Code Modification ForumTelco/Webex,

Wednesday, 17 June 2020

Agenda

1. Review of minutes from last meeting

2. Review of open actions

3. CRU Update re Impact of Covid 19

4. Update on Maintenance

5. Gas Quality – Proposed Change to Wobbe Index in the UK

6. Code Modification Proposal A087 – New Framework for Suppliers in PPM Market

7. Code Modification Proposal A096/A096A- Data Sharing

8. Code Modification Proposal A100 – Offtake Provisions at Haynestown

9. Code Modification Proposal A101- Extension of Daily Exit Capacity Booking Window

10. Code Modification Proposal A102- Facilitate GNI procurement of Shrinkage Gas on Trading Platform

11. Code Modification Proposal A103 – Changes to Shipper Portfolio Tolerances

12. Status of Code Modification Proposals

13. Update from GNI European Affairs Team

14. Gas and Electricity Interaction

15. AOB/ Date of next Meeting2

1. Review of minutes from last meeting

• Minutes of CMF meeting of 25 March 2020 were issued on 1 May 2020.

• No comments were received

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2. Review of open actions

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ID Action Responsibility Status Priority

C572 Transporter to monitor on ongoing basis the adequacy of the initial 25%

tolerance for RNG Entry Points

Transporter Open Medium

C575 Transporter to furnish required data to CRU in connection with tariff review

in connection with tariff review in relation to SPC Settings for CNG Offtakes

Transporter Open High

3. CRU Update

• Verbal update on operations during Covid-19

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4. Update on Maintenance Activities - 2019/2020

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Maintenance Programme Gas Year 2019/20

Date Duration Entry Points Commentary

20th May 2020 1 Bellanaboy

Station testing, valve check and validations at Cappagh

South.

Proposed to cancel this as the work will be carried out

during the planned entry point outage in June/July.

17th June 2020 1 Inch

Odourant injection system planned maintenance.

Proposed to cancel this as unit will be decommissioned

once flows at the entry point cease in Q2.

9th Sep 2020 1 Bellanaboy

ESD testing at the Corrib Terminal (will be coordinated with

the annual Corrib planned maintenance)

Proposed to cancel this as the work will be carried out

during the planned entry point outage in June/ July.

4. Planned Maintenance Activities - 2020/2021

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Maintenance Programme Gas Year 2020/2021

Date Duration Entry Points Commentary

19th May 2021 1 BellanaboyStation testing, valve check and validations at Cappagh

South.

8th Sep 2021 1 BellanaboyESD testing at the Corrib Terminal (will be coordinated with

the annual Corrib planned maintenance).

Imports at Inch are planned to cease from the 30th June 2020 so no requirement for maintenance

days at the entry point

5. Gas Quality Update

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UK Gas Quality UpdatePresentation to the Code Modification Forum (17 June 2020)

June 2020

UK Gas Quality Changes – June 2020 Update

• UK achieved significant milestone in the process of updating their Gas Quality (GQ) specification, with thepublication of the draft GQ standard IGEM/GL/10:

‒ “Gas Quality Specification for Conveyance of Group H gases of the second Gas Family” – seehttps://www.igem.org.uk/technical-services/comment-on-draft-standards

‒ This draft standard is out for industry consultation until 30 July 2020;

GNI would encourage Irish gas shippers and other industry participants to respond with any concerns

‒ Also published supporting evidence and governance arrangements documents;

• The scope of the proposed changes were in line with the previous draft of the evidence document:

‒ Increasing upper WOBBE limit to 52.85 MJ/m3 and reducing lower WOBBE limit to 46.5 MJ/m3

‒ Increasing the Oxygen (O2) limit to 1% (molar) for system pressures < 38 bar

‒ Replacing the Incomplete combustion and sooting factors with a Relative Density (RD) limit of 0.7

• Hydrogen (H2) limits remain unchanged, but will be revisited in either a future revision of the draft standard or in a separate H2 standard

• No emergency WOBBE limits in published draft standard (but is subject of ongoing discussion)10

Supporting Evidence paper summary

• Supporting evidence paper outlines the potential benefits:

‒ Securing future gas supplies;

‒ Decarbonising the gas network;

‒ Reducing emissions due to gas processing

• Outlines the various studies undertaken to demonstrate the changes are safe:

‒ Appliances can safely burn gas over the wider WOBBE index range

‒ No material increase in network risks (i.e. gas explosion and fracture propagation risks)

• Widening WOBBE range will present challenges to operation of gas turbines, sensitive process-industries, andindustrial & commercial boilers etc

‒ But notes there are already wide variations in WOBBE and GCV across system

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Historical variation in WOBBE and GCV

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Implications for large-users

• The proposed GQ changes will potentially increase the already wide variations in WOBBEand GCV across the UK gas system

• Stakeholder engagement by DNV-GL highlighted a number of operational challenges due towider WOBBE limits:

‒ Increased emissions and reduced efficiency for I&C burners

‒ Reduced quality for sensitive processes such as glass manufacture etc

‒ Gas turbine may have increased combustion and operational issues

• lGEM evidence paper recommends “sensitive” gas users may need to consider moreadvanced burner and process controls to manage future gas quality variations

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UK Gas Quality changes ... continued

• Publication of draft standard suggests that IGEM are attempting to keep to their planned timetable:

‒ To finalise the standard by the end of Q3 2020;

‒ Submit it to the UK HSE for approval in Q4 2020;

‒ Amend the Gas Safety Management Regulations (GSMR) in either April or October 2021 to point out to the new IGEM GQ standard (assuming it receives HSE approval)

• Although there are still a number of steps to be completed, it is looking increasingly likely that UK will amend their GQ standard next year – perhaps as early as April 2021?

• GNI would encourage Republic of Ireland (ROI) gas shippers to respond to IGEM industry consultation with any concerns they may have about the proposed changes

• GNI is happy to meet shippers individually to discuss these issues in more detail

• As ~ 60% of gas used in Republic of Ireland (ROI) comes from the UK, there is increasing likelihood that Code of Operations will need to be amended in 2021 - to realign it with the UK specification

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6. Code Mod A087- New Framework for Suppliers in PPM Market

• On 21st November, 2018 the CRU issued instruction approving A087 and implementation of a new

framework.

• The key change is that rather than GNI procuring and negotiating front office service agreements,

suppliers will procure their own front office services as of 1st July 2021.

• Working Group, set up under GMARG Terms of Reference, is reviewing the operational and

contractual arrangements in advance of the implementation date

• GNI have, at Workgroup Meeting on 23 January, presented their proposed contractual pathway

• The contractual documentation is under review by Workgroup and existing Front Office Service

Providers

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7. AO96 Data Sharing Agreement/A096A Model Clauses to address a Hard Brexit

• A096 -Transporter Proposal – To provide for an updated data sharing regime between Transporter and

Shippers to comply with provisions of Data Protection Act 2018 (implementing the General Data

Protection Regulation (GDPR) (EU) 2016/679) and to reflect the reality of personal data transfers

between the Transporter and the Shippers – REMAINS UNDER REVIEW

• A096A –Transporter Proposal – To provide for the transfer of personal data between the Transporter

and Shippers based outside the European Economic Area(EEA) through the introduction and

application of Model Clauses under a Model Clause Procedure. It is proposed to come into effect on or

before the Brexit deadline of 31 October 2019 – THIS HAS BEEN COMPLETED

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8. A100 Amendment to the Code of Operations to facilitate offtake arrangements at Haynestown

• Verbal update

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9. A101 Amendment to Code of Operations to facilitate the extension of the Daily Capacity Booking Window

Proposed by ESB

Reasons for Proposal;

- Currently the Daily Capacity Booking Window is defined as: The period commencing at start of the Day which is seven Days prior to the requested Capacity Booking Effective Date

specified in a request for Short Term Capacity for a duration of a Day, and ending at 03:00 hours on the requested Capacity Booking Effective Date

Effective Date for Daily Capacity meaning the Day for which the capacity is requested and active

‒ Shippers have incomplete information of capacity requirements at the Exit Point when the window closes

‒ The overrun cost of under-booking can be extremely high Even if prudently booking stacks of Annual / Quarterly / Monthly capacity, daily multipliers combined with overrun charges

at 4 times Daily Capacity are highly punitive

‒ Therefore there is a tendency to overbook, which leads to inefficiency Cost inefficiency from wastage – pass-through to end-users

Poor quality signals to Transporter

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A101: Possible Options for Consideration

A. Extend the Daily Exit Capacity Booking Window to coincide with the publishing of the final meter read of the day by GNI on GTMS

B. Extend the Exit Capacity Booking Window to end on D+X

C. Reduce the Exit Capacity Overrun multiplier from 4 to 1

D. Allocate Exit capacity to Shippers to match their final allocation (“implicit allocation”)

A101: Summary of Shipper Responses to Proposal and Solution Option Preferences

- Eight Shipper/Shipper Groups replied (including ESB ) and all but one were positive

- One Shipper indicated support for the Proposal before the last meeting and did not subsequently

indicate a solution option preference

- Two Shippers favoured Option D as long term solution but favoured B and C as interim measures

- Three Shippers favoured Option D as long term solution but favoured C as interim measure

- One Shipper preferred Option C

A101 – GNI response

• GNI is agreeable to extending the last time for Exit Capacity Bookings to 04:45 as an interim step

• The review of multipliers and the potential for implicit allocation of Capacity should be reviewed as part of a broader CRU consultation relating to seasonal multipliers which is required by the EU Network Code on Tariffs.

‒ GNI view is that any aspect of the regulatory regime, either under the Code or via the tariffs, that affects the incentives for Shippers to manage/optimise their Capacity Booking should not be looked at in isolation.

‒ This review will begin later this year

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10. A102- Amend Code of Operations to facilitate GNI Procurement of Shrinkage Gas on Trading Platform

• This proposal was approved by the Commission

• GNI went to the market on Wednesday the 10th of June

‒ GNI currently has 12 approved trading counterparties on the Marex Spectron Platform

• GNI successfully secured its baseload Shrinkage requirements for Gas Year 2020/21

‒ 59 kTherms / 1.73 GWh per day

‒ The equates to c. 70 of total forecast Shrinkage requirements for the year

‒ GNI will source additional volumes at later dates which will be communicated to industry in advance.

• All volumes were secured at a premium of 3.17 p/therm to Heren DA Midpoint Assessment

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11. A103 – Changes to Shipper Portfolio Tolerances

• Proposed by CRU.

• Intention: to remove the LDM GFPS Tolerance for gas fired power stations, the NDM forecast

Tolerance and the DM Exit Tolerance by end of current Gas Year to comply with Article 50(1) of the

Balancing Network Code which prohibits application of tolerances as an interim measure where either

Network Users do not a) have a short term wholesale gas market with sufficient liquidity, b) have

access to gas required to meet short term fluctuations in gas supply, or c) do not have sufficient

information regarding inputs/offtakes

• Rationale for proposal is requirement to comply with provisions of the Balancing Network Code.

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12. Status of Code Modification Proposals

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Number Title of Proposal Proposer Status

A087 New Framework for Suppliers in PPM Market GNI Live/ Implementation

process review

A096 Data Sharing Agreement GNI Live/Under review

A099 CNG Supply Point Capacity Setting GNI In abeyance

A100 Offtake Arrangements at Haynestown GNI Live / Under review

A101 Extension of Daily Exit Capacity Booking Window ESB Live / Under review

A102 Facilitate GNI procurement of Shrinkage on Trading Platform GNI Completed

A103 Changes to Shipper Portfolio Tolerances CRU Live / Under review

13. Update from GNI European Affairs Team

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European Affairs Update

Code Modification Forum - 17th June 2020

Gas Networks Ireland – European Affairs

1. Develop in depth knowledge of EU policy & regulation

and how it potentially impacts gas market

2. Ensure company compliance with EU legislation

3. Actively monitor developments at an EU and Member

State level

4. Influence EU policy development to facilitate delivery of

a well functioning and sustainable gas market.

5. Leverage potential opportunities for EU funding.

e: EuropeanAffairs@gasnetworks.iet: +353 21 453 4467

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Gas Networks Ireland - European Affairs Team

(L-R) Con O’Donnell, Regulatory Framework Manager, Kieran

O’Sullivan, EU Affairs Senior Analyst, Mary O’Mahony, European

Innovation & Policy Analyst, Gráinne Greehy, European Affairs

Manager and Stephen O’Riordan, EU Technical & Regulatory Analyst

Monitor >>> Advocate >>> Influence

Priorities of GNI EU AffairsBroad objectives:

• Ensure gas market regulation is fit for purpose and ensures a secure and sustainable gas

system.

• Recognition of the role of gas and gas infrastructure in the energy transition within the EU

• Ensure a supportive regulatory framework is put in place to enable a roll out of renewable

and decarbonised gases

• Specifically, ensure support for biomethane, CNG, CCUS and Hydrogen

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Compliance with and

development of gas

market regulations

Advocating for supportive

policy framework and direct

funding for Biomethane

Promoting CNG for

mobility, & advocating for

appropriate regulatory

framework

Advocating for

supportive policy

framework and direct

funding for CCUS

Monitoring developments

in Hydrogen, &

developing pilot project

proposals

Specific areas of focus:

GNI EU Gas association participation…

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• The European Network of Transmission System Operators for

Gas (ENTSOG) – founded under the 3rd Energy Package, to

develop Gas Network Codes.

• All EU Transmissions System Operators (TSO) are required to

be members of ENTSOG, including GNI & GNI(UK).

• ENTSOG is not a lobby group.

• Gas Infrastructure Europe (GIE) is an association representing

the interests of Gas TSOs, Storage System Operators and LNG

Terminal Operators.

• Gas Networks Ireland is a full member of GIE.

• Eurogas is an association representing the Gas Wholesale,

Retail and Distribution sectors.

• GNI is an associate member of Eurogas and participates in the

Distribution Committee along with other EU Gas Distribution

System Operators (DSO).

• Gas Distributors for Sustainability (GD4S) is an association

representing seven major European DSOs with a total of 27.7

million customers.

• GD4S is particularly focused on promoting biomethane & CNG.

• GNI joined GD4S in 2019.

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The European ‘Green Deal’ –transforming the EU’s economy for a sustainable future…

1. Increasing the EU’s climate ambition for 2030 & 2050; • 50 – 55% emissions reduction target by 2030 & net zero by 2050. • Measures to include changes to ETS & carbon border tax. • to be finalised by June 2021.

2. Supplying clean, affordable and secure energy;• Smart integration of renewables and other sustainable solutions. • Measures to be presented by mid-2020. • The decarbonisation of the gas will be considered in parallel.

3. Mobilising industry for a clean and circular economy;• Decarbonisation of energy-intensive industries, such as steel & chemicals.• New industrial strategy and circular economy plan, launched 10th March

2020.

7. Preserving and restoring ecosystems and biodiversity• The EC will present a Biodiversity Strategy by March 2020.• Includes proposal to green EU cities and sustainable for re- and

afforestation.

6. From Farm to Fork: a sustainable food system;• Reward farmers for improved environmental performance, including storing carbon in

soil, and improved nutrient management.• ‘Farm to Fork’ Strategy to be presented in spring 2020.

4. Building and renovating in an energy efficient way;• Proposed ‘renovation wave’ of public and private buildings.• Assessment of Member States’ renovation strategies in 2020.• Will consider financing schemes for renovation under InvestEU.

8. A zero pollution ambition for a toxic-free environment;• Focus on harmful pollutants such as chemicals and micro plastics.• Zero pollution action plan for air, water and soil in 2021.

5. Accelerating shift to sustainable and smart mobility;• 90% reduction in transport emissions is by 2050.• Fossil-fuel subsidies including tax exemptions to end.• Accelerated deployment of zero and low-emission vehicles.

1. Financing the transition;• Sustainable Europe Investment Plan funded by the ETS.• 30 % of the Invest EU fund be used to fight climate change. • EIB will become the EU’s climate bank

2. Leave no one behind (Just Transition);• Just Transition Mechanism, including a Just Transition Fund, to leave no one

behind. • Focus on regions and sectors most affected by the transition.

• 1st December 2019 - Ursula von der Leyen became President of the European Commission (EC), committed to strengthening the EU’s response to climate change.

• The Commission issued a high level communication on the ‘Green Deal’ on 11th of December 2019. This communication presented an initial roadmap of the key policies and measures needed to achieve the ‘Green Deal’.

• The Green Deal centres on eight key elements, underpinned by two key cornerstones, which are shown below.

‘Next Generation EU’: European Recovery Plan

€750bn recovery plan ‘Next Generation EU’ proposed by Commission on May 27th 2020. Money to be raised on financial markets.

“Press fast-forward towards a green, digital and resilient future” – Ursula Von der Leyen.

Three pillars:

1. Support for Member States, including €560bn towards ‘Recovery and Resilience Facility’ (€310bn in member state grants, €250bn in low-cost loans)

2. Kick-starting the EU Economy, upgrade of InvestEU to €15bn and new Strategy Investment Facility to boost sectors linked to green and digital transition, as well as key value chains in internal market

3. Addressing Crisis Lessons: New health programme and further funds for Civil Protection Mechanism and Horizon Europe

This funding package is the largest in EU history. The recovery strategy is framed by ambition of the EU Green Deal.

• ‘Massive renovation wave’ of buildings and infrastructure.

• More circular economy bringing local jobs

• Roll out of renewable energy projects, including a commitment to kick-start clean hydrogen economy in Europe

• Cleaner transport and logistics, including e-vehicle charging infrastructure and clean mobility

• Strengthening Just Transition Fund to €40bn to accelerate clean transition

NB. recovery plan sits on top of the overall EU budget for 2021-2027 and requires approval by EU-27, including the ‘Frugal Four’.

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Major EU initiatives from Gas Industry perspective…

Energy Sector integration Strategy:

GNI and Ervia have submitted responses to the Energy Sector integration Strategy consultation.

Consultation text was positive on the role of renewable and decarbonised gases – signalled creation of Clean Hydrogen Alliance.

Strategy set to be announced by the end of June, TBC.

Review of the TEN-E Regulation:• Revision of the TEN-E process which governs the PCI

process - has commenced.

• Focus will likely change from security of supply and market integration to Energy Transition projects.

• Will signal a move away from traditional natural gas projects towards renewable and decarbonised gas projects (including CCS) etc.

Other from the European Commission:

• Opportunities to increase the use of (renewable and

low-carbon) electricity via electrification of sectors that

currently still rely on fossil fuels (electric vehicles in

transport, or of heat pumps for heating buildings).

• Fossil-based gases and fuels can be replaced by

renewable and decarbonised gases and fuels.

Commission plans to propose supportive market

rules.

EU Hydrogen Strategy:

Consultation text signals support for both Green Hydrogen (Power to gas) and Blue Hydrogen (produced from natural gas and leveraging CCS to abate emissions).

Focus is on the industrial and mobility sectors.

Hydrogen strategy expected to be announced by the end of June, TBC.

The initial consultation on the hydrogen strategy commenced in May and closed on the 8th June.

Adjusted EU Commission Work Programme 2020

https://ec.europa.eu/info/sites/info/files/cwp-2020-adjusted-factsheet_en.pdf33

• The Commission is responding to the coronavirus pandemic by refocusing its work and prioritising the actions needed to propel Europe’s recovery and resilience.

• The European Commission remains committed to its flagship initiatives:

• the European Green Deal; and • the Digital Strategy,

• These initiatives are seen as key to relaunching the European economy and building a more resilient, sustainable, fair and prosperous Europe.

Market Intelligence – European Institutions & Member State updates,June 2020

• Commission releases €750bn EU Recovery Plan with focus on building renovation, renewables and hydrogen; clean mobility and circular economy Link Link Link Link

• Renovation wave, solar and offshore wind highlighted as key for the recovery of the energy sector Link Link

• DG Energy seeks submissions on the topic of benchmarking of methane measurements, reporting and verification for stakeholder meeting on June 9th Link Link Link

• EU Commission considering three options for future investments in gas infrastructure, according to leaked scoping paper Link

• EU Commission launches Consultation on TEN-E Revision Link

• European gas demand to drop across all sectors as a result of Covid19 – EU gas demand estimated to be around 15-20% lower Link Link

EU Institutions Update

• Equinor, Shell and Total have confirmed a multi-million-dollar investment decision for the Northern Lights carbon

capture and storage (CCS) project – awaits sign-off from Norway’s energy ministry Link Link

Norway

• SGN seeks regulator permission to deliver world’s first fully renewable hydrogen network for homes in

Scotland Link

• UK pilot programme HyDeploy (Cadent) yields positive results for 20% hydrogen blending Link

UK

• Portuguese government approves national hydrogen strategy which foresees investment of €7 bln. by 2030. Link

Portugal

• Dutch Government sets out strategy on Hydrogen Link Link

• Feasibility study into a large-scale hydrogen plant signed by three hydro-ports key in landing offshore wind-

generated energy. Link

Netherlands

14. Gas and Electricity Interaction

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15. AOB

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Code Modification Forum Meetings in 2020

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CMF Dates 2020 Location

29th January (Wednesday) Dublin

25th March 2020 (Wednesday) Telco/Webex

17th June 2020 (Wednesday) Cork

19th August 2020 (Wednesday) Dublin

21st October 2020 (Wednesday) Dublin

16th December 2020 (Wednesday) Dublin

Thank you for your participation