According to Markus Krebber, CEO of RWE, one of Germany’s largest energy companies, the European gas supply does not have a buffer zone, which means that only an unexpected major failure in the system can cause problems in the gas supply.
Although European Union countries have largely abandoned Russian natural gas and, as of November, EU gas deposits were 99% full, unforeseen events could still call into question the reliability of gas supply.
“We are not yet where we need to be because our energy system should not function without a buffer zone,” Krebber told the Financial Times.
RWE’s CEO explained that security of supply issues could arise if a pipeline or liquefied natural gas (LNG) terminal failed. Therefore, according to Krebber, gas import capacity must be improved in order to completely replace Russian gas.
Gas prices rose sharply last year after Russia’s full-scale invasion of Ukraine. In August 2022 the price of gas exceeded 300 euros per megawatt hour, almost ten times higher than normal. The price has since fallen and on Monday this week the price of gas on the Dutch TTF exchange was around 42 euros per megawatt hour.
The gas stored in EU gas depots is enough to fully cover two and a half months of winter consumption, but overuse of reserves would make it more difficult to fill gas depots for next winter.
Although RWE, which until now mainly traded in natural gas, is expanding its investments in renewable energy, Krebber warned that Germany needs new investments in energy infrastructure.
According to him, Germany may not meet the government’s plan to phase out coal from electricity production by 2030 if the government does not encourage investment in gas-fired power plants capable of running on hydrogen.
Krebber stressed that Germany’s energy security currently relies on nuclear and coal energy and that it is planning to abandon both at the same time. It would therefore be necessary to build new gas-fired power plants that operate when wind energy production is not sufficient. These stations could also run on hydrogen.
Since such power plants would only operate for short periods of time, it would be difficult to justify their construction from a commercial point of view without state support.
“The government hasn’t provided a framework for this yet. If it doesn’t happen this year or next, it would be difficult to phase out coal by 2030,” Krebber said.
2023-12-04 13:50:00
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