Tuesday, September 02, 2014

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Eandis: No Heat Grids at the Expense of Gas

Walter Van den Bossche, CEO at Eandis. (photo KM)
Walter Van den Bossche, CEO at Eandis. (photo KM)

Affligem-Eandis, the main electricity and gas grid operator in Flanders, is prepared to participate in heat distribution projects. It also closely monitors geothermal developments. The company however, doesn't want to compete with gas distribution, its own core activity.

During the annual shareholders’ meeting CEO Walter Van den Bossche and the new president Piet Buyse –also major of the historical city of Dendermonde– summarized the grid operators 2012 activities. Eandis is the grid operator for electricity and/or gas in 234 municipalities in the densely populated Flanders. These municipalities are indirectly also are its major (79%) shareholders. Last year, the firm installed 725 km of new gas tubes and realized 37,864 new gas connections. The distributed gas volume rose compared to 2011, mainly due to the colder weather. "Today, 91% of the Flemish households can be connected to gas," Van den Bossche explains. "But only 61% of the people who live along the gas grid are effectively connected to it. I believe it is more useful first to increase the connections degree, instead of the connectivity degree. Doing so, we would make investments become profitable quicker." 

His vision on the possible expansion of heat grids is based on a similar viewing point. Belgium has no real tradition in heat distribution. Most inhabitants don’t even know that this kind of grid exists and are quite familiar in many other European countries. This lack of tradition is largely due to the early implementation of first coal 'town' gas and later natural gas in the country and the close vicinity of cheap Dutch gas. "Electricity and gas are complementary," is Van den Bossche's view. "This is not the case for heat. It makes no sense to construct both a heat and gas grid in the same area. I hope we will succeed in our negotiations with the Flemish government to agree that we will be allowed to count the gas and heat grids for the rate of connectivity it expects, possibly 99%." Houses that can't be connected to the gas grid yet are located in rural areas, in places that are usually difficult to reach with new pipelines, for example behind a combination of waterways. A local heat grid could be a suitable solution for these energy consumers.

Long lasting producers and consumers needed

Eandis is already involved in studies and projects for heat distribution. Though, Van den Bossche is cautious, based on personal experience. "Before we install a heat grid, we need to be sure that there are both long-term heat suppliers and customers. In the city of Aalst, where I spent my youth, used to be a heat grid. Thick pipes were spread out throughout the city. As children we wondered why there never was any snow in our city. There was only one important heat customer. When that company didn’t need any more energy the heat grid just remained there without further being used." Nevertheless, Eandis is planning to start building a local heat distribution grid in Kuurne, a municipality in its grid area.

Gas a luxury product?

After several years of increases, in 2012 Eandis saw a regression in the number of 'social' customers. In Belgium, grid operators are obliged to provide households that have been dropped by their commercial energy supplier, a minimal amount of electricity and gas. 'Social costumers' are people who can't and in some cases don't want to pay their energy invoices. The grid operators by the necessary energy volumes on the commercial market, but have strict guidelines concerning the rates they can apply themselves. The grid operator's rates have to be sufficiently high, to give problematic consumers enough incentives to seek a supplier on the commercial market again.

Among the reasons for payment problems are the elevated Belgian energy rates, due to high government taxes and raisings. The Belgian authorities at the same time are obliging the grid operators to protect 'social' consumers and are charging a VAT-rate of 21% on gas and electricity. In Belgian, the normal VAT-rate for basic needs is 6%. 21% is the normal rate for luxury goods. The federal government has indicated it has no intention to change this tariff, because of the negative effect on the state's revenues.

Koen Mortelmans

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