Power-to-gas (P2G) technology
The EU legislation does not define power-to-gas (P2G) installations. Technically, they are electrolysers that convert electricity to gas - hydrogen or, with subsequent methanation, synthetic methane (Regulatory Treatment of Power-to-Gas, “European Green Deal” Regulatory White Paper series (paper #2) relevant to the European Commission’s Hydrogen and Energy System Integration Strategies, ACER, CEER, 11 February 2021, p. 1, 4).
Electricity Directive (EU) 2019/944 includes power-to-gas activities under the definition of ‘energy storage’ in the electricity system.
The aforementioned Regulatory White Paper of 11 February 2021 mentions the EU legislation does not have a definition for gas storage in terms of hydrogen or synthetic methane - nevertheless, power-to-gas installations are not in themselves storage installations, although they may be pivotal to support energy storage.
Hence, according to the said Regulatory White Paper, the definition of electricity storage might be modified in order to better clarify its application to power-to-gas.
Regarding electricity tariffication, power-to-gas producers are generally treated as consumers and, as such, they are charged with the same tariffs and levies as any other consumer of the same size and features (Regulatory Challenges for a Sustainable Gas Sector, CEER Public Consultation Paper, Ref: C18-RGS-03-03, 22 March 2019, p. 18, 19).
The said CEER Public Consultation Paper of 22 March 2019 differentiates the two diverging, from the regulatory (and technical) point of view, situations with the involvement of power-to-gas installations:
- first, when power-to-gas plant produces gas taking electricity from the network, and this gas is exclusively stored and used to locally re-generate electricity which is then re-fed into the electricity network, and
- second, when gas produced through power-to-gas installation is injected in the gas network.
In the first case, power-to-gas installations only use the electricity network.
Hence, in the CEER’s opinion, those installations can be considered as electricity storage infrastructures and they could be treated as such in terms of tariff settings.
CEER invokes in this regard the examples of some countries where pump storages are not charged with network tariffs for the electricity used to pump water in order to avoid double charging.
According to the CEER, similar provisions could also be applied to power-to-gas plants.
In the second configuration, power-to-gas installations make use of the gas network and, in case electricity is taken from the network, they also use the electricity network (there may be also the configuration where the power-to-gas installation is directly connected to renewable power plants and do not make use of the electricity network).
In this situation the said power-to-gas installations need to be considered differently from the gas sector point of view on the one hand, and the electricity point of view, on the other.
In the former perspective they could be treated as gas producers that inject gas into the network, in the latter, they are high-intense consumers, where the electricity is the main input of production (if there are special provisions for high-intense consumers, they could be applied also to power-to-gas installations).
The Council of European Energy Regulators (CEER) in the aforementioned document of 22 March 2019 (Regulatory Challenges for a Sustainable Gas Sector, CEER Public Consultation Paper, Ref: C18-RGS-03-0, p. 13) expressed an opinion that the involvement of Transmission System Operators (TSOs) in power-to-gas plants activity is not possible.
This is due to the facts that:
- power-to-gas plants are usually classified as gas production plants;
- in principle, network operators are not allowed to operate any gas production plants based on the current legal provision in Article 9 (1) of Directive 2009/73/EC (Gas Directive);
- this prohibition is addressed not only to gas TSOs but also to electricity TSOs (this follows from Article 9 (3) of the Gas Directive, according to which a competitive activity of the other sector is also relevant to unbundling).
This stance has been also upheld in the Market Monitoring Report (Gas Wholesale Market Volume) of 14 July 2021 where ACER and CEER jointly underline that the main principles that govern the internal EU gas market, i.e.:
- third-party access,
- absence of cross-subsidies,
- clear separation between regulated network activities and market-based production and supply activities;
are to be maintained for low-carbon gases.
Power-to-gas production facilities are in principle a competitive activity and the role of TSOs, as well as Distribution System Operators (DSOs), is to be limited to foster research in early phases – on top of reliable network operation – rather than owning or operating production plants.
However, if no sufficient market interest is detected, larger roles could be assigned to TSOs under controlled conditions.