State aid: EU Commission opens an in-depth investigation into the regulatory mechanism for natural gas storage in France

Our February article envisaged the end of a lengthy saga in the gas sector… and yet, here we are again with a new instalment!

Following last December’s publication of a number of Decrees on natural gas consumption interruptibility, awaited for over four years, the long saga of France’s gas storage problem appeared to have finally come to its conclusion.

Indeed, with the transition from 1st January 2018 to a regulated system of third-party access (TPA) to natural gas storage, remuneration for storage operators (Storengy, Teréga and Géométhane) is no longer based on rates ‘freely’ set by operators – and deemed prohibitive by the market – but rather on a dual system:

  • An auction, with no reserve price, of storage capacities;
  • In the event that the auction revenue is insufficient, compensation determined by the CRE [Energy Regulatory Commission] to make up this difference and cover all operators’ regulated costs, levied on consumers through gas transmission charges.

With many voices having spoken up to explain that compensation would impose a heavy burden on costs for industrial players, electricity producers, etc., interruptibility has been resorted to as a sort of loophole for storage compensation… a site need only be recognised as interruptible (particularly with ‘secondary interruptibility’, uncompensated) for it to largely avoid this compensation! The loop was closed…

Furthermore, the auctioning campaign for gas storage capacities covering the period from 1st April 2020 to 31 March 2021 went very well this year. In fact, Storengy announced on Friday 28 February the end of its auctioning campaign, reporting a ‘very positive result’ with 100% of the capacities offered, i.e. over 94 TWh of storage, having been sold. The average sale price was €3.7/MWh, showing a continuous increase over time: €1.9/MWh in June 2019, €3.3/MWh in November 2019, €5/MWh in January 2020, and finally €5.2/MWh in February 2020 (excluding the Sediane B product).

Similarly, Teréga, which operates gas infrastructures in the southwest of France, observed that very same trend. For the last auctioning campaign, demand remained strong, with an oversubscription oscillating between 7 and 13 times the volume offered and with rising prices, with a high of €5.97/MWh having been observed during the auction of 19 February.

‘The bidders made significantly higher offers than the simple summer/winter price difference for gas on wholesale markets,’ Storengy noted. ‘The revenues from these auctions represent nearly three quarters of the authorised revenues for the three storage operators, making it possible to reduce compensation for the benefit of end consumers,’ Storengy explained.

Thus, everything seemed to be going well, with storages fully filled-up, increased bids, and lower compensation, even if the CRE did decide, with the new ATRT7 gas transmission tariff, to extend the collection basis by including customers connected to the transmission network…

The Commission’s investigation

Suspecting some sort of ‘State aid’, the European Commission announced on that very Friday, 28 February, the launch of an in-depth investigation into the regulatory mechanism for natural gas storage in France. The purpose of this investigation is to verify whether the regulated system is in compliance with European Union rules on State aid.

In 2019, the compensation paid to the three operators amounted to €540 million. The Commission explains that if ‘France has a legitimate interest in ensuring the security of energy supply to its citizens and businesses, the role of the European Commission is to make sure that the measures taken are cost-effective and safeguard competition so that consumers pay a fair price for natural gas.’

At this stage, the Commission has some particular doubts over whether the valuation method for regulated assets is sufficiently justified. This component is essential for determining whether the amount of aid is limited to the minimum necessary for ensuring security of supply. ‘France did not carry out an independent economic evaluation of the market value of the assets at the time when the regulation mechanism was implemented. Moreover, the mechanism remunerates investments made before the revenue of the storage operators was regulated. Yet, France has not assessed whether this revenue has allowed the storage operators to cover their initial investment cost,’ the Commission underlines.

The Commission therefore also has some doubts over whether the potential positive effects of the aid outweigh its potential negative effects on competition and trade between Member States. In particular, introducing the measure could artificially reduce the incentives to use LNG terminals and interconnections and might prompt gas suppliers to store gas in France rather than in neighbouring Member States.

This last comment seems to be the key to the problem, as well as the explanation for the excellent results from the storage auctions: with the current abundance of cheap gas, European operators have rushed to store their gas in France, where the storage reform of the end of 2017 created a capacity bubble.

In fact, storage operators have managed to obtain more than 130 TWh falling within the scope of regulated facilities, whereas the real need for storage to ensure security of supply in France would be lower.

French consumers are therefore being called upon to finance a storage volume which is higher than their needs….and thereby finance storage for the needs of other countries.

Even if the appetite for gas storage in France drove up the auction results, automatically leading to a reduction in compensation, it is not a foregone conclusion that French consumers will emerge as winners, compared with a regulation that would be limited to the strictly necessary volume, the remaining capacity being freely marketed by storage operators.

Essentially, we’re discovering – a little late – that gas storage is a competitive business and not a simple, natural monopoly such as transmission and distribution networks, which by nature need to be regulated.

Furthermore, and quite ironically, France resisted regulating storage from 2004 until the end of 2017, preferring the so-called ‘negotiated’ system for third-party access to storage (TPA-S) while the European Directive of 2003 provided that the TPA-S could either be negotiated or regulated. And it is now the Commission that’s coming back to criticise the regulation finally being implemented!

For consumers, this latest twist can only be good news, which should – in the long run – make it possible to reduce the scope for storage giving rise to compensation. On the other hand, there is a lot of work to be done in terms of sorting out storage required to be assigned to the needs of supply continuity in France (in full or in part), with the remainder available for the needs of adjacent markets.

The interruptibility saga gives way to a new one on storage – quite a hit series!

Philippe Lamboley

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Diego graduated in Political Economy at King’s College University (London – 2021). He started his professional career in a family business in Madrid as an operations manager. Diego then studied a Master in Management and Master in Computer Science at IE University (Madrid – 2022), during which he participated as an Information Technology (IT) intern in a startup. In May 2023, Diego joined the HES team as an intern specialised in programming models. In his first project, he developed a software tool for modelling the unavailability of the French nuclear fleet. Afterwards, Diego has also participated in the development of new software tools for modelling price curves, generation asset performance and other topics related to the energy market. 

Diego Marroquin

Junior Consultant

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Profesional Experience

Céline joined Haya Energy Solutions in November 2021 as marketing and administration manager. She had a first professional experience in the tourism sector as a social media manager. At HES, her activities are focused on the development of the company’s visibility at European level through: commercial actions, content marketing and development of brand strategy. Céline is also involved in the management of the company’s communication: optimisation of the website (WordPress & Elementor), LinkedIn, publication of the monthly newsletter and the organisation of conferences. Céline participates in energy projects with the clients and acts as coordinator and project manager. Finally, she is in charge of administration (accounting, expenses management, invoicing).   


Céline graduated in Spanish and English Philology at La Sorbonne (France – 2018) and holds a Master’s degree in Project Management and Cultural Tourism (Clermont-Ferrand/ Buenos Aires – 2021). 

Céline Haya Sauvage

Marketing Responsible

Céline Sauvage

Investment Advice

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.


Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert


“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of the General Manager’s team at Sevillana de Electricidad (Spain). In 1997, he was appointed head of commercial regulation at Endesa Distribución. In 2000, he joined the mergers and acquisitions (M&A) department of Endesa Europe. He was appointed Managing Director of Endesa Power Trading Ltd (UK) in 2003. A year later, he became responsible for energy management at SNET (France). In 2008, he was appointed Managing Director of SNET (France). In 2009, he became Director of Corporate Development at E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm focused on optimising the energy management of consumers, producers and retailers of gas and electricity. From 2015 to 2018, Antonio combined the consulting activity at HES with the general management of 2 production facilities in France (2 CCGTs x 410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, an infrastructure investment fund, as an operating partner. Antonio currently devotes most of his efforts to the Asterion Portfolio, while advising through HES companies in the energy sector in France, Italy, Germany, UK and Spain. 


Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain). 

Antonio Haya