Spillovers of underground gas storage facilities and their role in the sustainable energy markets: Assessment and policy recommendations

Chrysochoou, Anastasios, Zissis, Dimitris ORCID: https://orcid.org/0000-0002-6957-3494, Chalvatzis, Konstantinos ORCID: https://orcid.org/0000-0001-9829-7030 and Andriosopoulos, Kostas (2024) Spillovers of underground gas storage facilities and their role in the sustainable energy markets: Assessment and policy recommendations. Benchmarking, 31 (2). pp. 391-409. ISSN 1463-5771

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Purpose: The purpose of this study is to investigate the impact of the construction and operation of underground gas storage (UGS) facilities, under the prism of the recent rise in energy prices. The focus is on developing energy markets interconnected with gas producers through pipelines and has access to liquefied natural gas (LNG) facilities in parallel. Design/methodology/approach: Through a focal market in Europe, the authors estimate the economic value for both stakeholders and consumers by introducing a methodology, appropriately adjusted to the specificities of the domestic energy market. The Transmission System Operator, the Energy Market Regulator, the Energy Exchange and Eurostat are the main data sources for our calculations and conclusions. Findings: The authors investigate the perspectives of UGS facilities, identifying financial challenges considering specific energy market conditions which are barriers to new storage facilities. Nevertheless, the energy price rocketing coupled with the security of gas supply issues, which arose in autumn 2021 and were continuing in 2022 due to the Russia–Ukraine crisis, highlight that gas storage remains, at least for the midterm, at the core of European priorities. Originality/value: The paper emphasizes on developing markets toward green transition, proposing tangible policy recommendations regarding gas storage. A new methodological approach is proposed, appropriate to quantify the economic value of UGSs in such markets. Last, a mix of energy policy options is suggested which include regulatory reforms, support schemes and new energy infrastructures that could make the gas storage investments economically viable.

Item Type: Article
Additional Information: Funding Information: Concerning the financial aspect of the South Kavala project, its grant funding eligibility from national or European institutional financial tools (Connecting Europe Facility) enhances its business perspectives. Nevertheless, the European funding is provided under strict time constraints (up to 2023) since natural gas as a fossil fuel has a specific role in the context of the European strategy for an economy of low (or zero) CO emissions (). Therefore, it seems that the European funds will be channelled in gas projects, under strict prerequisites (). Consequently, national authorities should consider the storage facility’s in light of the European Commission's green hydrogen strategy. Gas storage installations, when are transformed to hydrogen ones, can play a twofold role: (1) improve energy comprehensive utilization rates which depict more efficient integration of renewables in the energy systems and (2) achieve better load supply shortage rates (). Bearing all these in mind, policymakers in Greece should pre-define the ability of South Kavala UGS to store a mix of natural gas and green hydrogen, obtaining sustainability perspectives, given the pursuit of deep de-carbonization targets (). Nevertheless, it is not underestimated that the hydrodynamic characteristics of underground hydrogen storage, compared to these ones of a natural gas storage, are different, since the chemical composition of these two gases is also different (). 2 Publisher Copyright: © 2023, Emerald Publishing Limited.
Uncontrolled Keywords: energy and climate policy,energy economics,energy storage,hydrogen,sustainability,business and international management,strategy and management,sdg 7 - affordable and clean energy,sdg 13 - climate action ,/dk/atira/pure/subjectarea/asjc/1400/1403
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: LivePure Connector
Date Deposited: 14 Apr 2023 09:30
Last Modified: 04 Mar 2024 18:17
URI: https://ueaeprints.uea.ac.uk/id/eprint/91763
DOI: 10.1108/BIJ-01-2022-0024


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