23 Dec 2021 8:15 pm
All over Europe, electricity and gas prices in free trade are climbing to ridiculous heights. Germany will have the biggest problems with this, at the latest when the nuclear power plants go offline. The first basic supplier is already refusing to take over customers of insolvent gas suppliers.
An analysis by Dagmar Henn
The electricity and gas markets crunch and crash. Just yesterday another gas supplier was reported that had stopped supplying it; today came the first Messagethat a replacement supplier refused to deliver to customers. It was about Mitgas, the Central German gas supply, which delivers in Saxony, Saxony-Anhalt, Brandenburg and Thuringia.
Mitgas said the 5,000 customers queuing for replacement supplies were ten times what it would normally be; the delivery is not economically reasonable. They only offered new customer contracts with significantly higher tariffs to those abandoned by their suppliers.
If a gas or electricity supplier stops supply, the regional basic supplier is obliged to continue to supply customers for a period of three months, based on the replacement supply tariff, which is higher than the regular tariff, but far from the current purchase prices on the energy markets reproduces. The regional basic supplier is the largest provider in each case. In many cases these are still municipal companies. In case of Mitgas but it is a daughter of E.on, one of the largest German energy groups.
In those areas where a local supplier actually still dominates the market, the increasing failures are a manageable problem. Stadtwerke München, which as the largest municipal energy supplier still supplies far more than half of the city, have no problems coping with the replacement supply cases, which they say are in the upper four-digit range, although they also supply these customers via the spot market have to.
This may be different in areas with a very fragmented electricity or gas market. A supplier who is the basic supplier with only a third of the local customer base gets into financial difficulties much more quickly. In these areas, insolvency cascades could occur because no single utility is big enough to absorb failures.
In case of Mitgas is basically absurd and only conceivable because large corporations like Eon are allowed to split up into hundreds of subsidiaries and grandchildren. Mitgas is a wholly owned subsidiary of send, and send turn from E.on. E.on is not only currently the operator of three nuclear power plants that will go offline at the turn of the year, but is also a co-investor in Nord Stream 2.
For gas as well as electricity consumers, things should only get really exciting from January 1st. Because originally Nord Stream 2 was planned, among other things, to replace the share of nuclear power plants in the electricity supply when they are switched off. The construction time was calculated for this point in time. It was not planned that part of the current federal government believes that the project is in Russian and not primarily in German interests – Russia can sell its gas to China at any time – and therefore would prefer not to commission the pipeline at all. At the moment, in any case, there are almost eight gigawatts that the still existing nuclear power plants provide for power supply contribute, no replacement.
The consequence of this is that the electricity supply competes with the gas supply, and in the event of a bottleneck, the supply of the gas-fired power plants will have priority over the supply of the end users.
The Federal Association of Energy and Water Suppliers has now sounded the alarm because of the failing delivery companies. He points out that the basic suppliers would have to stock up on the spot market for the additional customers, and demands: “The Federal Government should therefore arrange that, under certain conditions, energy suppliers can, if necessary, temporarily fall back on interest-free, earmarked loans from the Kreditanstalt für Wiederaufbau.” More expensive new customer contracts should be made possible in a legally secure manner. And: “In addition, the tax burden on energy must be reduced, low-income households must be relieved through social policy instruments.”
The said tax and duty burden is the highest in Europe. Part of this is the CO2 tax, which is also to be increased in January and which already contributed to a noticeable increase in energy prices last year.
In the past few years, Germany had to import electricity from neighboring countries, especially during the winter “dark doldrums” (when both solar and wind power fail) in order to guarantee the security of the German grid. Now four nuclear reactors have been shut down for repairs in France, which significantly reduces the chances of being able to fill the gaps in the dark doldrums (here, too, one can ask oneself whether this is not a friendly greeting from Paris, knowing about the German problems) .
The energy supply risks come from two sides this winter: from the material (how much gas and electricity is available) and from the financial (how many suppliers are still failing or how they react Mitgas). And there is no real solution in sight because the federal government is arguing with Nord Stream 2 over geopolitical games. The US liquefied petroleum gas transporters will not change that, nor will theirs Route changed in order to head for the currently more lucrative Europe instead of Asia.
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more on the subject – Global Gas Wars: The Fun Is Just Beginning!