 16 proposals were submitted. Eventually 12 proposals were accepted after the first round. Four proposals had to be rejected, but some of them will apply again for funding in the second round at the end of this year.

The success rate is in large part due to the fact that the partners where involved in setting up the program, implying that we were all on the same page from the start of the project.

We do have to guard a high quality standard within the EDGaR program. This is of course also one of the prerequisites associated with the subsidy. An international jury judges the quality of the proposals.

So far the EDGaR board has always followed the advice of the jury on whether or not to accept the proposals. Around half of the budget is committed to accepted proposals by now. We are now in the process of committing the rest of the budget to interesting proposals. The role of the foundation is to stimulate our partners to work together and to arrange the puzzle of separate proposals which have to match with the overall picture of the business plan. We hope to have around 90% of the entire budget committed to proposals by the end of this year.

What is the goal of the EDGaR program?

At the first meeting of the advisory board, one of the members, Mr. Lubbers, put it very interestingly. He said “If you look at gas in the Netherlands, there is a three phase development. The first step was to make gas the pillar of the Dutch energy household. The second step is to embed the national gas infrastructure in an international network: exporting our national expertise and to build an international infrastructure; the gas roundabout. EDGaR is exploring the third stage, with natural gas in relation to the sustainable energy system of the future: how can you use gas in a way that it is secured for the future and how do we use it in a sustainable way?”

“Through new knowledge we can create new products and export knowledge to compensate for the decline in molecules exported“

From an economic point of view, the group of EDGaR partners took the opportunity to think further than 5 years and to prepare for a sustainable future. The Netherlands will end up with a net import position. Gas reserves in the Netherlands will decline. Already it takes more energy to produce gas from the Groningen field. There is a lot of knowledge about gas in the Netherlands, about all of its aspects. From that advanced knowledge position, we should think about using gasses in different ways. Gas can be perfectly used in combination with

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of €600.000 has been reserved for this. This part is very important, especially at the end of the project We hope that EDGaR, and the active dissemination of the knowledge that will be build up in the program, will create more interest for gas and the opportunities that come from it for further economic growth for the Netherlands.

renewable energy, mostly through the production of electricity. If we can innovate in that area, thereby producing new equipment and knowledge, then we could export this to other countries. The high efficiency boilers serve as a great example. They were developed by Gasunie and were later exported. Our conventional gas exports will gradually decline, but we should strive to compensate this with new knowledge about gas in relation to renewable energy. This is the most important opportunity for the Netherlands. Through new knowledge we can create new products and export knowledge to compensate for the decline in molecules that are exported.

EDGaR has obtained a subsidy for local development.

Does this mean that the knowledge will also be disseminated locally?

The same goes for knowledge on regulation. If you want to add ‘new gasses’ (ed. Biogas, hydrogen, syngas) to your network, new rules and regulations have to be formed. The Netherlands could also become a front runner in this respect.

First, our intention is to really get the program going, but in my personal opinion one of the main challenges is to roll the program out internationally after this program has finished. That certainly is in the interest of the region and the Netherlands.

What is the size of the organization and what is the structure?

There seems to be a bit of a contradiction. On the one hand the subsidy is used to do research in the general interest but on the other hand partners invest a lot of money in order to get profit from the research done.

How are their interests secured?

The board of the EDGaR foundation is formed by one member of each partner, so in total we have ten board members. Roelf Venhuizen, former managing director of NAM, is the independent chairman of the board.. Since all of the decisions are made in the board, all of the partners are involved in the overall development of the program, We also have a board of advisors that meets twice a year. The members are Ruud Lubbers, Max van de Berg, Hans van Luik, Hans Alders and Lense Koopmans. Twice a year we ask them for advice about the program and its future opportunities. Besides this we also have an independent expert body. This body consists of four professors and one member from the industry. They review all the submitted proposals.

Besides this they have been asked to carry out a mid term review.

The bureau of the foundation consists of a project manager (from Canada) who will start in September. We also have a financial officer from the Groningen University who works for us 2 days a week. I work for the foundation as a business director, and then there is also the program council. Catrinus Jepma is the scientific director and is in charge of supervising the four theme leaders that have been appointed to this program council. Naturally there is a secretary, ms. Dity van Dijk. That’s the entire organisation, so a small office suffices.

When the research is finished there is a certain period in which the partners who funded the program have time to apply for patents and secure their intellectual property (IP) rights. If they do not do this, then after a certain period the information will come into the public domain.

There are all kind of IP conditions which are taken into account in the agreements with partners. However, compared to other projects the contracts are relatively small. In the end all of the information will be available to the public, but not before our partners had the chance to apply for patents. The public can then later on license these patents.

In addition, not many spin off effects will be realized by patents, but by innovative knowledge that will be used to define new services to companies within and outside of the Netherlands.

It’s a trade off between public and private interests. The subsidy would have never been granted if the information would not be made public but the partners wouldn’t have invested if they did not get a chance to obtain patents.

Does all the research take place within the partner organisations?

Is there a possibility for people within the industry to engage with the researchers in these topics?

Most of the research does, but there are exceptions. The researchers in general are employed by the partners participating in the program.

However they are able to hire external consultants if they do not have the in house expertise.

An interesting example of this is KEMA. When we formed the project Kema was still called Gasunie research and was part of the Gasunie organisation. By now Kema is an independent entity and Gasunie hires them in order to do this research. Gasunie is still the partner in EDGaR.

Yes. There is a possibility for external partners to join EDGaR projects, as long as they stick to the rules of the game. Each year we will have two conferences. One of these will be open to the public, the other one is dedicated to partners within the consortium. Since industrial partners are of vital importance for the future EDGaR plan, they are welcome to join EDGaR. At the moment, we are in the process of formulating a strategy how the interests of new private parties can be optimally supported.

How will the information be disseminated and will all the information be disseminated?

We have not finalized the PR-policy 100% but we will actively disseminate the information through our partners, through seminars and by other means during and after the EDGaR projects. A budget

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From Mono- to Multigas A significant contribution to the drive towards sustainability is the introduction of climate-neutral gasses, such as biogas, into the natural gas infrastructure. The chemical composition of these gasses are generally so different than the natural gasses traditionally distributed that the combustion behaviour of end-use equipment will unacceptably deteriorate. It is important that the safety, operability and fitness-for-purpose of end-use equipment be guaranteed when these sustainable gasses are introduced. In the short and middle term, gasses will have to be treated to do so. In the long term this complexity will be reduced due to the introduction of more robust technologies, e.g. gas utilization equipment that is able to accept a wider gas variation of gas compositions while ensuring safety and efficiency. Both processes require the formulation of clear and well founded quality specifications for gas compositions. Insight into the influence of a variable gas composition on the behaviour of combustion equipment is essential. The challenge is to efficiently produce biogasses that meet the requirement on composition; new production processes that lead to less post-treatment would considerably speed up the large scale introduction of biogasses.

The diversity in supply of various gasses can also adversely affect the infrastructure. Components that are not common in natural gas, such as hydrogen, can deteriorate the physical condition (e.g., corrosion) of transport and distribution pipelines, and of components in gas utilization equipment.

The potential effects of these gasses on various materials in the infrastructure must also be established.

A larger variety in supply will also require improved management of gas streams in order to be able to guarantee the quality of the gas. It is expected that the current gas infrastructure will be used as much as possible for the transportation of future gasses. Since the pipelines have been used for a long time now, the integrity and safety of this infrastructure will need increased monitoring. One of the applicable instruments will be condition monitoring. At the same time there is an increased demand for knowledge about the long term behaviour of the materials used.

An additional element in the activities within the gas sector that has to be adapted in a multi gas world is the changing function of gas storage. When natural gas is increasingly used as a base load factor, combined with the use of new gasses with a more whimsical supply and demand pattern, the need for flexibility increases. Gas storage is part of the solution, together with new technologies that create a more flexible gas infrastructure.

Finally, there is also the important development of Carbon Capture and Storage (CCS). CCS could lead to a more climate-neutral use of primary fossil fuels (possibly including natural gas), because the emitted CO2 is captured, transported and stored in geological formations. When this technology is further developed, there will be a need for companies that are able to provide transport and storage services required for

Prof. Howard Levinsky KEMA Netherlands B.V.

CCS. This further complicates the gas sector because many new questions will need to be answered. Not only about the optimal logistical and spatial layout for CO2 infrastructure (for transport and storage), but also about its relation to the existing network for other gasses. Besides that, there are many questions about acceptable quality specifications of CO2 streams, compression, pipeline integrity and safety. Therefore the development and application of high quality monitoringtechniques and protocols are indispensible.

The research performed in theme 1 will deliver insight into the possible introduction of ‘new’ gasses, quality specifications (and its consequences for the gas infrastructure), strategies for new technologies for natural gasses, ‘renewable’ gasses, their mixtures and CO2. The research in theme 1 also answer the question about the ways in which gas storage and technology adaptation can enable the switch to a multi gas world.

Prof. Levinsky is one of the theme leaders. He is working for KEMA, but is involved with EDGaR on behalf of Gasunie, due to the takeover of Gasunie Engineering. He also submitted two proposals for the EDGaR program, both of which were granted. He was kind enough to discuss these proposals for the EDI Quarterly.

Proposal 1 (small gas) What is the importance of the research?

The importance of this research is two-fold. First, knowledge is generated about the physical-chemical basis of the effects of (sustainable) gas composition on end-use equipment. Second, it investigates which variations in gas composition are acceptable. For example, what is the maximum fraction of CO2 in biogas for which the behaviour of end-use equipment remains within the range obtained using the currently distributed natural gasses? Perhaps more importantly, the reasons for this behaviour are elucidated.

What are the societal benefits of the research?

Those are also two-fold. The ultimate goal is being able to guarantee that the range of performance using sustainable gasses is within the acceptable range for the end-user; that is, we will be able to specify a range of acceptable compositions, used to derive specifications.

The other benefit is that once you have good specifications, you can determine the necessary degree of treatment for biogas and syngas.

Treatment of biogas until it meets the set specifications costs money and energy. Basing the specifications on thoughtful research supports the necessity of investing in treatment.

What about the industry, the partners?

It means that they know which gasses they can accept. For a given sustainable gas, they can determine to what extent it must be blended with natural gasses so that the end-user will not notice the difference.

The societal impact described above is also important for the industry.

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We shall determine the extent to which the incorporation of sustainable gasses can be facilitated by widening the natural gas band.

Why is this research important for the gas industry?

I expect it to be more important for ‘Netherlands, Inc.’ Being able to use a wider range of sustainable gasses will help the Netherlands reach their sustainability goals. If the requirements for the gas composition can be relaxed, while maintaining the performance of end-use equipment, then this is expected to reduce the costs of treating the gas, and making these gasses less expensive to introduce into the infrastructure.

What are the expected results of this research?

“It is important that the safety, operability and fitness-forpurpose of end-use equipment be guaranteed when these sustainable gasses are introduced”

What will be the research approach?

It will be a combination of fundamental and applied research. It is a fundamental assessment of the changes that occur in combustion processes when using different gasses. The effects of sustainable gas composition on the microscopic details of the combustion process as it occurs at the end user is analyzed, and the consequences for equipment behaviour are derived. Comparison of this behaviour with that of the range of natural gasses provides a means to discern acceptable performance. Predictive methods are derived to compare the performance of gasses in end-use equipment based on the physics and chemistry of combustion, rather than on the behaviour of individual appliances. Tests on practical equipment are used to assess the veracity of the predictions, and indicate the acceptible impact of any predicted deterioration of acceptable performance. For example, predictions of the effects of sustainable gasses, such as the maximum acceptable hydrogen fraction on engine knock will be compared with measurements on KEMA’s gas engine. Since Kiwa has a different kind of gas engine, being able to predict the behaviour of their engine as well will help to demonstrate the generality of our method.

Which results do you expect from this research?

Besides a physically correct description of effects of gas composition on equipment behaviour, the research provides a technical basis for gas quality specifications for new gasses in the natural gas infrastructure.

The parties responsible for formulating specifications, such as standardization organizations can use these results for making wellfounded gas specifications.

Proposal 2 Wide gas On what aspect of the gas quality issues will this research focus and why?

It is very similar to the small gas proposal, but rather than examining the “interchangeability” of gasses within the current Dutch low-calorific distribution band we shall consider a wider band of natural gasses.

Similar to the results of “small gas”, we will provide a correct physicalchemical basis for gas quality specifications. One point that I have not yet mentioned is the relation with another EDGaR theme: developing new robust equipment to accommodate new gasses. Once we understand the origins of equipment behaviour, we can show the designers of combustion equipment how they can alter and control their combustion processes to accommodate a wider range of gasses while maintaining performance.

Gas Infrastructure for the future The different technical and institutional change processes in the energy transition should not be considered as stand-alone processes. In theme 2 the relationships will be analyzed in order to come to a coherent entity from which concrete recommendations for the Dutch government and business can be derived. This is approach is better known as a systemic approach. It goes beyond traditional research about changes in the gas sector. These are usually either one sided technical engineering questions or economic societal problems. The transition to a renewable energy supply is described as a consistent entity of technological development paths, supportive policies from the government and a wide range of economical and societal processes. The goal of this theme is to analyze in which way the Dutch gas sector can optimally anticipate on the transition to a renewable energy supply, thereby focussing on connecting the gas system to other energy systems.

“Safety and reliability are key conditions for the gas industry, now and in the future”

What can you tell about the approved research proposals you are involved in? What is the goal, what are the expected results and how will society benefit from this?

The current infrastructure we have is based on Groningen gas quality, which is a very narrow band. The network system based on this gas quality operates very well; it is very safe and reliable. However, the gas composition, which is typical for the Groningen field will change in the future, at least the supplier of gasses will change in the future. There will be all kinds of gasses from Russia, Norway, gasses based on LNG, biogas, SNG, and perhaps even gas based on hydrogen.

Prof. Mannes Wolters Technology Manager Kiwa Gas Technology

In the frame of these projects we would like to look into the possibilities to use the existing network for the transportation of these new gasses.

We have a network of plastic and steel pipelines and all kind of equipment in there. Is this system already suitable to transport these new gasses or should we put some strict requirements on the gas composition? We are trying to figure out which gas compositions do not affect the pipeline materials. Ultimately we will try to define what we can do with the existing network and to find out the boundaries of the equipment. The infrastructure currently in place has a very high value, which has already been invested. If this infrastructure cannot be used anymore and has to be renovated or new pipelines have to be installed, this will be very expensive.

How will changing the gas quality band affect the market? From an infrastructural point of view, there are both upsides and downsides of changing this band.

On the one hand, if you have a narrow band, existing infrastructure can be used. On the other hand if you widen the band in order to make the network suitable for other gasses, you have to make more investments and it might be harder to transport all the gas, due to liquidity of the market. Could you elaborate a little bit more on that?

It’s always a choice to be made. From the network operator’s perspective it is of course the best to have a system which can handle all kinds of gasses. Then you can deliver and supply gas to all kinds of customers without being dependent on a certain gas quality. There’s obviously a limit to that though. As a network operator, you would first like to have an idea about the possible boundaries. After this, you can make a choice between investing and upgrading your network infrastructure or adapting your applications or gas quality. But first of all the network operators should know what they can do with the existing infrastructure.

How do you test or measure the boundaries of the network?

You are always dealing with an infrastructure which operates over long times, hard to say how many years, but let’s say, several decades. So, in these experiments, you have to say something about the behaviour of this infrastructure over the next 20, 30 and 50 years. We try to accelerate certain failure processes in the materials in order to generate knowledge about the long term behaviour of these materials in a short period. You have to have an insight into the corrosion processes of the steel pipelines, which take quite some time. For plastic pipe materials you have to know the long-term behaviour as well especially because plastics are widely used in distribution systems. So, you always have to

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deal with time-dependent behaviour. You have to know all the longterm behaviour of those materials in various gaseous environments.

That is rather complicated.

Do you also look into techniques to prolong the lifecycle of these pipelines? Having in mind that most of the pipelines which are currently in the ground are supposed to be there for 30, or maybe even 50 years, everyone is now looking into the possibilities for extending this lifecycle, so that we can use these materials longer instead of making replacement investments.

Most of the systems are designed for, let’s say, 50 years. And a lot of these systems are already in operation almost 50 years, sometimes even longer. Apart form changing the gas composition, if we were in a situation to distribute Groningen gas for another 50 years, there is a question on whether we can use this infrastructure for another 50 years?

We are now looking into the changes undergone by the materials during the last 50 years. Moreover we will also change the environment.

This makes it complicated, but yields the desired answers. Therefore we will have to look into the reference situations, namely the behaviour of the system in case you do not change the gas composition, as well as the possibility of changes in the gas composition shortening the lifecycle of the materials.

What is the alternative? Groningen gas, biogas and LNG have quite different compositions. Can the current infrastructure handle that? Are there new requirements? What are the alternatives for these plants?

If you come to the conclusion that the present pipelines are not suitable for these gasses, you can of course lay new pipelines or try to renovate the existing pipelines by, for instance, some relining of the pipelines or laying an extra pipeline inside of the old pipeline, which will of course be very expensive and quite complicated. So, we hope that the existing pipelines can also handle a lot of the future gasses. We already have some knowledge about the behaviour of these materials, so we are quite optimistic about it. However, we have to test if the existing materials can indeed handle the new gasses. It may turn out that the system as a whole is not able to deal with these gasses, but part of the network is.

We must be absolutely sure that in the coming decades we will have no failure of these materials. Safety and reliability are key conditions for the gas infrastructure, now and in future.

So, although there is a very slim chance, there is a possibility that the infrastructure is unsuitable for transportation of biogas, which would prevent large scale use of biogas?

We hope and expect that the present infrastructure will be largely suitable for the transportation of upgraded biogas. Upgrading costs of biogas should be limited as much as possible. If the existing infrastructure is not suitable for transporting biogas, either high costs are incurred for upgrading biogas or high investments in infrastructure

have to be made. Both would prevent large scale use of biogas.

The current boundaries of the infrastructure limit the access of gasses with different compositions to the network. Are there other limitations to the network?

We are of course not only focusing on the effects of certain gas components on the materials, but also looking at the complete systems.

Currently we have a centrally organized system: gas under high pressure is transported by a certain pipeline, then the pressure is reduced and gas is fed to the distribution system. In future that will change.

We’ll have more local gas production, gas coming from different sites.

Adapting the system to the composition of the gas is only one part of the problem. We shall also look into the suitability of the distribution/ transportation system to handle more decentralised production, e.g. biogas injection. There may also be strong changes in demand patterns, like in the case of the use of more micro co-generation. This will also place new requirements on the system. The design of the system may also become different, maybe there will be more local storage.

The demand and supply part will change. These developments, combined with others will form the future integrated system.

We will focus on this issue in the second part of the program. Some of these studies have already started.

You are also looking into decentralized power generation, thus concentrating in this case more on the feedin system instead of the infrastructure. What changes do you expect if this increases, especially given the progress and the developments of feeding in biogas.

Should the network operators prepare for big changes?

I think so. I expect much more fluctuations between demand and supply in the future, over the time of the year, for example. The network operators should focus on balancing of demand and supply. Now they can simply go to Gasunie and ask them for more gas and they will normally provide it. Maybe they will continue to do so in the future, but at a higher price.

I think the network operators will focus more on options for balancing demand and supply themselves, sometimes indeed by going to Gasunie to ask for more gas, but sometimes by using local gas storage or playing with the night/day demand. So, I expect that network operators will try to control the system more and balance everything. That will create business opportunities for network operators.

Also more on a regional level?

Maybe on a regional level, maybe a bit more. The network operators should consider their future business. Of course, they can simply do what they are doing now, mostly regulated business. To make it simple: they transport gas from A to B. Of course, you can make money by doing so. But in the future, more profitable opportunities may arise that they should consider. In order to do so they will need more tools. This is an issue I am very interested in.

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Changing gas markets The gas sector in EU countries is confronted with a large number of simultaneously occurring trends.

The most important of these are: - A growing import dependency of natural gas produced outside of the EU, increasing importance of geopolitical relations in the gas market, a shift in international demand patterns and further application of liquefied natural gas (LNG) and gas to liquids (GTL). This poses new challenges on foreign geopolitical policy; public-private partnerships, chain integration, safety aspects, nature, size and flexibility of the natural gas infrastructure and the functioning of gas markets.

- Possible integration of national gas markets, as a consequence of liberalizing the national EU energy markets, a larger role of storage facilities and of ‘spot-markets’ and the resulting repositioning of important public and private players in gas markets under the influence of new regulation, the new international context and new market conditions. This poses new challenges on the information- and processing systems that need to be able to transform faster and more complex (market)information into optimal business processes and collaborations between players on the gas market.

- Changes in regulation policy and the policy framework with regard to the functioning of the gas market, the progressive application of climate and other environmental policies, i.e. the introduction of ‘green gasses’ and integrated and flexible energy systems and changing relative prices in energy markets.

Dr. Rolf Künneke Associate Professor TU Delft

be technically possible to feed biogas into the network. If biogas is injected on a larger scale, problems could arise for end consumers when the gas is burned or for the maintenance of the networks. This could be corrosion or a presence of bacteria in the network. It is a challenge to facilitate the network to transport different gasses due to the structural changes in technology. This is especially true for biogas, not only in a technical sense but also in a regulatory sense.

Which party should pay for all these technical changes? This is a very straightforward, yet important and complicated question. Who is liable if something happens, and which party should take the lead?

There are very interesting examples illustrating great potential for biogas production, which are neglected because these important issues are not resolved. This requires further analysis.

Besides biogas, are there any other factors that will impact the market?

The incorporation of hydrogen is also an issue. If we want to start driving hydrogen cars, a hydrogen network should be developed. Who shall be responsible for developing this network? Currently hydrogen is produced locally for industrial purposes. These local networks are already developed by private parties.

If we really want to facilitate a hydrogen economy we need to make the shift from small scale local networks to a larger interconnected network. We would have to aim at some kind of network in 30 – 40 years, where we have the major agglomerations in the Netherlands connected to a hydrogen network. The question is; how can we move in this direction, who is responsible?

The goal of theme 3 is to obtain a better understanding of the functioning of future gas markets given the above structural changes and its implications for energy transition. A better understanding is needed about the internal considerations from the most important players in the energy value chain, the decisions based on these considerations and the resulting market behaviour.

In your opinion which factors will mostly change the gas market?

One factor is the incorporation of new gasses. One of the central points in the EDGaR proposal ‘Towards sustainable gas distribution systems’ is the fact that in the future we will have to deal with various different gas qualities in the Netherlands. Historically we have always used Groningen quality gas in the Netherlands. Currently, the industry is already using high calorific gas, but most of the households still use Groningen gas. In the future the Dutch gas network will need to facilitate many different gas qualities in one way or another.

One of the central aspects in the proposal is the production of small scale biogas which has been traditional in the Northern part of the Netherlands. Biogas has very different technical qualifications in comparison to Groningen gas or high caloric gas. On a small scale, it might

More parallel gas pipelines in Europe would potentially enhance competition, but the question is whether this is economically feasible. Again this is a question which party would be willing to pay for the infrastructure.

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Which factors, other than renewable gasses, have the potential to change the market?

Structural changes in international gas markets and geopolitics. If we suddenly start to develop a lot of local opportunities for gas production, hydrogen, biogas, syngas or other kinds of gasses this will certainly lead to political repercussions from either Russia or other countries. Will they still be inclined to make huge infrastructural investments such as interconnectors to Europe if they see these countries developing other strategies? Or would they say: ‘if you want to invest to provide gas for yourself, that is fine, but then we will have to invest in interconnectors to other countries such as China’. Is this then still something that we actually want?

Should we see this as a major risk?

At least it is something that you should be aware of. These are very longterm processes, huge investments and you should balance the interests very carefully, including international interests. That is only one of the examples that are important in this respect.

What changes can we expect in the near future, and also in the longer term due to the integration of the regional gas markets?

The market is changing due to Liquefied Natural Gas (LNG), Gas to Liquids (GTL) and unconventional gas. We can speculate a lot about the future possibilities and the cost savings you may have with LNG. You should compare the costs of transporting gas through pipelines or by ship, and the investment costs of LNG terminals and pipelines. Even though I am not really an expert in this particular field, I believe that LNG will become more important but huge investments are necessary.

I also think, however, that there are quite some risks associated with that. Both financial and practical, we would have a serious problem if an LNG terminal exploded. Therefore there are only a limited number of locations where you could safely develop these terminals.

However LNG has changed the gas market from a regional into a global market. There are many different calculations regarding the possible role LNG could have in future gas markets. Still, when compared to the amount of gas that is transported through pipelines, the share of LNG is relatively small. The question that remains is whether this could have a higher potential in the future. What I know is that there might be a higher potential in certain parts of the world, but it really depends on the supply situation. In some parts of the world it might be profitable to have more LNG.

this.

In order to create the roundabout you also need a lot of knowledge. The EDGaR project is one of the bigger research projects that also takes these kind of developments into account. It is important to maintain the role of a key gas country, but this role will change in the future.

The ambitions to become a gas roundabout are indeed high in the Netherlands. How do you see our chances if you look at the competition?

Even though it is debatable whether or not we would win this competition, at least we should strive to become the roundabout, that is very clear. Programs like EDGaR can help us improve our understanding of how we can materialize these functions. It is not only about longdistance gas, it is also about local gas, which might be quite helpful in the future. I think it is also important for the Netherlands, as a gas knowledge country, to work on this.

In the future we can export and capitalize on this knowledge. We have a competitive advantage to this end. The knowledge base and the close interrelation between the industry and knowledge producers like ECN and the Universities is of utmost importance if you want to maintain these advantages.

Do you envisage the establishment of public-private partnerships in the future?

Certainly! As I have already mentioned, we will produce more local gasses. Typically these activities can be performed by local partners and private firms. They will be willing to do this as long as this is profitable.

We will get a multitude of new actors in the gas market, locally and internationally. This makes it necessary to develop new kinds of publicprivate partnerships.

Are these changes also influenced by geopolitics?

Look for example to the development of new pipelines or LNG terminals. We already see this emerging now. Historically there have been many public-private partnerships. The gas pipeline from Russia to Germany, for instance (ed. Nord Stream), many private firms are involved in this. These partnerships will continue to exist in the future, but if we have different geopolitical circumstances, these public-private partnerships may involve different risks and opportunities. We need investments in pipelines, LNG terminals and other infrastructure. Therefore we do need private parties to be involved. Geopolitical incentives will change the incentive for public-private partnerships.

What do you expect the position of The Netherlands to be in the North West European market in future?

Do you expect more public or more private involvement?

The Netherlands rightfully has high ambitions in this respect. The Western European gas system has largely developed from the Groningen field in the Netherlands. The market share of the Netherlands and the gas production, however, are declining. The development of a market hub (the gas roundabout) is an important ambition for the Netherlands to maintain its position on the European gas market. In that respect it is very important to develop the gas roundabout and continue to work for this. There are already many technical facilities in place, many traders and already a lot of knowledge is present. But the Netherlands should be very eager to further develop

The example of the possible development of a hydrogen network is very illustrative in that regard. For the development of small-scale local networks, private parties might have good incentives to invest in it.

At a later stage of development where we would wish to interconnect networks, since the externalities of these networks would be quite difficult to capitalize on, the role of public involvement increases. It is tricky to say that either private firms or the public sector should do everything. One of the challenges for the EDGaR program is to find out the nuances; when can we trust the market and when do we need

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the government? Possibly we already need to incorporate the public agents at a stage where private engagement would seem sufficient. For a longer-term perspective it may be preferable to involve them from the start in order to prevent lock-in effects.

Do you see a future for long-term contracts?

Long-term contracts have been very important in the past for the mitigation of the risks involved in the huge investments needed for pipelines and other facilities. From a competition policy point of view, a traditional economist would say that we need to abolish these kinds of contracts, because they are anti-competitive. These are contracts for periods of 15 – 20 years with exclusive use of facilities. The argument is that this is harmful if we want to develop a competitive market. The question is, if we would follow this rigid line of competition policy, who would be interested to invest in high cost facilities, who would be willing to take the risk? To what degree is it necessary to grant these kind of temporary monopolies for certain essential infrastructure facilities? To what degree do we need to push for competition, and how could technological change help us develop competitive markets? What we have seen in the past are large scale networks which were associated with enormous investments. They developed under circumstances of an oligopolistic market, or even a monopolistic supply of gas. This system worked fine for quite some decades but nowadays decentralized gas production might be very interesting. Investments are lower and therefore the pay-back period could be shorter. These are circumstances where competition becomes possible. Still, we cannot expect decentralized gas production to provide all of our gas needs. I expect that decentralized gas production for now will only have a limited role, but might have a considerable role for the future.

It also depends whether you only look at Europe or at the US. In the US there is a lot of competition in the gas industry. Among others, this is related to the fact that there are parallel and competing pipelines on certain routes, which is normally not the case in Europe.

More parallel pipelines in Europe would potentially enhance competition, but the question is whether this is economically efficient?

Again, this is a question of which party would be willing to pay for the infrastructure. Who is willing to take the risk, and under what circumstances? What would be the actual benefit of these possible redundancies?

How do you think the spot markets will develop?

Spot market development is very important if we want to develop more competition in gas markets. Under the given circumstances there is limited room for spot markets. If we look at the changing conditions in the gas markets; from mono gas to multi gas, centralized versus decentralized gas production, LNG etc., we should ask ourselves whether this offers opportunities to create more spot markets for gas locally. We have to take these structural and technological issues into consideration. There are many opportunities, and EDGaR will certainly help to identify and evaluate the evolution of future spot markets.

How do you see the role of gas within the smart grid concept?

The development of smart grids is an interesting technical issue, which creates new opportunities for the economics and regulation of gas markets. How can these novel technical opportunities help to develop

innovative services that stimulate end-users to use gas more efficient?

How can smart grids be used to integrate the different gas qualities in the pipeline network and create new markets for different types of gas?

Another important issue in this respect is asset management. If we want to facilitate different gas qualities and economize on the maintenance of the gas network, we should at least be able to monitor the gas and pipeline quality in our pipeline system. Many of the pipelines are at a point where they should be replaced, or at least need some maintenance work, which costs a lot of money. With intelligent monitoring systems, we might be able to detect the parts of the pipelines that need to be replaced, where other parts could still stay in the ground for years with little maintenance.

If we develop more intelligence in the gas grid, we should always ask ourselves why we want to do this, what is the objective? For example, an objective in smart grids might be to stimulate end-users to behave in a more sustainable manner in their consumption of gas. In that case we need smarter meters where the end users can actually react on price signals. More intelligence might also be needed if we want to create a stronger technical integration between the provision of gas and the provision of electricity. For instance, can the gas network be used for electricity storage? At times when you have excess electricity, either due to wind or solar power, one could use this electricity to produce hydrogen. In that case we should be able to inject the hydrogen into a network. In EDGaR we also address the issue how can we interlink the electricity and gas system technically and economically more closely and how can we economize on these issues. How can we strengthen the complementary relationship between gas and electricity? How can we economize on the use of energy as a whole?

How could the government stimulate small scale local energy production?

I think it is very important to look at the regulatory circumstances under which new initiatives can flourish. If we want to have more sustainable energy, more possibilities to produce sustainable gasses and have more diversity in gas quality in the pipelines, what are the institutional circumstances to do so? Where do we have to change our regulatory system? Where would we have to redefine roles and responsibilities of certain market parties? That is a very important point. We need to reconsider our regulatory system and change ‘the rules of the game’ in order to facilitate this sustainable means of energy provision. Financial stimuli might also be necessary to boost these developments. However, you cannot maintain an energy system by only giving subsidies.

Existing technologies in general have an initial advantage compared to newer technologies. There is a ‘lock-in’ effect into the technology and market organization, which creates barriers towards the development of a more sustainable energy system that is based on small-scale local energy production. This holds for decentralized gas production since new facilities need to be developed to deal with different gas qualities.

Hence, new and risky investments are necessary in order to modernize networks or end user appliances. Market structures will change, with innovative business models and the emergence of new actors. In the first instance old technologies will have an advantage because the infrastructure already exists and is supported by the present markets and regulations. Accordingly, financial support is indeed important to launch sustainable technologies and to diminish part of the risk for private parties. Research programs like EDGaR are very important to support these complex transition processes, in which technology, economics, regulation, and policy are strongly intertwined.

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Overview approved research proposals Project title: Understanding gas sector intra- and intermarket interactions Project leader: Dr.ir. Gerard P.J. Dijkema, TU Delft Partners: TU Delft, ECN, RUG Budget: €1.8 million Research question: How to assess the gas sector as a cpmplex socotechnical system governed by institutions and regulatin, and how to model its operation and evolution to provide underpinning for government policy and company strategy? The focus of this program is to explore and understand gas sector interaction: (1) intra-market: interaction within the gas sector amongst technology, players, and markets and (2) inter-market: interaction between the gas and electricity sector, via the technical infrastructure, power and carbon markets resulting from (changing) institutions and regulation.

Project title: Advanced green Gas Technology Develiopment, phase 1 Project leader: L.P.L.M. Rabou, ECN Partners: ECN, RUG Budget: €1.4 million Research question: Can we show the viability of our technology for high-efficiency SNG production from biomass or mixed streams? Biomass available for energy purposes varies widely in moisture content. The project contains two parts aimed at the conversion of very wet and nearly dry biomass into “green gas” of natural gas quality. Both parts complement one another in the development of techniques suitable for both ends of the biomass moisture spectrum. Exchange of knowledge between the project partners allows to make better funded choices in the extension or adaptation of one or the other technique toward the centre of the spectrum.

Project title: New gas sensors Project leader: F.P. Bakker (ECN) Partners: ECN, Gasunie/KEMA, TU Delft Budget: €1 million Research question: Is it possible to demonstrate a gas meter and gas appliance with special sensors for safe and efficient use of new gasses (hydrogen, biogas) in order to facilitate the transition to a sustainable energy infra structure in the most cost-efficient way? There is a lack in fundamental and practical knowledge to answer the research question. To this end the following specific research items will be investigated: • How to measure a CH4, H2, CO, CO2, N2, Cx Hy composition measurement in a reliable, safe and cost effective way?

• Which risks of cross contaminations can be expected for the different components, what de-tections systems are employable and what

are the risks of memory effects?

• What about long term stability?

• Is it possible to control the dynamic and complex reaction processes using a limited set of control parameters delivered by the new gas

sensor system?

• What is the ultimate range of gas qualities the systems can handle?

• Is it possible to produce a –proof of principle – universal gas boiler and new gas meter and what level of performance is required by the

prototypes to win over the various stake-holders?

• Are new gas sensor systems at the end the most cost effective solution for transition to a sus-tainable (gas) energy infrastructure? Is

conversion of end user systems indeed more cost ef-fective then conversion of biogas to pseudo G-gas?

• What threats to the concept can be expected from international competition legislation and pipe line integrity?

Project title: Effects of Sustainable Gasses on Materials used in GasTransmission and Distribution Systems Expanding the Distribution Band of the Gas Quality in the Netherlands Project leader: ing. R. Hermkens, KIWA Partners: Enexis, Liander, Stedin, Gasunie, Kiwa Budget: €1,9 million Research question: The most important materials in the Dutch gas grid are steel, PVC and PE. The Dutch natural gas infrastructure consists of a steel transmission network having a total length of more than 12,000 km. The mains in the distribution network consist of approximately 95,000 km of polymeric materials (PVC and PE) and 29,000 km of metal materials (mainly steel, but also some cast iron).

Since wide band gasses can have compositions quite different from G-gas, the transport and distribution network might suffer from increased (unexpected) materials problems when used to transport these gasses.

Because steel, PVC and PE are the most used materials in the existing Dutch gas transmission and distribution network, the focus in this project will therefore be on the relevant long-term failure mechanisms of these materials in these gaseous environments.

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Project title: Effects of Sustainable Gasses on Materials used in Gas Transmission and Distribution Systems within the Current

Distribution Band for Natural Gas in the Netherlands Project leader: ing. R. Hermkens, KIWA Partners: Enexis, Liander, Stedin, Gasunie, Kiwa Budget: €2 million Research question: In this project the following main research question will be answered: Are the most important materials used in the Dutch gas transport and distribution grid resistant to narrow band gasses?

In this respect the following sub questions are relevant: a) What exactly are narrow band gasses? b) What are the most important materials? c) What are the critical (long-term) failure mechanisms of these most important materials in gaseous environments?

Project title: Effect of impurities in CO2 on CCTS chain optimisation Project leader: prof. R. Herber, RUG Partners: RUG, Gasunie, KEMA, Hanzehogeschool Groningen Budget: €2.1 million Research question: An important aspect of the CO2 transport and storage is the purity of the CO2 product. Depending on the source, a CO2 product stream will contain contaminants, which may cause unwanted effects during transport and/or storage. Requirements for CO2 purity will impact the degree of purification, and thereby the costs for CO2 separation. Regarding the transport, CO2 purity determines the energy requirement, infrastructure integrity and legal aspects. Aspects such as phase separation, hydrate formation and the presence of corrosive components are directly related to the impurities present. Moreover, if the CO2 originates from different sources, different types and degrees of impurities will lead to legal uncertainties. Regarding storage, CO2 purity relates to well integrity and injectivity as well as long-term cap-rock seal integrity.

It can thus be stated that the production, transport and storage of CO2 each have their own characteristic requirements for CO2 purity. Depending on the nature of the additional components and their levels, these requirements can be mutual or contradictory, yet they have to be met within the full chain.

Project title: Embedding decentral energy supply in the infrastructure, Flexigrid Project leader: Prof. J.C. Wortmann, RUG Partners: RUG, Hanzehogeschool Groningen Budget: 0.9 miljoen euro Research question: The research question addressed by this proposal is: “how can a co-ordination and control system enable adequate mutual adjustment between local demand and decentral supply while optimising utilization of the energy infrastructure? ”. The core idea of the proposal is that Gas and Electricity are linked. In the figure below, the two forms of energy are shown next to each other in columns, where other columns could be added for e.g. hot water or carbon oxide. The figure shows that Gas and Electricity are similar, but not the same. Moreover, electricity cannot be stored and therefore it lacks the flexibility to eliminate unbalance in demand and supply. Gas plays the role to provide such flexibility both at the high end (where electricity plants based on gas can be switched on and off more easily than plants using other fuels) and at the low end, where gas is a source of flexibility via co-generation.

Project title: Up stream – Down stream: securing gas supply and demand and the governance of the gas value chain Project leader: dr. A. Correlje, TU Delft Partners: TU Delft, ECN Budget: €1.1 million Research question: How can the notions of energy security, geopolitical threats and sustainability be framed in a conceptual framework, applying institutional economy and gas value chain analysis, to contribute to effective policy making, regulation and strategy development in the gas industry?

The term energy security is ambiguous, multidimensional and varying over time. It is used in a variety of meanings in political discourses and (quantitative) analytical exercises. This ambiguity calls for an analysis of the different understandings and meanings given to energy security and their implications. Generally energy security is branded as security of supply, or security of energy services. Yet, there are three other crucial perspectives to consider. First, what counts for producing countries and the supply industry is security of demand. Second, concerns for global warming require sustainable energy systems, altering the basic determinants on the demand side of the current energy systems. Third, energy security, system reliability and crisis management can only be provided by considering and coordinating the technical, economic and institutional facets of energy supply, transport and end-use, including the roles of public and private actors. As drivers for the governance of the gas system, these three perspectives cannot be considered independently. This project with explore how these perspectives y overlap and interact in policy and strategy making by answering three main questions, addressing firstly, the meaning given to energy security.

Project title: Project leader: Partners: Budget: Research question:

Towards sustainable Gas Distribution Systems dr. R. Künneke, TU Delft TU Delft, KIWA, Enexis, Liander en Stedin €2 million This project aims to support investment decisions of Dutch gas distribution companies by providing insights into the

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technical and institutional features of a robust and sustainable gas distribution system that is based on climate neutral gaseous energy carriers.

Objectives are: • Elaborating the technical and institutional features of robust and sustainable gas distribution systems in order to support investment

strategies of Dutch gas network companies • Technical and institutional design of sustainable gas distribution systems in the Netherlands.

• Insights into possible technical and institutional transition paths that support the development towards sustainable gas distribution

systems.

The proposed research is aimed at answering the following research questions: • What are the functional requirements of future gas networks?

• What kind of technological developments are desirable/ necessary to make the gas infrastructure suitable for the transport and

distribution of a wider range of gasses while maintaining an acceptable level of safety and reliability?

• What institutional arrangements are necessary/ desirable in order to support/ facilitate the technical changes of the gas network?

• How can network companies in their current investment decisions anticipate the functional requirements of future gas networks?

Project title: The next 50 years: Developing robust strategies for the gas transition Project leader: dr. K. Hemmes, TU Delft Partners: TU Delft, ECN, KEMA/Gasunie Budget: €1.8 million Research question: In order to help the gas sector to prepare itself for the next 50 years, the leading research question of this proposal is: What is a robust long-term sustainability strategy for the gas sector?

The long-term goal for the system centers on sustainability in the broad sense of the term, i.e. including objectives such as minimum environmental impacts and non-renewable resource depletion, reliability, safety, affordability and societal embedding. Strategy development will look for the best present strategies, explicitly considering the fact that a variety of future developments may occur, and that uncertainties exists with respect to future preferences regarding these different objectives. We will do so starting from the best available present knowledge on various aspects influencing system development. To complement the economic and market-oriented research in many other EDGaR projects, we will give special attention to exploring possible developments and issues related to technology development and societal acceptance.

Project title: From mono-gas to multi-gas: effects of sustainable gasses on end-use equipment within the current distribution bands for

natural gas in the Netherlands. Short title: Small Gas Project leader: Overall project leader: H.B. Levinsky Gasunie (research performed by KEMA) Partners: Kiwa, Gasunie, University of Groningen, Enexis, Liander, Stedin Budget: €2.1 million Research question: The dwindling reserves in the Groningen field, the globalization and liberalization of the gas market and the desire to replace fossil fuels by sustainable fuels, such as biogas, are rapidly expanding the variety of gas “qualities” being supplied to the Netherlands. Since sustainable gasses, in the compositions as they are produced, generally have different combustion characteristics than natural gas, the behaviour of end-use equipment that has been designed and adjusted for a given natural gas can deviate substantially, and even fail, when fueled with untreated sustainable gasses.

The issue at hand is how to tell whether a given gas, when supplied to combustion equipment, will result in performance that is outside the range of behaviour deemed acceptable when fired with the “normal range” of natural gas. In essence, one must compare the performance of a “new” gas with that of the range of natural gasses considered acceptable. Rather than the usual empirical approach to studying interchangeability, i.e., performing experiments on large numbers of practical equipment, we follow a more fundamental approach derived by Gasunie/KEMA. In this approach, each technical phenomenon that is affected by gas composition can be characterized by a given combustion property, which can be used as a scale factor when comparing gasses. Thus, stability issues such as flame lift and flashback can be characterized by the burning velocity, which can be computed using current state-of-the-art combustion codes. A key aspect of the method is that one must consider other changes in equipment conditions upon changing gasses.

Project title: From mono-gas to multi-gas: optimum use of sustainable gasses by expanding the distribution band of gas quality in the

Netherlands. Short title: Wide Gas (A14) Project leader: prof. H.B. Levinsky Gasunie (research performed by KEMA: Partners: N.V. Nederlandse Gasunie, Kiwa, University of Groningen, Enexis, Liander, Stedin Budget: €2 million Research question: This project characterizes the effects of supplying sustainable gasses via the natural gas infrastructure on the behaviour of the major classes of end-use equipment in the Netherlands: domestic/commercial, large-scale/industrial and for power generation. The emphasis of this research will be on what can be referred to as “critical” issues, related mainly to safety, such as flame lift, flashback, CO emissions, engine knock, and unwanted ignition and instability in turbines. Nevertheless, important issues regarding changes in NOx emissions and efficiency will also be examined during the natural course of the project. It is important to note that, since the distribution range for natural gas is being expanded, the width of a “new” distribution band, without sustainable gasses, must necessarily be a subject of study as well.

To assess the degree to which sustainable gasses can be accommodated in a wider distribution band than currently maintained, the following aspects will be examined.

Lower E-band:

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• Fundamental investigation of the response of domestic appliances to sustainable gasses • Exploratory experiments on practical equipment • Stability of large-scale burners • CO/soot in large-scale burners • Engine knock • Stability in modern gas turbines • Examination of chemistry of spontaneous ignition H-band: Extrapolation of results to the accommodation of sustainable gasses in a wide H-band.

The sustainable gasses to be examined are both CO2-containing fermentation gasses and hydrogen-containing gasses from gasification.

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Books, reports and conferences The International Energy Agency’s World Energy Outlook 2010, to be released on 9 November 2010 Many countries have made pledges under the Copenhagen Accord to reduce greenhouse-gas emissions. Commitments have also been made by the G-20 and APEC to phase out inefficient fossil-fuel subsidies.

As the world appears to be emerging from the worst economic crisis in decades, will actions such as these guide us to a secure, reliable and environmentally sustainable energy system?

Updated projections of energy demand, production, trade and investment, fuel by fuel and region by region to 2035 are provided in this year’s edition of the World Energy Outlook. It includes, for the first time, the results from a new scenario that anticipates future actions by governments to meet the commitments they have made to tackle climate change and growing energy insecurity.

WEO-2010 shows what more must be done and spent post-Copenhagen to limit the global temperature increase to 2°C and how these actions would impact oil markets; what role renewables could play in a clean and secure energy future; what removing fossil-fuel subsidies would mean for energy markets, climate change and state budgets; the trends in Caspian energy markets and the implications for global energy supply; the prospects for unconventional oil; and how to give the entire global population access to modern fuels.

More information about the Outlook is available at: http://www.worldenergyoutlook.org/

Edward Hunter Christie, September 2010 (Pan-European Institute), The Russian gas price reform and its impact on Russian gas consumption This article provides quantitative assessments of the impact of Russia’s ongoing reform of domestic natural gas prices on the country’s consumption of natural gas. The base assumption is that Russia could go through an adaptation process analogous to what occurred in more advanced transition countries. Empirical gas demand models are thus estimated for the transition countries of Central Europe for the period 1992-2006.

The results are used to calibrate gas demand functions for the Russian Federation. Forward projections are then made up to 2020, separately for both industrial and residential consumption. This is complemented with estimates based on benchmarking for potential savings in generation of electricity and heat, and for gas transmission and distribution.

The projected levels for total gas savings are large: in a range of 83 to 134 bcm per year by 2020 as compared to the 2007 level, provided price reform paths remain strong and assuming favourable conditions for rapid and large-scale investments in the electricity and heat generation sector. The results also suggest that Russia’s net export potential should rise provided developments are favourable on the production side as well.

The paper is available at: http://www.tse.fi/FI/yksikot/erillislaitokset/pei/Documents/Julkaisut/ Christie%202_netti_final.pdf

Hanna Mäkinen, September 2010 (Pan-European Institute), Energy efficiency – a new energy resource for Russia?

Investing in energy efficiency is an economically rational choice for Russia. By investing in energy efficiency Russia will be able to meet supply needs at approximately one third of the cost of building new production capacity. Moreover, if all of the oil, gas and oil products that could be saved by realising Russia’s energy efficiency potential were exported, Russia would obtain additional revenues of 80–90 billion USD every year. For example, Russia has a potential to reduce its natural gas consumption by 240 billion cubic meters, which would largely exceed the volume of Russian gas exports in 2005–2008.

Reducing the energy intensity of Russian economy will create positive environmental effects by reducing greenhouse gas emissions. Realising its full energy efficiency potential would help Russia to achieve the goals of Kyoto Protocol because its greenhouse gas emission would stay well below the 1990 threshold level until 2050, even in the case of strong economic growth.

Improving Russia’s energy efficiency will be beneficial for the EU as well. First of all, if Russia invests in energy efficiency, it will increase the likelihood that Russia will be able to satisfy the EU’s natural gas demand in the future. Second, energy efficiency and energy saving can open opportunities for the EU-Russia energy cooperation. Third, global sustainable development, that the EU also greatly emphasises, requires actions from all countries, including Russia. Investing in energy efficiency is an important step towards it.

Russia’s need to improve its energy efficiency can create business opportunities for Finnish companies. In Russia there is demand for expertise, technologies, and equipment in the field of energy efficiency, which Finnish companies have, and collaborating and networking can benefit both sides.

Although the first steps towards realising Russia’s energy efficiency potential were taken when the Russian leadership acknowledged the importance of energy saving and incorporated it into the country’s energy strategy, the real challenge is still ahead – to implement energysaving measures effectively. Furthermore, the majority of Russians still remain unaware of the benefits of energy saving, and a real transition to energy efficient economy will require embedding the energy-saving attitudes in the whole Russian society.

The paper is available at: http://www.tse.fi/FI/yksikot/erillislaitokset/pei/Documents/Julkaisut/ Makinen_Energy%20efficiency%20in%20Russia.pdf

Patrick Heather, August 2010 (Oxford Institute for Energy Studies), The Evolution and Functioning of the Traded Gas Market in Britain The Oxford Institute for Energy Studies has just published a study by Patrick Heather on the evolution and functioning of the traded gas market in Britain. Trading has revolutionized the commercial operation of the British gas market since the mid-1990s, and promises to have a similar impact in Continental Europe in the 2010s. This paper looks into the historical background and the reasons for the successful

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development of a liberalized gas market in Great Britain and examines the importance of the Network Code and the National Balancing Point in that regard. The paper further examines natural gas as a physical and as a traded commodity, analyses the market structure and explains the different routes to market and the contractual documentation needed to trade. It reviews the price drivers in Britain and the trading dynamics in Britain and Europe. Finally, the paper examines the commercial prospects for the British gas market after.

The paper is available at: http://www.oxfordenergy.org/pdfs/NG44.pdf

Katja Yafimava, July 2010 (Oxford Institute for Energy Studies), The June 2010 Russian-Belarusian Gas Transit Dispute: a surprise that was to be expected This paper analyses the June 2010 Russia-Belarus gas transit dispute and argues that the dispute was triggered by the combination of several factors: A certain number of ‘fault-lines’ existed in the January 2007 supply and transit contract, such as the lack of clarity and transparency on price methodology and the lack of clarity on the relationship between a price and a transit fee. There was a lack of transparency in the protocol which set up the Gazprom-Belarus JV ‘Beltransgaz’, in particular on the relationship between the Beltransgaz wholesale mark-up and a transit fee. Moreover at that time Belarus strongly desired to improve its economic conditions – negatively affected by the financial and economic crisis of 2008 and by the January 2010 changes in Russian oil export regime – by means of postponing its transition to European ‘netback’ gas prices until 2014-2015, before its bargaining power visà-vis Gazprom declines further as a result of the Nord Stream pipeline completion in 2012. Last but not least, the degree of ‘allowable’ Belarus deviation from the January 2007 contract was decreasing, possibly resulting from decreasing Russian government tolerance of Belarus. .

The paper is available at: http://www.oxfordenergy.org/pdfs/NG42.pdf

Prof. Jean-Michel Glachant, Nicole Ahner & Adrien de Hauteclocque (ed.), September 2010, The EU Energy Law & Policy Yearbook 2010 Based on the contributions and debates which took place in Brussels at the 5th EU Energy Law & Policy Conference (27 & 28 January 2010), organized by Claeys & Casteels in partnership with the European Energy Institute, this yearbook provides sound knowledge of recent developments in the ¬eld of EU energy law and policy. The speakers represent a wide variety of legal and political backgrounds and approaches to EU energy policy. They were given the mandate to critically examine current EU energy policy approaches in their respective area of expertise, and to explore the agenda of the new European Commission.

The yearbook covers the whole range of EU energy law and policy, from the 20-20-20 strategy and new initiatives for ensuring security of supply to the application of competition rules and the organization of an e cient technology policy. It provides practitioners and academics a clear and comprehensive guide in this field.

Contributions by Walter Boltz, Domenico Dispenza, Florian Ermacora, Fiona Hall, Leigh Hancher, Heinz Hilbrecht, Christopher Jones, Nicola Pesaresi, Konstantin Staschus, Hans Ten Berge, S. Tostmann, Claude Turmes, Hans van Steen, Jean-Arnold Vinois, Peter Zapfel.

More information about this book is available at: http://www.claeys-casteels.com/publications.php?pg=150

The paper is available at: http://www.oxfordenergy.org/pdfs/NG43.pdf

Jonathan Stern, Simon Pirani and Katja Yafimava, June 2010 (Oxfor Institute for Energy Studies), The April 2010 Russo-Ukrainian gas agreement and its implications for Europe An agreement signed on 21 April 2010 by Russian president Dmitry Medvedev and his newly-elected Ukrainian counterpart Viktor Yanukovich provided for a 30% discount on Russian gas imported to Ukraine, in return for a 25-year extension of the lease to Russia of the Black Sea naval base at Sevastopol. The agreement came along with declarations from both sides that political and diplomatic relationships would improve after the departure of Yanukovich’s predecessor Viktor Yushchenko, whose pronounced pro-western foreign policy, centred on NATO accession, was distrusted in Moscow. There followed a flurry of other proposals for deeper Russo-Ukrainian cooperation – in the electricity generation, atomic, aerospace and telecoms sectors, among others. This article considers the significance of the new agreement with Russia, (a) for Ukraine as a gas transit country, and for the European states that rely on Russian imports transported via Ukraine, and (b) for the Ukrainian gas market.

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Upcoming conferences 5-6 October 2010 European Energy Infrastructure Amsterdam, the Netherlands Website: http://iir.nl/energy/event/european_energy_infrastructure/

4 November 2010: 6th Energy Summit Istanbul, Turkey Website: http://www.conventure.ro/energy2010/index.php?act=2

5-7 October 2010 World Commodities Week London, UK Website: http://www.terrapinn.com/2010/commoditiesweek/conf. stm

9-10 November 2010 25th European Autumn Gas Conference Berlin, Germany Website: http://www.petroleumshow.com/PDM/Events/Event. aspx?evesid=16&pgid=36

October 12: Energy transition and leadership Amersfoort, The Netherlands Website: http://www.energydelta.org/en/mainmenu/conferences/ intro

9-10 November 2010 SMART GRIDS, SMART CITIES – SMART FUTURE Amsterdam, The Netherlands Website: http://www.jacobfleming.com/jacob-fleming-group/conferences/energy/smart-grid-smart-cities-smart-future#eve_sum

18-19 October 2010: Fossil Fuels Forum Berlin Berlin, Germany http://ec.europa.eu/energy/oil/events/2010_10_18_forum_berlin_en.htm

18-19 November 2010 The Politics and Economics of European Energy Security Amsterdam, The Netherlands Website:http://capture.jrc.ec.europa.eu/IP/index.htm

19-20 October: European Emissions Markets Brussels, Belgium Website: http://www.platts.com/ 21-22 October 2010: EIF’2010 International Energy Congress Ankara, Turkey Website: http://www.energy-congress.com/congress-programme/

23-24 November 2010 GRIDS 2010: the backbone of Europe’s energy future Berlin, Germany Website: http://www.ewea.org/grids2010/ 30 November – 1 December Shale Gas World Europe Warsaw, Poland Website:http://www.terrapinn.com/2010/shalegas/

EDI Quarterly is published in order to inform our readers not only about what is going on in EDI, but also and in particular to provide information, perspectives and points of view about gas and energy market developments.

Read the latest developments in the energy industry, daily published on the website of EDI. Editor in Chief Prof. Catrinus J. Jepma President of Energy Delta Institute Editors Leo Hoenders Marius Popescu Sanne Bücking Steven von Eije Ivelina Boneva EDI Quarterly contact information Energy Delta Institute Laan Corpus den Hoorn 300 P.O. Box 11073 9700 CB GRONINGEN The Netherlands T +31 (0)50 5248331 F +31 (0)50 5248301 E quarterly@energydelta.nl

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