Effort and cooperation show effect: gas supply passes stress test

Storage levels at historically low levels, trading prices higher than ever, partial reversal of the With the halt in natural gas supplies from Russia, an extreme scenario became real for Germany this winter. However, a gas shortage did not occur. “Only due to the mild winter, consumption-conscious gas customers, the effort and cooperation of all parties involved, the supply could be secured,” said FNB Gas Managing Director Inga Posch. “The technical possibilities of the transmission system operators have been stretched to the limit. We can’t give the all-clear for next winter either.”

The gas emergency plan alert level declared by the BMWK for Germany on June 23, 2022, applied throughout the winter half-year. Only through closely coordinated action between the federal government, authorities, utilities and pipeline network operators, as well as the savings efforts of all economic players and citizens, was it possible to compensate for the loss of what had until then been the most important supplier of natural gas.

Another decisive factor that had a favorable impact on security of supply was the consistently mild temperatures in the winter of 2022/2023. Both households and industry used significantly less energy than in previous winter periods.

Major network engineering challenge due to reversal of gas flows

Transmission system operators (TSOs) have been instrumental in enabling rapid diversification of supply sources this winter through their network flexibility and ad-hoc measures. This included in particular the import of gas from Norway, the Netherlands and Belgium. For the first time, Germany also imported odorized gas from France and Switzerland. Imported liquefied natural gas (LNG) volumes from the Netherlands, Belgium, France and the UK increased by 40% year-on-year.

With the commissioning of the Baltic Pipe in November 2022, export volumes to Denmark have been significantly reduced. In the period from December to March, the first three German floating regasification terminals for LNG also began operations in Wilhelmshaven, Lubmin and Brunsbüttel. The Wilhelmshaven Link (WAL) was completed in just 10 months in time for the commissioning of the terminal in Wilhelmshaven.

Major challenges included using the largest import station in Mallnow as an export station and securing large export volumes to the Czech Republic. Overall, gas flows completely reversed from east-west to west-east. The compressor stations played a central role in this. They were used to the technical maximum.

Legal storage requirements met

In addition to developing additional sources of natural gas supply, one of the main instruments for ensuring security of supply was to achieve the legally prescribed fill levels for gas storage facilities. In 2022, THE procured and stored nearly 50 TWh. By March 31, 2023, just under 12.5 TWh of this had been sold, while the remaining volumes remained in storage.

Provision through Long Term Options (LTO)

As in previous years, the necessary hedging requirements for the winter period were coordinated with the BMWK and the BNetzA at an early stage and put out to tender for the first time in September 2022. As the bids for the LTO product were well into the three-digit million euro range and thus exceptionally high, a second invitation to tender was issued for the same amount for the periods January to March 2023, which revealed a significantly improved bid situation. However, prices remained at a high level. To avoid an unreasonably high burden on network customers, only the offers for February and March were accepted in full.

Prices recover after record high in August

After the index price at the virtual trading point initially developed as expected for a summer period, a sharp increase set in towards July, ending in a record high of €311.10/MWh on August 26. Index prices then fell to €74.75/MWh by the end of the year and finally to €43.62/MWh by March 31.

Further optimization

Russia’s war of aggression on Ukraine will continue to be felt on gas markets. Under certain circumstances, such as particularly low temperatures next winter, gas shortages could still occur. “As part of their responsibility for transport, the TSOs will continue to make their contribution to security of supply in close cooperation with all stakeholders. We must not rest on our successful crisis management and not slacken in our efforts to diversify and save,” Posch said.

Dr. Thomas Gößmann, FNB Gas CEO: “The changes on the gas market make it clear how urgently we need to drive forward the transformation of our energy supply, above all the ramp-up of the hydrogen economy, so that German industry remains competitive on the global markets and energy remains secure and affordable for everyone. What we have achieved this winter together with all those involved makes me confident that we will also successfully master this task.”