ENTSOG TYNDP 2015

3.3.2 MARKET ENVIRONMENT

Many promoters are facing challenges in triggering investment on a market basis as it is supposed to be the rule under the Third Energy Package.

22

Lack of market support Lack of market maturity Other

46

%

32

Figure 3.4: Overview of the Market related project barriers

The difficulty in receiving sufficient market commitment is one of the main barriers highlighted by promoters. The focus on short-term capacity products, as a result of the way European regulation has been implemented, the current economic situation and unclear signals from EU energy policy, do not deliver the necessary investment signals and long-term financial commitment to trigger new infrastructure projects. The lack of market maturity is also identified as a barrier with regard to the number of users and the development of the commercial arrangements. In some regions, promoters are facing additional challenges as the gas market is not sufficiently mature to give the appropriate signals and provide sufficient financial commitment. These regions are often at the same time suffering from a lack of infra- structure integration compared to the rest of the European gas market. Within the framework of the TEN-E Regulation, European Commission has emphasised that co-financing will only apply for key projects not affordable solely within the concerned markets. Nevertheless, the expectation persists that co-financ- ing would reduce the need of long term commitment by the market.

3.3.3 FINANCIAL ENVIRONMENT

Gas infrastructure projects are capital intensive assets with a very long economic lifetime therefore project financing is a major part of the process of enabling the investment. Financial tools put in place to support new investments are not always attractive to investors.

20

Availability of funds Amortization rates Other

%

15

65

Figure 3.5: Overview of the Financing related project barriers

32 |

Ten Year Network Development Plan 2015