Incremental Capacity

The Network Code on Capacity Allocation Mechanisms (NC CAM) prescribes a harmonised auction regime for the allocation of existing capacity at Interconnection Points, but does not put rules forward for the identification, allocation and tariff setting of incremental capacity and new capacity. Incremental capacity refers to capacity above technically available capacity at existing Interconnection Points (IPs). New capacity relates to the creation of an IP between two market areas, or to the creation of physical reverse capacity at an existing IP where gas could previously flow in one direction only. The aim of the work on incremental (and new) capacity is to propose harmonised and market-based approaches throughout Europe to allocate and price both existing and incremental/new capacity in an integrated manner.

The CEER Gas Target Model (in December 2011) concluded that efficient, market-driven and timely infrastructure investments for interconnection capacity are needed to support the completion of the internal energy market. National regulatory authorities consulted the stakeholders and developed approaches for coordinated and market-based procedures to identify the need for and to integrate new and incremental capacity in an EU-wide capacity allocation regime.

Following the invitation letter by the European Commission (June 2012) to start working on the Framework Guidelines for Harmonised Tariff Structures, the Commission requested to consider tariffication issues for incremental capacity within the Framework Guidelines development process. In this framework, ACER tendered a consultancy study to assess the impacts of possible policy options on incremental capacity. The study, which was steered by a study steering committee of ACER/CEER, ENTSOG and the Commission, resulted in Frontier’s Final Report on Impact Assessment of policy options on incremental capacity for EU gas transmission (in February 2013) and contributed to the development of the CEER Blueprint on Incremental Capacity (in April 2013), the latter being requested by the 22^nd Madrid Forum (in October 2012).

In the Blueprint paper regulators with the support of stakeholders have identified possible options on when and how incremental capacity demand could be identified (economic test) and offered in auction processes. These approaches were transposed in five technical design options. Open Seasons were proposed to treat large and complex new infrastructure projects. Design principles for the economic test as well as tariff implications are discussed in the paper.

Based on the CEER Blueprint, ACER developed and published on 2 December 2013 its guidance to ENTSOG on the development of amendment proposals to the Network Code on Capacity Allocation Mechanisms on the matter of incremental and new capacity, taking into account the interactions between tariffs (under the framework guideline process) and incremental capacity.
The guidance contains principles on when and how incremental and new capacity shall be offered and allocated to network users as well as requirements for information provision and co-ordination between TSOs and NRAs.

Based on this guidance, ENTSOG submitted an amendment proposal to the Network Code on CAM to the Agency on 26 December 2014.

During 2015, the Agency assessed and refined the proposal received from ENTSOG and publicly consulted upon its proposals. The Agency not only revised the legal texts on incremental capacity, but also proposed a few technical amendments to the CAM network code.

More information on the latest consultations:

Public Consultation on the Incremental Capacity Proposal PC_2015_G_02

Public Consultation on the Incremental Capacity Proposal and further NC CAM amendments PC_2015_G_05

On 14 October 2015, ACER sent its recommendation on the amendment to the NC CAM to the European Commission for adoption.

Following a Comitology procedure these amendments shall become legally binding, and the first integrated incremental auctions could take place in July 2017. The Gas Committee voted the amended Network Code on 13 October 2016. The amendments have passed the Comitology process and resulted in the Commision Regulation (EU) 2017/459 establishing a network code on capacity allocation mechanisms in gas transmission systems and repealing Regulation (EU) No 984/2013.