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      Analyzing the regulatory framework gaps for gas distribution networks with decreasing natural gas demand in Germany

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          Abstract

          German energy system studies, investigating the energy transition pathways to the set climate targets, depict a significant decrease in gas demand. This leads to a discussion about the long-term need of gas distribution networks. The discussion intensified with the war in Ukraine and the subsequent energy price crisis. The German regulatory agency responded to these developments with adjusting the regulatory framework to the current challenges. Up to now, the depreciation period of network components varies between 45 and 65 years, and consequently the monetary capital is tied up for a long time, lowering the flexibility of network operators to react to current challenges. Therefore, the German regulatory agency allows the shortening of depreciation periods of new gas network assets. Nonetheless, it is still unclear how to deal with existing assets at risk of becoming stranded assets and how to regulate the decommissioning of gas networks. Therefore, this paper addresses the research question: “What effect do different regulations for decommissioning of gas distribution networks have on operators and users?“. To answer the question the model MERLIN is applied, which integrates the current and future regulation options into long-term investment decision analysis. The results show a need to shorten the depreciation period of existing assets to avoid stranded assets. Further, partial decommissioning with including the decommission costs in the regulatory framework and hence finance it through the network users, is the most economical attractive option for network operators and users.

          Highlights

          • Long-term investment analysis including current and future regulatory conditions.

          • High risk of significant future stranded assets based on current network assets.

          • Including partial decommissioning costs in revenue cap most attractive option.

          • Financing of full dismantling costs with provisions leads to breach of regulation.

          • Efficiency factor has high influence on economic feasibility of network operation.

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          Most cited references25

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          Demystifying natural gas distribution grid decommissioning: An open-source approach to local deep decarbonization of urban neighborhoods

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            Analysis of dependencies between gas and electricity distribution grid planning and building energy retrofit decisions

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              Is there a future for the gas network in a low carbon energy system?

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                Author and article information

                Contributors
                Journal
                Heliyon
                Heliyon
                Heliyon
                Elsevier
                2405-8440
                05 December 2024
                30 December 2024
                05 December 2024
                : 10
                : 24
                : e40800
                Affiliations
                [a ]Fraunhofer Institution for Energy Infrastructures and Geothermal Systems IEG, Breslauer Str. 48, 76139 Karlsruhe, Germany
                [b ]Fraunhofer Institute for Systems and Innovation Research ISI, Breslauer Str. 48, 76139 Karlsruhe, Germany
                [c ]DVGW Research Centre at the Engler-Bunte Institute of the KIT, Engler-Bunte-Ring 1-9, 76131, Karlsruhe, Germany
                Author notes
                Article
                S2405-8440(24)16831-4 e40800
                10.1016/j.heliyon.2024.e40800
                11681859
                39735630
                89a82abf-889b-474a-b285-4358b06d3c2d
                © 2024 The Authors. Published by Elsevier Ltd.

                This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

                History
                : 27 September 2023
                : 15 November 2024
                : 27 November 2024
                Categories
                Research Article

                gas distribution network,network regulation,revenue cap,decommissioning,network charges

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