What are Network Codes?
Europe's cross-border gas networks operate according to rules that regulate who can use them and under what conditions. As gas systems become more interlinked through greater interconnection, harmonised cross-border EU-wide rules are required to effectively manage gas flows. These rules are known as network codes. They govern all cross-border gas market transactions.
A network code is a set of rights and obligations that apply to parties operating in the European energy markets. Once adopted, the codes apply directly across Europe in the same way as an EU Regulation.
Network codes (NCs) aim to:
Promote increased trading across Europe;
Make it easier for companies to enter the market;
Enhance cooperation and security of supply;
Allow more renewable generation to be safely integrated into the energy mix.
Legal Basis for Network Codes
The Third Energy Package is an EU legislative package designed to create an internal gas and electricity market in the European Union. The Third Package requires the development of European - wide Network Codes. Regulation (EC) 73/2009 and 715/2009 create the legal basis for the gas network codes.
The European Commission is developing new rules for cross-border cooperation between gas network operators. These rules are referred to as network codes. The rules will cover how network operators manage gas flows across borders, deal with difference in gas quality and exchange data between themselves and market players.
Gas Network Codes
To date gas network codes have been formally adopted for gas in relation to the following-
Capacity Allocation Mechanism,
Congestion Management Procedures,
Transmission Tariff Structures.
The network code on interoperability aligns the complex technical procedures used by network operators within the EU and other countries neighbouring the EU.
EU Regulation No. 2015/703 on interoperability and data exchange rules can be downloaded from the European Commission website at the following link-
The network code on 'Gas Balancing of Transmission Networks' provides gas balancing rules including the responsibilities of transmission system operators and users.
EU Regulation No. 312/2014 establishes a network code on 'Gas Balancing of Transmission Networks'. It can be downloaded from the European Commission website at the following link-
Capacity Allocation Mechanism
The network code on 'Capacity Allocation Mechanisms in Gas Transmission Systems' requires gas grid operators to use harmonised auctions when selling access to pipelines. These auctions sell the same product at the same time and according to the same rules across the EU.
EU Regulation No. 984/2013 establishes a network code on 'Capacity Allocation Mechanisms in Gas Transmission Systems' . It can be downloaded from the European Commission website at the following link-
Congestion Management Procedures
The European Commission's rules on congestion management procedures aim to reduce congestion in gas pipelines. They require companies to make use of their reserved capacity or risk losing it. Unused capacity is placed back on the market.
EU Regulation No. 2015/715 establishes conditions for access to the natural gas transmission networks. It can be downloaded from the European Commission website at the following link-
Transmission tariff Structures
EU Regulation No. 2017/460 establishes a network code on harmonised transmission tariff structures for gas. This includes rules on -
- the application of a reference price methodology,
- the associated consultations,
- publication requirements,
- the calculation of reserve prices for standard capacity products.
EU Regulation No. 2017/460 can be downloaded from the European Commission website at the following link-