Energy Transition

Germany takes new steps to tackle the energy crisis

Russia accounted for 55% of Germany's gas imports in 2021.

Russia accounted for 55% of Germany's gas imports in 2021. Image: REUTERS/Wolfgang Rattay

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Germany

  • Germany has decided to replace all Russian energy imports - most notably natural gas - by as soon as mid-2024.
  • Russia accounted for 55% of Germany's gas imports in 2021 - a level that declined to 26% by the end of June 2022.
  • Germany plans to meet this challenge through a combination of measures included diversified sources of LNG imports, levies and extended the life of its nuclear power plants.

Germany has decided to replace all Russian energy imports, most notably natural gas, by as soon as mid-2024, a Herculean effort given Europe's top economy depends on Moscow for the fuel to power its industry.

In 2021, Russia accounted for 55% of Germany's gas imports, a level that had declined to 26% by the end of June 2022, due to significantly reduced flows via the Nord Stream 1 pipeline, which is operating at just 20% of capacity.

Since a landmark strategic shift outlined in a speech by Chancellor Olaf Scholz, Germany has taken numerous measures to tackle the challenge while softening the blow to its economy and citizens.

Here's an overview:

LNG

- Germany has leased four floating storage and regasification units (FSRUs) to quickly start importing liquefied natural gas (LNG) directly and replace Russian volumes.

- Two of the FSRUs will be stationed in Wilhelmshaven and Brunsbuettel, able to jointly handle up to 12.5 billion cubic metres a year. Efforts to build fixed terminals at those two locations at a later stage are also underway.

- The economy ministry has identified the Elbe river port of Stade and Lubmin on the Baltic Sea as the two other recipients of the remaining FSRU.

- Germany is also in talks with Qatar and Canada, among others, to raise LNG imports in the medium term. German utilities have existing supply agreements with Qatar, Australia and the United States.

LEVIES

- Germany has imposed two levies, one to help fund the higher gas procurement costs which importers are facing to replace lower Russian volumes, and one to beef up efforts to fill the country's storage facilities.

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- The gas levy will cost an average family of four an additional annual 480 euros ($482) a year based on annual consumption of 20,000 kilowatt hours, while another 13 euros come on top due to the gas storage levy. Both will kick in from Oct. 1.

- To protect consumers somewhat, Germany has announced a sales tax reduction for a limited period, which will cost the state 10 billion euros.

COAL

- Germany has passed a law to bring back oil- and coal-fired power plants into the country's energy mix in case of a critical gas supply situation. This could add 10 gigawatts of reserve capacity on an interim basis in a deal that runs until March 31, 2024.

NUCLEAR

- Germany's grid operators are carrying out a stress test on behalf of the government to see whether the lifetime of Germany's three remaining nuclear plants, which account for 6% of the country's power mix, can be extended.

- The reactors - Isar 2, Neckarwestheim and Emsland - are operated by E.ON, EnBW and RWE, some of which have said a short-term lifetime extension beyond Dec. 31, 2022 is possible without ordering new fuel rods.

STORAGE

- Germany is trying to fill its gas storage facilities and has set targets to reach 85% by Oct. 1 and 95% by Nov. 1. Storage levels stood at 77.79% on Aug. 16.

- Its gas market operator Trading Hub Europe has received 15 billion euros from state lender KfW (KFW.UL) to fill storage facilities faster, a government source said in June. read more

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BAILOUT

- The government has agreed a 15 billion euros bailout for Uniper (UN01.DE), Germany's largest importer of Russian gas, to ensure it can continue to operate and fulfil its contracts.

- Aside from taking a 30% in the group, the government has also said it stands ready to provide further support if operating losses due to lower gas flows and sky-high prices exceed 7 billion euros.

SAVINGS PLEA

- The government and its network regulator are regularly asking citizens and companies to reduce gas consumption. Consumers need to cut the amount they use by at least 20% to avoid the country from entering a gas supply emergency, at which point rationing would kick in.

RATIONING

- Network regulator BNetzA, which would be in charge of rationing, is collecting data from around 2,750 companies to determine gas usage and draw up a list of which sectors would have to be switched off first.

- BNetzA has said it is trying to put together a shutdown list for industry based on six criteria, which include a company's size, economic damage, and how long it would take to restart specific facilities.

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