In a context of growing demands regarding the energy transition, Floene considers that gas distribution networks “have an essential role in achieving the national decarbonisation objectives, while simultaneously contributing to supply security, the flexibility of the energy system and its resilience in the face of climate or geopolitical instability.”
The position of Floene, as the company states in a press release, rests on five fundamental axes of analysis: the role of gas distribution networks in the future of the energy system; the evaluation of demand forecasting methodologies; the evolution of the regulated asset base; the operational benefits associated with the investments made; and the operating costs that underpin the investment proposals and their comparability.
Floene emphasises that the existing gas infrastructure “constitutes a strategic asset for the country.” It is a network “already significantly amortised, in other words, an infrastructure that has already recovered much of the investment made over the years, technically prepared to transport renewable gases and that allows decarbonising consumption with an additional investment substantially lower than would be required for an outright replacement by exclusively electric solutions.”
In this context, the coexistence between the electrical and gas systems “represents the most prudent and economically efficient response, especially in a scenario of predictable growth in energy demand.” Put simply, using electricity and gas networks simultaneously “allows responding to the country’s energy needs more safely and at lower costs.” The mobilization of all available energy vectors “is essential to strengthen supply security and national energy sovereignty.”
Stable consumption and prudent investments
Regarding consumption prospects, Floene considers that there is no evidence to support a significant reduction in gas demand. Even in a conservative scenario, it is estimated that the decrease in consumption by 2040 will be less than 2%, a figure that may even overstate the actual reduction. Floene also warns that assuming a drop in consumption without solid foundations can lead to erroneous decisions about the investments needed in the network.
The investments proposed by the distribution network operators of the Floene Group “reflect a prudent, incremental approach focused on the best use of the already existing network. They do not correspond to an expansionist logic, despite 68 municipalities still lacking gas access in the group’s concession areas. The priority is maintenance and adaptation of a consolidated infrastructure, while ensuring territorial cohesion.”
The company also highlights that all municipalities currently without a gas network are located in its concession areas, “granting the planned investments a relevant dimension of territorial equity not found in other parts of the country.” These investments “also present some of the lowest unit costs of decarbonisation, since they allow replacing more polluting fuels, such as butane, propane or diesel, by leveraging infrastructures already existing and prepared to receive renewable gases.”
Defending consumers
Floene considers it “fundamental to ensure that domestic consumers can benefit from renewable gases, thereby guaranteeing the economic sustainability and viability of the distribution networks.” The company also argues that the discussion regarding the sharing of connection costs for new biogas production units “should accompany market development and the investment decisions necessary for the sector.”
Floene also warns about the adverse effects of an excessive limitation on investment. “Such an option could lead to higher costs borne by both gas consumers and electricity consumers, due to the increased electrification needs of those currently served by the gas network.” For this reason, Floene maintains that the economic analysis should focus on seeking the most efficient decarbonisation solutions, “valuing the contribution of gas infrastructure prepared to integrate renewable gases and complement the electric system.”
The investment in development and expansion presented by the operators of the Floene Group corresponds to the minimum level necessary to keep the network operating efficiently, to guarantee the indispensable resources for its operation, and to comply with the legal obligations associated with the service provided to consumers.
In the face of different strategies and varying investment levels among operators, Floene understands that “it is not appropriate to apply uniform recommendations for reducing investment, arguing instead that decisions on investment should take into account the reality of each network and not a one-size-fits-all rule.”
