Berlin’s energy watchdog has warned that businesses and households will need to cut gas use even further if Germany is to avoid an energy crisis next winter.
The head of the Federal Network Agency, Klaus Müller, said Germany’s power crisis was “not over” and said much depended on whether next winter would be colder than last year.
“The danger of gas shortages still exists,” he told the Financial Times. “It depends a lot on whether we continue to curb the use of gas and ensure a diversified supply to Germany. And there are risks.”
These include China’s economic recovery, which is accelerating “faster than many expected”, driving demand for gas with “results in terms of prices”.
The winter of 2023-24 will also be the first time Germany has experienced “no Russian pipeline gas at all”, while global supplies of liquefied natural gas (LNG) will “slow significantly this year and next.” is not expected to increase to
Mueller’s comments are in line with those of the International Energy Agency’s Fatih Birol, who warned last month that Europe has yet to win its energy war with Russia, despite a significant drop in gas prices.
“It’s dangerous to be overconfident about next winter,” Birol told the FT, adding that Europe could not afford to lose interest in the conservation and development of renewable energy.
The Neptune floating storage and regasification plant arrived at the Lubumin industrial port in northeastern Germany in December last year © Danny Gohlke/AFP/Getty Images
Germany was one of the biggest victims of the turmoil in Europe’s energy markets caused by Russia’s war in Ukraine. Before the invasion, her 55% of gas was supplied from Russia. These supplies virtually disappeared in the months after fighting broke out, prompting a rush for replacements.
A decline in Russian pipeline imports pushed wholesale gas prices to more than €300 per MWh last summer, up from around €20/MWh before the war. This has forced some of Germany’s energy-intensive companies to suspend production, prompting warnings of blackouts and gas rationing for industrial customers.
However, Germany succeeded in reconfiguring its energy system to deal with the crisis, in what Müller described as a “peculiar achievement”.
Berlin procured new LNG from the Middle East and the US, increased pipeline gas imports from Norway, the Netherlands, Belgium and France, and built its first LNG import terminal on the North Coast. German petrol tanks are now 64% full, a much higher level than a year ago.
Significant energy savings have also been realized in businesses and homes, with the industry using 20% less gas this winter. “They’ve done it through fuel switches, innovations to be really proud of, and of course very painful production cuts,” Muller said.
But he said he was confident they could go further. hmm,” he said. “I think we can and should do more. [to save gas]”
A lot depends on the weather, he said. “We were very lucky to have had a very mild winter in Europe. [in 2022-23],” he said.
The energy crisis has caused a major restructuring of the German business environment. The government nationalized gas importer Uniper, lost cash when Russian supplies stopped, and bought Gazprom Germania, the German arm of the Kremlin-controlled gas company.
Negotiations are also underway to acquire the German subsidiary of Tennet, the Dutch state-owned grid operator. Müller said negotiations were ongoing and that the German and Dutch governments were eager to reach an agreement. “This is welcome because it will help accelerate the construction of the grid,” he said.
Some executives in Germany’s energy industry have expressed concern about the state’s growing role in the sector and hope the government will clarify its long-term plans for holding companies such as Uniper.
Utilities RWE CEO Markus Krebber said in a recent magazine interview that private companies are at a competitive disadvantage compared to state-owned companies in this sector.
Müller said it was unlikely the government would pull out of Unipar and SEFE anytime soon. “Both companies’ business models are based on importing Russian pipeline gas, which is still in intensive care,” he said. “It’s too early to release them.”
