Markus Krug is a Senior Gas Expert at E-Control, the Austrian Energy Regulatory Authority. In our interview with him at the Flame conference, we talk about Austria’s target for an annual balance of 100% renewables by 2030 (and where that leaves gas), the promotion of power-to-gas projects through European regulatory reform, and the rapid recovery of Austria’s Baumgarten natural gas transfer node following the explosion there in December last year.
“Of course in the first moment the whole station was shut down. But to really resume the transit flows that quickly, within the same day, I think I have to say to the system operator: that was great work done.”
This is the second year that you’ve been at Flame. Have you noticed a big difference in everything that’s being talked about over the last twelve months?
Yes, for sure. I mean last year this whole discussion about greening gas, decarbonisation, how should the gas industry maybe change its narrative, its communication – I think last year there were some elements there of how this maybe should be changed, or a new approach should be found. But this year I think it’s much more. We have arrived at a stage I think where the gas industry is comfortable with this new narrative, and much more self-confident to talk about this new role.
There are a lot of people walking around looking very happy.
It seems so, yes. It’s positive.
A lot of optimism. Let’s talk about the Austrian market. Austria has a renewable energy target of 34% by 2020, 100% self-sufficiency by, what was it, 2050?
2030 even. Self-sufficiency yes. That’s the new climate and energy strategy. And we’re starting already at the level of 72% renewables, and I think – well, it’s annual balance, so it’s annual supply and demand – but on an annual basis I think the aim would be until 2030. This is in this 2030 strategy, to have renewables meeting 100% of annual demand.
So what actually is the mix within that, and is gas still figuring within it – whether it’s biogas, or whatever it is.
So from the strategy presented by the government it’s not so clear what the exact mix is, but right now what we’re starting from is a very high share of hydro. Biogas or renewable gases are at the very infant stage, so it’s not really that much. I think – well we are also phasing out coal between 2022, 2025, so that’s good for gas. And well, as I said, I think we will still need gas in 2030, but at least renewables could, if you look at an annual supply and demand perspective, they could meet 100% of demand. But I think there will be certain hours for the seasonal demand in the winter when I think the gas-fired power plants will be needed for sure.
And what about storage facilities?
We are very well equipped with storage in Austria. So we have – I think if you look in relation to annual consumption we have the highest number, so we could store our annual Austrian consumption of gas. But of course our storages as Austria is a transit country are also very much used for downstream countries: Italy, Germany, Hungary, Slovenia. But yeah, I think we’re in a good position regarding gas storage.
What about challenges in the market ahead – trying to meet those goals, what do you foresee?
The challenges will be – well I think what’s not clear is that although there is a strategy, there is a target, it’s still open how to get there. And one of the challenges will be to do with sector coupling. I think that’s the way the government sees the road to decarbonisation - with good sector coupling. I think there also gas will play a role, and the gas infrastructure will play a role. But it’s not yet defined how to do that. So I think there also a lot of more detailed work is still necessary, and also some money is maybe needed to get there, to get this power-to-gas technology maybe, to get them further and to provide some pilot projects and so on. And there some money also needs to be provided by the public.
So it’s public sector, or private?
Or private… or even we are thinking about what the regulatory framework could allow regarding innovation, and maybe incentives for research and development, and maybe also private projects, and maybe to have some more flexibility from the regulatory point of view. I think there are some elements already now from the electricity act in Austria, maybe, and that’s what we’re hoping for also from the European level – is to have a more explicit flexibility for allowing certain pilot projects. Because mainly those are then carried out by the system operators – so it’s the gas TSOs, the electricity TSOs, who see that there is maybe room then for optimisation between the two, and we could need some more flexibility also from the regulatory point of view.
What about energy security? I’m thinking particularly about the tragic accident you had last December. What do you think has been learned from that?
Well, I have to say actually as a case study it’s a very positive one. So if we look at the crisis management very short term by the TSO, that was very professional, and it’s the best case I would say. Because what was affected was actually the link to the domestic system. So this part was affected, and of course in the first moment the whole station was shut down. But to really resume the transit flows that quickly, within the same day, I think I have to say to the system operator: that was great work done, at such short notice to resume the flows. And also for the downstream countries I think this was very important, for Slovenia, Hungary, Italy, to have this flow…
Italy in particular, with their reaction…
Yeah, with the emergency there. So to have these flows re-established, yeah. So what we can learn I think was that this was done very well.
And what about a knock on then from any of the geopolitical conversations you start to have. Because yes the flow was put back quite quickly, but there was still that break.
Yes. Of course these things can happen, and I mean it’s still open to really identify the cause of this explosion. But I think that to say that it was in one part of the station but it did not effect at all the other parts of the station is also good. And that allowed resuming the flows quite quickly. I think it’s built in a good way so that such an incident in the same station does not impact the other parts of the station, so I don’t think that any improvement can be made – so I think this will be now rebuilt, and it should be reliable, and will also somehow have some redundancy in there. And also now allowing the flows to refill the storage in the domestic system is also quite important, and this has been achieved. So the system is working, and without much impact on the market participants.
