The head of the network agency, Klaus Müller, is of the opinion that industry and households must save even more. In the weekend interview he explains: “Germany needs a jolt moment”.
Munich – The fear of a gas shortage has driven stock market prices to a record high of around 250 euros per megawatt hour. At the same time the French power generation collapsed – and winter is coming. If there is an emergency, Federal Network Agency boss Klaus Müller will take over the helm. In an interview with Merkur.de von IPPEN.MEDIA the head of what is probably the most important authority at the moment explains whether Germany will make it through the winter – and what consumers need to be prepared for now.
Mr. Müller, only 20 percent utilization on Nord Stream 1, but 80 times more liquefied natural gas (LNG) via Belgian terminals. Can we get through the winter?
We calculated different scenarios. With an average winter and 20 percent deliveries from Russia, we would need at least 20 percent savings in all areas and an additional 10 to 15 gigawatt hours of gas flows to survive the winter. It’s not impossible. In addition to the four floating LNG terminals chartered by the federal government, there are a number of private initiatives. There are also good talks with France. If we can do all that, we have a chance to get through this winter and next. If we don’t make it, it can be difficult.
What about our other neighboring countries?
Norway, Belgium and the Netherlands have been of great help to Germany over the past few months, and I strongly advocate that we also meet our European solidarity obligations. We have a European gas market in which Germany occupies a special place because of its geographical location. That is why we have a great interest in being able to move further in this market.
What if Russia stopped supplying gas at all?
We would need to enable additional savings or gas flows beyond our already challenging assumptions – and both are going to be really difficult. Or Peter would have to come to our rescue with a much milder winter. However, it would not do us any good to shut down the storage very deeply because we also have to think about the winter of 2023/2024.
Gas crisis: LNG trade goes towards Europe and Germany
European gas prices have increased tenfold even for futures – but is there enough LNG on the world market?
we see that the international LNG trade has taken a completely different direction. For years, the ships primarily went to Asia. Because of the prices, deliveries are now going to Europe and Germany. If we look three to four years into the future, we see that there are numerous initiatives in the USA and Canada to export more LNG. To be honest, it has to be said that a lot of it is fracking gas. And new sources are also being tapped in Africa and the Arab world. But that is more a question of years. But now we have to see how we can get by with what we can get over the next 24 months.
In July alone, German gas-fired power plants converted four billion kilowatt hours of gas into electricity, which is the annual requirement of 200,000 four-person households. Don’t we have to stop this?
We need a certain amount of electricity generation from gas to keep the grids stable, and some generate heating energy for residential buildings, so it is particularly protected. Anything beyond that is a sore point, but it can be explained: France has got through defects in its nuclear power plants significant power supply problems. This is why the prices paid there are so high that it is worthwhile for German power plants to generate electricity from gas, despite the horrendous costs. That is correct from the point of view of neighborly ties – but in terms of gas supply this is not a good development. Therefore, the coal-fired power plants should be connected to the grid again instead. The ordinances are issued step by step and the material is stored so that the power plants are then ready for use. That has already happened with hard coal, with lignite it will come in the autumn.
Energy crisis: “There are companies that have understood that it is an act of solidarity”
Next to Uniper some other companies, such as OMV, have applied to be included in the levy to replace Russian gas supplies. Does that mean higher allocation costs in January?
There are fixed dates when companies can submit their applications, which means we know how much gas has failed in total. What we don’t know is how replacement prices will develop. It depends on whether the contribution, which is recalculated every three or six months, decreases or increases.
Corporations like Austria’s OMV are earning a lot from the energy crisis, doubling their profits in the first half of the year. How do we prevent payers from financing corporate profits?
The levy ordinance was intended to prevent Uniper from becoming insolvent, because that would have swept away hundreds of municipal utilities and their customers. However, a rule only for Uniper would not have been possible under the principle of equal treatment, which is why all companies whose deliveries have failed have a legal claim. There are companies that have understood that it is an act of solidarity to waive the levy without their own need – that could be a role model for others.
In the future, however, we have to expect that gas customers will finance group profits with the current structure of the levy – because a solvent company could meet its delivery obligations. Is that fair?
The question of justice is a political discussion, and the Federal Network Agency has no mandate.
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Gas crisis: heating with electricity is more inefficient and more expensive than with gas
Let’s turn to electricity: Experts warn of blackouts due to the large sales of fan heaters.
Heating with electricity is many times more inefficient and therefore still far more expensive than with gas. That’s why the purchases can only be explained by the concern of running out of gas in winter. However, households are particularly protected – I am optimistic that they can be cared for this winter and next. If the fan heaters are not connected to the mains, they will not cause any problems.
France hopes to get its power plants back online over the winter – what about the rest of the world?
Of course, the situation can only be viewed in European terms. The second stress test will show where we stand, the results of which we expect in a few weeks.
Households expect horrendous additional costs – as consumer advocates: Where is the line between price signal and threat to existence?
There will be people who are angry about the prices but can cope with it. But we write every day People who can no longer bear the costs. The reduction in VAT is a first step, the federal government has also announced further targeted measures that are to be decided in the next few weeks.
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Energy Crisis: “The price signal that’s already on the way is very strong and harsh.”
Economists criticize the VAT reduction as contradictory: First the state makes it more expensive, then it becomes cheaper across the board. How can we encourage people to save without overburdening them?
The price signal that is already on the way and will reach many people’s mailboxes in the next few weeks is a very strong and hard one. We are now seeing significant savings in industry – we have to wait and see for the heating season in private households. The reduction in value-added tax is only a first step: I clearly understood the federal government to mean that the third relief package would be aimed precisely at those in need.
On the subject of price signals: gas is being paid for more than 20 cents and electricity for more than 50 cents on the exchanges – will consumer prices reach this level?
That depends on the contract constellations of the suppliers and their market power – another reason why Uniper was saved, because it has many small customers. Exchange prices are dampened by other price components, but many customers are already feeling gas prices tripling – and I can’t rule out the possibility of more.
They also warned of the coming two winters. What is your forecast for the next few years?
When it comes to prices, you can only look into a crystal ball. We can see that more supply is being created worldwide, but no one can say how this will affect prices. But what we calculate is how much we use our storage this winter. Emptying the stores completely by next spring would definitely be too short-sighted. We also have to get through the winter of 2023/2024. Robert Habeck assumes that we can then be independent of Russian gas in the summer of 2024 – that’s the target for now.
Do you share Habeck’s view?
I think it’s up to us, it depends on whether Germany feels the jolt moment. I see that the construction of the first two LNG terminals has started in Brunsbüttel and Wilhelmshaven, we see a lot of people in the energy companies and in the authorities who are doing everything to improve our supply, we see the savings efforts in industry and in private households there is an enormous demand for advice on saving energy. This gives me hope that we are not powerless – but everyone has to participate.