Commenting on the Federal Government’s third relief package, Kerstin Andreae, Chairwoman of the BDEW Executive Board, said while the relief package will help dampen enormous spikes in energy prices caused by the war, Germany can only invest its way out of this crisis in the medium and long term. The BDEW Federal Association of Energy and Water Management represents over 1,900 companies.
Andreae said, ”We therefore need smart approaches that advance Germany as a business location and the energy transition. In addition to investments in the massive expansion of renewable energies, this also includes gas, hydrogen and hybrid power plants, LNG and network infrastructure, storage technologies and electrolysis systems.
“These investments in the energy transition must not be reduced by an excess profit tax. In addition, it must be examined whether a reduction in network charges can also be achieved by using the federal subsidy for the EEG levy account.”
The package includes support for “energy-intensive companies that cannot pass on cost increases to their customers, combined with premiums for efficiency and substitution investments”, without specifying more details.
Andreae added that “speed is the order of the day”.
“The energy suppliers pre-finance energy quantities and, in view of the enormous increase in energy prices, need sufficient liquidity support to be able to guarantee this advance payment and thus security of supply,” she said.
Alongside an electricity price brake, financed by profits from energy companies, Chancellor Olaf Scholz said it will introduce a revenue cap for electricity producers who are not dependent on gas, which is currently expensive, for electricity production.
The carbon dioxide (CO2), due to be increased by €5 per tonne from January 1, 2023, will now be postponed to 2024, meaning it will remain at €30 per tonne of CO2.
Natural gas is the second most important primary energy source in Germany’s energy mix, after petroleum.
Germany will continue to be highly dependent on imports of natural gas. It is among Europe’s biggest gas market, along with the UK and Italy. More than 90% of natural gas is used as a source of heating.
Reduced gas flows from the shutting of Nord Stream 1 could lead to gas shortages of 9% of national consumption in the second half of 2022, 10% in 2023 and 4% in 2024, which would be worse in the winter months, and would likely fall on firms, given legal protections on households, according to the IMF.
Last week Germany’s government announced it will take delivery of a fifth floating storage regasification unit (FSRU) in a bid to strengthen its energy security and reduce reliance upon Russian natural gas – but it won’t come on stream until the winter of 2023-24.
Having signed a term sheet, Excelerate and ENGIE will work alongside E.ON and Germany to support development of the FSRU import terminal, which will have a capacity of around 5bcm (billion cubic metres) of gas per year.