Solidarity in natural gas storage: A potential allocation mechanism of stored quantities among several players during times of crisis

TL;DR

This paper proposes a game-theoretic framework for allocating stored natural gas among EU member states during crises, aiming to enhance solidarity and efficiency in energy supply security.

Contribution

It introduces a formalized, voluntary cooperation mechanism for gas storage sharing, considering uncertainty and risk aversion, which is a novel approach in energy solidarity.

Findings

The model demonstrates potential benefits of cooperation under risk aversion.

Simulation shows improved storage utilization during crises.

Framework encourages voluntary participation for better energy security.

Abstract

The recently experienced disruptions in the EU's energy supply pointed out that supply crises pose a real thread and the member states must be better prepared do deal with the related challenges. According to the current practice, member states fill their gas storages independently, while it is not clear how solidarity could be put into practice in the future, i.e. how the accumulated reserves of one or more members may be potentially redistributed to help others in need. In this paper we propose some possible guidelines for a potential solidarity framework, and formalize a game-theoretic model in order to capture the basic features of the problem, considering the related uncertainty of the future conditions related to gas storage levels and possible transmission bottlenecks as well. The proposed mechanism of supply-security related cooperation is based on voluntary participation, and may contribute to the more efficient utilization of storage capacities. Via the computational model we demonstrate the operation of the proposed framework on a simple example and show that under the assumption of risk-averse participants, the concept exhibits potential.