04 Our external economic value creation

Through our infrastructure, we provide energy users in north-western Europe with open, non-discriminatory access to energy on non-discriminatory terms. The value of the availability of energy for society cannot be overstated. We create long-term economic value for our shippers and the market parties on our trading platform. In doing so, we keep the balance between safety, reliability, affordability and sustainability in check, in many cases within the frameworks imposed on us by our regulators. In this section we look at the external economic value we generated in 2021.

Related material topics:
# 4 Security of supply

Related SDGs:
7, 9, 12

Relevant stakeholders:
Customers
Energy sector
Regulatory authorities

In 2021, some of the external economic value we created included:

• Reliable gas transport: 4 transport disruptions (standard: no more than 6)
• Volume of gas transmitted via our networks: 1,108 TWh
• Amount of gas traded on TTF: 47,705 TWh
• Green revenue 0.3% / Green CAPEX 10.5% / Green OPEX 6.3%

In 2021 we provided a high level of transport security for our customers in the Netherlands and Germany. There were unfortunately four transport disruptions. At two locations our maintenance work resulted in a short-term disruption in the supply of gas and, as a result, the gas supply to a number of homes and a German customer was interrupted for a short while. In the other two cases, the disruptions affected industrial customers; however, since these interruptions coincided with activities that were being carried out at these sites anyway, these gas outages did cause them much inconvenience. The standard we have set ourselves is that the number of transport disruptions in any one year can never exceed six, a figure we stayed below in 2021.

After five very warm years, 2021 was a normal year in terms of temperature*. Gas transport through the GTS network totalled 841 TWh (79.3 bcm) in 2021, compared to 835 TWh (78.7 bcm) in 2020, an increase of 0.7%. When we break the total transport volume down by domestic consumption, storage and exports, we see only slight differences between 2020 and 2021 in all categories. In 2021, Gasunie Deutschland transported 267 TWh (27.3 bcm) through its networks, an increase of 6.6% compared to the 2020 volume of 250 TWh (25.6 bcm) in 2020.

In the second week of February, it was remarkably cold, causing demand for natural gas in our service areas to rise steeply. These volumes were transmitted without any problems. It was, however, not cold enough for a new gas transport record. Where on Wednesday 10 February 2021, GTS transported 420 million cubic metres (mcm) of gas per hour through our Dutch networks, this was far below the record set on 2 January 1997, when we transported an average hourly volume of 527 mcm of gas.

In the third week of July, the south of the Dutch province of Limburg was faced with flooding caused by excessive rainfall upstream in Germany. Two GTS gas receiving stations, one in Itteren and one in Meerssen, were damaged and fouled by flooding. Thanks to great efforts by our staff and emergency services on the ground and the deployment of a mobile gas receiving station, there were no transport interruptions.

• Gas prices were very high at the end of 2021. At the beginning of the year, very high exit volumes were regularly seen at the industrial exit points of GTS and GUD. Over the course of the year, the volumes at these points decreased and by the end of the year exit volumes were regularly very low.
• A different effect can be seen in the utilisation of the Dutch and German storage facilities. These were less filled than usual in the summer and more gas than usual was withdrawn in the last few months of the year during this period. The result is a historically low fill rate from the beginning of winter to the end of 2021 and beyond.
• The high gas prices have also had an effect on the parties who purchase transport capacity in our networks. In the Netherlands, regulator ACM withdrew the licences of several shippers because they ran into financial difficulties or went bankrupt as a result of the high market prices for natural gas. On one occasion, GTS made a residual distribution to receiving licensed suppliers.*
• In Germany, GUD provided a loan facility of € 25 million to Trading Hub Europe (THE) to make up for a liquidity shortage that had arisen at THE due to high gas prices and shipper bankruptcies. At the end of 2021 € 10 million had been drawn under this facility.
• In 2021, GTS was not required to guarantee payment for the purchase of gas by, or to make gas available to licensed suppliers to supply small consumers in connection with a decision by ACM to revoke a supplier’s licence.

GTS saw 44 bcm of imported natural gas flow through its grid in 2021, an almost unchanged volume for the fourth year in a row. Of this total volume, 7.1 bcm (rounded off) came in via the Gate terminal and 3.8 bcm from gas storage facilities in Germany connected to the GTS network.

German LNG
During the energy transition, having good natural gas transport and storage infrastructure in north-western Europe is of crucial importance. Germany wants to end electric power generation from coal and lignite over the coming decades. During the transition period, the country will use more natural gas. At the same time, Germany wants to limit its dependence on Russian gas.

For several years now, Gasunie, together with partners, has been busy making all the necessary preparations for the construction of an LNG terminal in Brunsbüttel, close to Hamburg in Germany. The importance of such facilities for the effective functioning of the gas market in Germany has become very evident due to gas price developments and the discussion around the international supply of natural gas. We were not yet able to take an investment decision in 2021 because we have not yet been able to obtain sufficient assurance on the contracts with our customers.

In the coming period, we will work together with our customers and the German government with the aim of ultimately taking this investment decision. We also plan to use the terminal’s favourable location for the landfall of sustainable types of gas, meaning that the terminal can also play a leading role in the energy transition.

Connecting LNG terminals
In 2018 and 2019, GUD received applications for the connection of two LNG terminals, one in Brunsbüttel and one in Stade. Gasunie is a partner in the Brunsbüttel project. As a result of an amendment to the Gas Network Access Regulation (Gasnet Toegangsverordening; GasNZV) with regard to the connection of LNG terminals to the network, network operators are obliged to construct and operate pipelines to connect LNG terminals. The network connection costs can be recovered through transmission tariffs.

The necessary adjustments to the gas infrastructure to connect both terminals to the GUD gas network were approved by German regulator BNetzA in early 2021. However, both terminals are behind their original schedule and a final investment decision has not yet been taken.

Grid expansion to Wolfsburg
Volkswagen AG in Wolfsburg requested a network expansion in 2017 to supply its new gas-fired power stations from 2022 to replace coal and to reduce VW’s carbon emissions by 1.5 million metric tonnes per year. To meet the requested capacity, GUD is constructing a 33km long gas pipeline between Walle and Wolfsburg. 

Two relevant permit approvals have been received, one in December 2020 and one in February 2021. Some landowners filed a complaint with the Higher Administrative Court of Lüneburg against the approval of the permit. While the decisions on these complaints are still pending, construction work in 2021 progressed according to plan and commissioning is scheduled for April 2022.

In 2021, Nord Stream transported 59.2 bcm of natural gas, exactly the same volume as in 2020. There were also no unscheduled interruptions in 2021, with the result that the available capacity was fully utilised almost continuously. November 2021 marked the tenth anniversary of the first of the two Nord Stream 1 pipelines coming into operation; the second pipeline followed in October 2012. Approximately 432 bcm of natural gas had been transported in the ten years after commissioning.

In 2021, Gate Terminal again saw a large number of bunkering tankers and container trucks arriving to load LNG. It is striking that the number of smaller vessels (for supplying LNG as marine fuel) and trucks being loaded are showing strong growth. This shows that LNG is gaining importance as a relatively clean fuel for shipping and industrial applications.

With its large-scale throughput of natural gas to the GTS network, Gate Terminal continues to be instrumental for security of supply in the Netherlands, the Gasunie network’s position in international gas flows, and the regional market for natural gas in north-western Europe.

The Gate terminal underwent a major maintenance overhaul in June and July 2021. In July and October 2021, Gate Terminal received sufficient binding market interest to increase the throughput capacity by 1.5 bcm per year to 13.5 bcm per year. This additional capacity is expected to be delivered in 2024.

In 2021, the BBL (Balgzand-Bacton Line) interconnector transported over 25.8 TWh of gas to the UK (11.2 TWh in 2020) and transported 9.7 TWh of gas to the Netherlands (25.1 TWh in 2020) via the reverse flow service. In 2021, BBL had one planned maintenance stop and one unscheduled maintenance stop (23-28 March, leaking insulation coupling).

In 2021, BBL was at the centre of volatile market developments between gas trading hubs TTF (Netherlands) and NBP (UK), a situation felt by the public, especially in the third and fourth quarters of 2021. BBL shippers capitalised on the temporary enormous gap in prices between the TTF and NBP and bought up capacity in the short term.

For BBL, the use of the pipeline is confirmation that the provision of the physical reverse flow service (since 2019) meets a need. The price gap between the TTF and NBP determines whether the gas flows westward or eastward.

Market dynamics over the last two quarters have made it necessary to switch the direction of flow of the pipeline frequently and quickly. The technical design of the pipeline does not facilitate this for BBL at this frequency and rate, with the result that the costs and financial risks of operating the pipeline have increased.  BBL Company is consulting with the regulators in the Netherlands and the United Kingdom to find a solution.

The Brexit transition period came to an end on 1 January 2021. We have worked with customs consultants to ensure we meet the new conditions. In December 2021, BBL celebrated its 15th anniversary.

As in previous years, in 2021 EnergyStock managed to market virtually all of its free capacity. What makes this such a remarkable feat is that there is structural oversupply in the market for flexibility in north-western Europe, which means that tariffs for storage services have been under downward pressure for years. What sets the EnergyStock facility apart is the rapid cycles of input and output that make EnergyStock a steadily attractive option for shippers. At the beginning of 2021, the additional salt cavern developed in 2020 was fully operational and integrated into the available capacity pool of the UGS facility. With this extra cavern, EnergyStock is able to further optimise the existing functionality of the UGS facility.

Europe’s security of supply benefits from a wide range of international gas supply pipelines. In 2021, US sanctions and concerns of the German regulator delayed the completion of the new Nord Stream 2 supply pipeline. Though completed in 2021, no gas was transported to Germany via the Nord Stream 2 pipeline during the year under review. Due to new sanctions against Russia that were announced recently in response to the situation in Ukraine, this situation may continue. Gasunie does not have an equity interest in Nord Stream 2, but it does have a 16.5% interest in EUGAL, a new gas pipeline that transports natural gas from Nord Stream 1 and -possibly- Nord Stream 2 from the Baltic Sea to the Czech border. Due to how German regulation works, EUGAL’s lower-than-expected utilisation level will have no impact on GUD revenue during the service life of the pipeline.

In the province of Zeeland, the first gas transmission pipeline was repurposed for hydrogen transmission in 2017. In 2021, Hynetwork Services’ hydrogen pipeline transported, without interruption, 1,176 tonnes (13.1 million cubic metres) of grey hydrogen between the Dow Chemical plant and the plant of fertiliser producer Yara in Zeeland; this was 2,644 tonnes (29.4 million cubic metres) in 2020.

In 2021, gas trading volumes on our Title Transfer Facility (TTF) virtual trading platform reached a new all-time high. The number of parties trading on TTF was also higher than ever.

On a gas trading platform, there are two main forms of transactions: over the counter (OTC) transactions, where the gas is purchased directly from the other party, and transactions through a gas exchange, which acts as the intermediary for all traders. OTC trading decreased drastically in 2021, from 27,120 TWh (in 2020) to 19,610 TWh. In contrast, the TTF share traded through gas exchanges grew steeply, from 18,406 TWh to 28,094 TWh in 2021.

During the past year, TTF increased its lead over other European gas trading platforms. In 2021, nearly 80% of European gas trading took place on TTF, compared with 72% in 2020, which again confirms that the Dutch gas market is working well and that TTF has acquired a leading position in Europe.

Green gas producers need grants to be profitable. To be eligible for grants, these producers need to demonstrate that their gas is sustainable. Vertogas provides this proof with its Guarantees of Origin (GOs).

The volume of green gas certified by Vertogas rose strongly again in 2021, from 201 million m³ in 2020 to 225 million m³ in 2021. This increase was mainly due to new green gas production plants that were started up in 2021.

GOs issued by Vertogas represent a particular value for producers of and traders in green gas. We estimate the total value generated by certificates issued in 2021 at € 150 million.

In 2021, Vertogas issued GOs to 59 producers of renewable gas (green gas), to 75 traders, and to 80 end users. (These figures were, respectively 53, 66 and 65 in 2020.)

Hydrogen will also play a major role in the energy transition on our way to 2050. Guaranteeing the renewable origin of hydrogen is essential for market development. Vertogas is a member of the CertifHy project for the European certification of hydrogen. From 2022, Vertogas will also be responsible for issuing GOs for green hydrogen.

In compliance with a legal obligation, all German TSOs jointly initiated a project in 2018 to merge the two existing German market areas into one major virtual trading hub in Germany with one single market area manager, Trading Hub Europe (THE). In 2021, all necessary contracts were concluded between the German TSOs and THE, the IT systems were approved, and the newly merged market area started trading on schedule on 1 October 2021. THE’s market area is covered by 400,000 kilometres of high-pressure gas pipelines that feed over 700 regional and local gas grids. Gasunie expects THE to lead to greater liquidity on the German gas market. An integrated German market area makes further north-western European market integration easier to achieve.

The European Union aims to be climate-neutral by 2050. In 2018, the EU Action Plan for Financing Sustainable Growth was adopted for this purpose. This action plan contains three main objectives: 

• reallocation of capital to more sustainable financing;
• risk management that takes ESG criteria into account throughout the process; 
• reporting and external accountability on sustainable financing. 

One of the steps to achieve these objectives is to set up an EU classification system for sustainability activities, the EU Taxonomy Regulation. The current taxonomy has six environmental objectives: 

• climate change mitigation
• climate change adaptation
• the sustainable use and protection of water and marine resources
• the transition to a circular economy
• pollution prevention and control
• the protection and restoration of biodiversity and ecosystems.

Undertakings that are subject to the EU Directive on non-financial reporting (Directive 2014/95/EU; NFRD), like Gasunie, are required to disclose in their 2021 annual report the proportion of ‘taxonomy eligible’ and ‘taxonomy non-eligible’ economic activities that can contribute to the environmental objectives of climate change mitigation and adaptation in their total revenue, capital expenditure (CAPEX) and operational expenditure (OPEX).

In 2021, Gasunie had only limited revenue from taxonomy eligible economic activities. In total this concerned € 4.5 million (activity 4.14 and 8.2), i.e. 0.3% of our total revenue. In the table below we list our taxonomy eligible CAPEX and OPEX.

For a description of the taxonomy eligible activities listed above, we refer the reader to Annexes I and II of the Commission Delegated Regulation. All of our eligible activities under the taxonomy are allocated to activities associated with the climate change mitigation objective. There is therefore no question of allocating multiple climate objectives to one and the same activity.

Our taxonomy eligible projects consist in particular of our investments in hydrogen (activity 4.12 and 4.14), our investments in heat (activity 4.15), our investments in green gas (activity 4.14) and our investments in storage, reuse and transport of CO₂ (activity 5.11). Studies conducted in 2021 regarding the energy transition are included under activity 9.1.

The above KPIs have been drawn up in accordance with the reporting requirements as specified in Article 8 of the Commission Delegated Regulation supplementing Regulation (EU) 2020/852. These reporting requirements are further explained in Annexes I and II of said delegated regulation.

The basis for the KPIs in the table above is the consolidated financial statements of N.V. Nederlandse Gasunie.

Revenue KPI
We calculated the share of taxonomy eligible economic activities in our total revenue by dividing the revenue from taxonomy eligible activities (numerator) by the total net revenue (denominator) as specified in the consolidated statement of profit and loss for 2021. The accounting policies used with regard to net revenue are also explained in more detail in the consolidated financial statements.

CAPEX KPI
We calculated the share of taxonomy eligible economic activities in our CAPEX by dividing the CAPEX of taxonomy eligible economic activities (numerator) by the total CAPEX (denominator). The numerator includes investments in property, plant and equipment and investments in joint ventures carrying out taxonomy eligible economic activities. We explain these financial statements items in Note 5 and Note 7 to the 2021 consolidated financial statements.

In the financial statements, we deduct contributions from third parties (including grants) from the investment amounts in accordance with the valuation principles for tangible fixed assets. For 2021, the third-party contributions relating to taxonomy eligible economic activities amount to € 18.4 million, and € 0.1 million to the taxonomy non-eligible activities. In the table above, the CAPEX has been adjusted for contributions from third parties. In summary, the total CAPEX consists of the following amounts:

OPEX KPI
We calculated the share of taxonomy eligible economic activities in our OPEX by dividing the OPEX of taxonomy eligible activities (numerator) by the total OPEX (denominator). According to the EU taxonomy, the OPEX consists of all the direct and indirect costs ‘necessary to ensure the continued and effective functioning of [the] assets’. As an energy infrastructure company, we have adopted the principle that the total costs excluding depreciation costs are required for this. The total expenses consist of personnel expenses and other costs less capitalised expenses as specified in the consolidated statement of profit and loss for 2021. In summary, the total OPEX consists of the following amounts: