Blazing an Innovative Path for Natural Gas

Energinet.dk, a state-owned, Danish non-profit electricity and gas transmission system operator (TSO), is carving out novel approaches for the gas industry in Europe, helping gas stay in the game.

One marked difference between Energinet.dk and the rest of the natural gas industry in Europe is the company’s efforts to spearhead “renewable gas,” according to Søren Juel Hansen, Head of Tariffs and Infrastructure, Gas Market at Energinet.dk.

“With a government owner dedicated to convert the entire Danish Energy sector to renewables as fast as practically possible, we need to have a renewable focus or to consider closing down our business,” he explained. “Looking at the EU’s 80% aims for 2050 and listening to the public in the North West European countries that I travel most in, the same seems to apply to our colleagues.”

Mr. Hansen offered one example. 

“Of course biogas is not fully compatible now, but if you look at farming – Denmark intensively farms – we have a lot of manure lying around in fields. That produces methane whose emissions are 20 times more harmful to global heating than those of CO2, so burning that methane and making CO2, plus some energy out of it is 20 times better for the environment.” 

“Maybe that’s worthwhile subsidizing or incentivizing with higher CO2 prices, if we really are serious about CO2 emissions.” he said.

Gasification projects, he said, were also in progress in many countries such as e.g. Austria, France, Germany, Sweden, Denmark and in the US.

“We might be thinking of cars with huge cylinders on the back, but now we’re seeing gas projects getting into a more and more mature phase. For example, the Italians, Swedes, Germans and many leading car manufacturers have gone far in halving CO2 emissions in transport and lowering particle emissions even more by introducing gas cars like the VW Passat which has the same performance with gas as with petrol.”

Or, suggested Mr. Hansen, what about using some kind of synthesis?

“This is being done in Germany, Denmark and the US,” he reported. “You can take electricity, make synthesis with water and you get hydrogen, which you synthesize with CO2 and you actually get methane. That’s interesting when you have windmill electricity – in Denmark we’re increasing it; sometimes we have too little wind and then we need another source. We could use that gas produced to generate electricity.

“In other periods we periodically have a lot of wind but don’t need all the electricity, so it would be nice to use these processes and make gas for storage out of that,” he said.

There had been successes in Germany, so it was something he said he believed the industry should look more into.

This approach all started with government, recalled Hansen.

“Both Denmark’s new red cabinet and the former blue cabinet want Denmark to be 100% independent from fossil fuels in 2050. Attracting support for critical interim multimillion euro investments in natural gas import capacity to Denmark, and promoting gas in transport in Denmark, accordingly require a long term fossil free vision for the gas system to avoid the risk of having the public and politicians seeing critical gas infrastructure as a potentially stranded asset. 

“We’re a little bit different than most other businesses,” he explained, differentiating Energinet.dk from others in natural gas. “They basically have the same aim as Coca Cola - earn profits. Enenerginet.dk is non-profit. I also have a bonus contract, but it is focused on making competition work, securing security of supply and migrating from fossil to renewable fuels. When making huge investment decisions, Energinet.dk makes both a classic private economic ’Coca Cola’ profit & loss business case, and a socioeconomic business case focusing on the investment effects on society.  But where the classic profit oriented ‘Coca Cola’ business focuses on profit, Energinet.dk is more than happy with a break even if there is a strong socioeconomic business case. Making the right investments for society is thus not difficult at Energinet.dk.”

Still, Energinet.dk’s turnover on electricity and gas transport and PSO is EUR 1 billion/year. The company has approximately 500 employees: 100 of them working in the gas sector.

Mr. Hansen said many of his contemporaries in the energy sector were doing some of the same activities as his Danish TSO, but for profit. 

“We share goals, but sometimes the perspective is a bit different. But with a consistent regulation focused on the same European climate, competition and security of supply priorities and a clear unbundling to avoid so-called ’perverted incentives’, we have no problem in aligning our focus with other profit oriented TSOs. This was, for example, the case in our 2009 Open Season where we offered new infrastructure from Denmark towards Norway (Skanled) with Gassco, Poland (Baltic Pipe) with Gaz-System and Germany (Ellund) with Gasunie to the market.” 

“Another perspective where the Danish regulator and Energinet.dk used to be different from most other regulators and TSOs in North West Europe is the focus on dialogue,” he continued.

“The whole business is changing,” explained Mr. Hansen. “When I looked at the TSO business in North West Europe a few years ago there were a lot of court cases everywhere. I see that now everyone is capitalizing upon dialogue, and that’s really what we’ve been doing for the last seven years. So in many ways, we feel more and more like our European colleagues, despite our difference.”

“We actually have a few legal obstacles for a renewable vision,” he opined. “I think we should work on that, because while it’s true we have a fantastic interim fuel, but if we want to convince the general public that gas is a fuel of the renewable future, we have to start setting up visions for how we can make it renewable.”

Mr. Hansen contended that the natural gas industry was not enough engaged in dialogue with the public.

“We need to listen to the what the cab driver tells us when he takes us from the airport to the conference venue. I take this trip, tell them I’m in the gas business, we start talking about energy. If I listen long enough to the driver, he’ll start talking about green energy, gas being a fossil fuel, and while interesting, not something he would believe in in the long term.”

He had an opinion as to how the industry should reply to the taxi driver.

“Gas has a lot to deliver,” he rebutted. “It’s the cleanest fossil fuel. As an energy carrier, it’s fantastic – we can store it. We have plenty of the fossil stuff, but I have what I believe to be a lot of exciting green opportunities.”

He said he believed the gas industry needed to look more into these, explaining: “If we want the cab driver, the public and thereby the politicians to bet on gas long term, we also need to have a green vision on gas, something which I think is lacking.”

Electricity and heat, in contrast, have clear, green visions, according to him.

“I see windmills, I see sun; they even speak of biogas maybe even more than the natural gas industry does,” he said. “They talk about all kinds of green fuels from which they can generate electricity and heat.” 

He continued, “I think we need to do the same in gas. I’m not saying that the gas industry needs to be all green by 2020, but I think if we don’t develop a vision for the year 2100, in Europe, and in Denmark, where we have a strong political will for 2050, gas is written out of energy policy, and I think that’s something that we need to take seriously.

For that reason, Mr. Hansen said that the natural gas industry needed such a vision in Europe if it wanted to be around in the next century.