A very well-developed gas transmission infrastructure happens to be a fundamental pillar as far as a competitive gas market is concerned.
As a monopoly that comes pretty naturally, the transmission network needs to have robust, neutral, as well as non-discriminatory, access frameworks so as to make sure of fair and just market participation. Efficient, transparent, and prompt access to the transport capacity without compromising the security of the gas grid happens to be essential in terms of fostering competition and at the same time unlocking the complete potential of the gas sector in India.
The gas market in India holds great potential so as to support its energy shift, especially as the efforts go on to intensify to blend cleaner and also more sustainable energy sources. But the inefficiencies in the transportation capacity allotment as well as the access mechanisms happen to have quite a strained market growth. Major hurdles such as regulatory frameworks that are outdated, consolidation when it comes to marketing and transportation functions, as well as a dearth of transparency-all require immediate reform.
Addressing all this happens to be very critical so as to make sure of an open, efficient, as well as competitive market that can, in a way, respond dynamically to the ever-changing energy landscape.
Barriers in Gas Transport
One of the fundamental challenges that affects the sector is the outdated code that happens to govern the access to grid and pipelines as well as related procedures.
The present code has existed for over 10 years and, as a matter of fact, does not sync with the global best practices or even cater to the changing demands of the market. For instance, pipeline operators are allowed almost three days to go ahead and confirm their capacity booking, which is indeed too long a time when it comes to short-term transactions. Moreover, the absence when it comes to mechanisms like day-ahead as well as within-day capacity booking happens to restrict the flexibility and also stifles the progress of a market-driven balancing system. Additionally, it remains quite a challenging task to book capacity when it comes to non-working days.
One more prominent issue is the dearth of transparency when it comes to accessing the pipeline capacity. Unlike the developed markets wherein the gas bulletin boards – GBBs offer real-time data in terms of capacity, India does not have such a platform. Users have to individually get in touch with every owner for pipelines in their contract path, hence dealing with varied rules and complex procedures. There happens to be no single, online, and prompt capacity portal for booking.
The integration when it comes to marketing and the transportation functions adds one more layer of intricacy. Organizations that happen to integrate these functions go on to reap advantages such as eradication of imbalance charges as well as reduced booking response times when it comes to their bundled agreements while at the same time imposing more stringent conditions when it comes to other entities. This goes on to create a not-so-level playing field, discourages just and fair competition, and limits the opportunities when it comes to third-party suppliers, thereby, at the end, hindering the growth of the market.
Moreover, gas-fired power plants that are important when it comes to balancing fluctuations within renewable energy generation happen to be underutilized. These plants face barriers in terms of securing timely access to the pipeline capacity, thereby stemming from the ineffectiveness as far as the capacity booking regime is concerned. India, indeed, needs a series of reforms in order to deal with all these situations.
Revision of Access Code – The access code requires being revised as per the present market needs as well as global benchmarks. Decreasing the response time when it comes to capacity reservations and at the same time executing provisions in terms of day-ahead and within-day agreements is sure going to build flexibility and also broaden the market.
Coming-up of an independent system operator – ISO – It is only viable to state that an independent operator brings fairness and transparency as well as efficient access to the transportation capacity. It would go on to resolve conflicts of interest, if any, that happen to arise from the integrated entities.
GBBs that are electronic – Executing GBBs will help with real-time access to information pertaining to the capacity of the pipeline. It will also go on to create an open as well as rule-based structure that will go on to help all the participants from the market to access as well as book capacity, hence pushing up the dependence element and also enhancing the efficiency of the market.
Unbundling marketing as well as transport functions – A segregation when it comes to marketing along with transportation by way of decoupling these functions will go on to create a much more balanced environment when it comes to independent suppliers. Eradicating the right of first use aspect and at the same time encouraging competition that’s fair between the bundled entities as well as third-party participants shall go ahead and promote better participation along with innovation in the sector.
Reform Benefits
These reforms are going to lead to a much more efficient as well as transparent gas market. Faster and also more dependable capacity booking processes shall decrease the operational delays, whereas the real-time capacity information shall empower the stakeholders to make some informed decisions. Unbundling the transport and, along with it, the marketing functions shall stimulate competition to a great extent, attract fresh investors, and also support a strong market spectrum.
The power sector is also going to gain significantly from these alterations. Enhanced access to gas supplies as well as pipeline capacity will enable the gas-driven power plants to play a very crucial role when it comes to balancing RE sources, making sure of grid stability, as well as effectively meeting a peak power demand.
The fact is – The gas sector in India stands at a crossroads, and the proposed reforms can as well act as an antidote to certain inefficiencies and also a strategic move to make sure that the industry is future-proof. Upgrading the revolutions, equal access, as well as transparency, all would go on to lead to the creation of a vibrant as well as competitive gas market that supports the broader energy targets of the nation. All these reforms would help with better access when it comes to transport capacity and go on to make the gas sector in India a sort of an enabler of a clean energy shift.
