As the nation prepares for a further deterioration in energy supplies this winter, Germany wants to encourage businesses and energy providers to conserve natural gas by creating incentives for them to make surplus gas accessible to the market.
Major suppliers and customers will be able to auction off their unused gas under the system that will go into effect this summer, and winning bidders will be compensated for the fuel they supply, according to a statement released on Thursday by the Economy Ministry. The government increased the risk level in its national gas emergency plan to the second-highest “alert” phase on Thursday, which is when the policy, which was announced on Sunday, was detailed.
After Russia cut supply on the crucial Nord Stream pipeline by more than half last week, Germany is struggling to conserve gas. Germany hopes to fill its storage facilities to 90% capacity by November, up from the current level of 58%, according to the ministry. Lower Russian flow rates, however, will make it more challenging for Germany to meet its goals.
There is currently a disruption in the gas supply, which is leading to a significant deterioration in the gas system situation, the ministry said in a statement.
Peter Adrian, president of the association of German chambers of commerce and industry, welcomed rewarding gas savings.
But now you have to get started quickly, he said. In addition, companies should be allowed to switch from gas to heating oil or coal in the short term. So far, however, environmental regulations have stood in the way.
Companies will register their offers to supply gas at Trading Hub Europe, Germany’s gas-market manager, as part of the auction procedure. Trading Hub Europe will accept the least expensive offer if there are supply shortages. According to the announcement, payments to industrial businesses will be based “purely on the energy price.”
Additionally, Germany will give Trading Hub Europe the liquidity it requires to buy more gas on the market and fill storage facilities.
The model is intended to ensure that as many gas quantities as possible are available for any bottleneck situations in the coming winter, the ministry said.
The increased alert declared on Thursday intensifies market surveillance and enables the reactivation of some coal-fired power plants. The government announced that it will postpone considering the possibility of passing legislation that would allow energy companies to pass cost hikes on to homeowners and businesses.