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EC Approves French Support For Natural Gas Storage

 |  June 28, 2021

France’s system of financial support for natural gas storage, set up in 2017 to shore up the country’s energy supplies, complies with European Union State aid rules, the European Commission stated on Monday, June 28.

“The mechanism complies with EU rules on State aid, since it strengthens the security and diversification of the energy supply without unduly distorting competition,” the Commission said in a statement.

France introduced the auctioning system in 2017, which aims to ensure existing gas storage capacities continue to operate, by auctioning storage capacity and governing the storage operators’ costs.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said, “Following an in-depth investigation, the Commission concluded that the regulatory mechanism for the storage of natural gas in France complied with EU rules on State aid. In particular, the measure is necessary and proportionate to ensure the security of energy supply to its citizens and businesses, while also guaranteeing that any possible distortions of competition are minimised.”

In December 2017, France introduced a regulatory mechanism for the storage of natural gas whose aim is to keep in operation existing storage capacities deemed necessary to ensure the security of the country’s natural gas supply.

This mechanism involves auctioning the storage capacities and covering the storage operators’ costs. To this end, where these operators’ revenue is below that set by the French independent energy regulatory authority (the CRE), storage operators receive compensation. This compensation is financed by means of the tariffs for use of the transmission network that are collected by the network operators from gas shippers under conditions set by the CRE. Conversely, if the storage operators’ revenue is more than their authorized revenue, they must pay back the surplus through the tariffs for use of the transmission network. There are currently three storage operators in France.

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