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The EU dependence on imported gas is increasing, rising to 67% in the year 2014 with 30% of total gas consumption used for electricity generation that year. With such a dependence on imported gas, gas supply interruptions can have significant impacts on the EU energy system and economy. This points to the need for integrated electricity and gas modelling tools to fully explore the potential impacts of gas supply interruptions. This paper builds and applies a detailed publically available integrated electricity and gas model for the EU-28. We use this model to examine a number of hypothetical scenarios where gas supply routes are interrupted for yearly periods and the impacts on power system operation and gas flow in Europe observed. Model results show that interruption of Russian gas supply to the EU could lead to a rise in average gas prices of 28% and 12% in electricity prices. When supply from North Africa was removed all Southern European states were affected heavily, Spain in particular saw large increases of 30% in gas prices with a corresponding rise of 18% in electricity prices as a result. In addition to supply interruptions, all gas storages were removed from the model to examine the importance of gas storage infrastructure. This resulted in an average increase in power prices of 6% across Europe. These additional insights offer an increased understanding of the interplay between the gas and power systems and identify challenges which may arise when seeking to understand energy systems as a whole. [ABSTRACT FROM AUTHOR]

Domestic gas prices in Russia are substantially lower than export netback prices. The Russian government aims to increase the domestic price level in the long term. The objective of this paper is to analyse the long-term effects of higher gas prices in Russia on the European gas market. The analysis is based on a modified analytical and a numerical Hotelling model. The main findings are as follows. Under a price elasticity of demand equalling −0.5, a 70% increase in the domestic gas price in Russia results in an annual average reduction in domestic gas consumption of 116 bcm. The export supply to Europe could be affected via two channels: (i) a stock effect and (ii) scarcity rents. The results show that in the presence of a stock effect with an elasticity equalling unity, the annual average increase in the export supply to Europe could account for 33.7 bcm. Although Russia may not face a resource constraint in the short and medium terms, scarcity effects could become more relevant in the future. A reduction in domestic gas consumption could reduce the future scarcity rent, implying a higher potential for exporting gas in the long term. Overall, total gas consumption in Europe could annually increase by 17.5 bcm on average. As the stock elasticity increases, so does the increase in total gas consumption. Furthermore, the results show that increasing the domestic gas price is associated with an annual average increase in the export tax revenue from gas of 38.4 billion USD and an annual average reduction in the domestic gas subsidy of 34.1 billion USD. [ABSTRACT FROM AUTHOR]