The Federal Ministry of Economics is considering whether capacity bookings for gas storage facilities should be linked to the obligation to physically store the gas.
Uniper supports a filling obligation and points to France, where storage operators use a regulated pay-as-you-go system and customers are obliged to use booked capacities.
Sebastian Heinermann from the Ines Association calls for a timely discussion about storage obligations in order to put storage filling on a reliable basis.
Trading Hub Europe GmbH has advertised long-term options in order to flexibly access gas quantities at a defined price.
Berlin. The low gas storage level remains a problem for Germany's supply. The filling level is still below the average value of previous years.
In order to achieve higher filling levels in the future, the Federal Ministry of Economics is open to demands that the booking of storage capacities be linked to the obligation to physically store the gas. “This is a point that we should discuss,” said Bernhard Kluttig, the responsible department head, recently at the Handelsblatt annual gas conference in Berlin.
Capacity bookings have often proven to be deceptive in the past. Federal Economics Minister Katherina Reiche (CDU) has also occasionally pointed out in recent weeks that the storage facilities are well booked.
But that is no guarantee that the bookings will actually be used. Figuratively speaking: someone throws a towel on the lounger by the pool, but doesn't use the lounger. Would it make any difference to link bookings with the obligation to actually store gas?
Uniper refers to France
Approval prevails in the industry. The federally owned energy company Uniper says that a filling obligation could be a sensible component and, if designed correctly, help to fill the storage facilities more strongly at the start of winter. “Other European countries are already using such models,” said a spokesman. “It is crucial that it is clearly regulated who is obliged, what level of protection should be achieved and how the obligation interacts with the maintenance of sufficient storage capacities.”
Uniper, which as the most important German gas importer and largest gas storage operator looks at the question from two different perspectives, thinks beyond the filling obligation and has long been propagating the French model. In France, some of the economic risk is taken away from storage operators. If their income is not enough to cover the costs, the gap is closed through a pay-as-you-go system. The system is financed with a surcharge on the fee that consumers have to pay for using the gas networks.
Significant challenge next year
As a result, the storage operators generate a “regulated return” – similar to the operators of electricity and gas networks. At the same time, the customers of the storage operators are obliged to actually use the booked storage capacities. They must not expire unused.
Sebastian Heinermann, head of the Ines association, in which the storage operators have come together, said that the Federal Ministry of Economics's openness to structural reforms in the storage market is to be welcomed. “We should conduct the discussion about storage obligations suggested by the ministry as soon as possible and concentrate on their specific design in order to put storage filling on a reliable basis as quickly as possible,” he said.
Heinermann predicted that the expected severe emptying of German gas storage facilities next winter and the subsequent planned build-up of a strategic gas reserve would once again pose significant challenges for filling next year.
A few months ago, Minister Reiche announced that she wanted to build a strategic gas reserve. However, the reserve should be viewed separately from market events and only be kept for exceptional crises, such as a disruption in the gas supply infrastructure. The legal framework is still being worked on. The reserve should be available from winter 2027/2028.
Gas storage has changed fundamentally
David Bothe from the consulting firm Frontier Economics, which specializes in energy issues, told the Handelsblatt that it couldn't hurt to take a closer look at the advantages and disadvantages of a storage obligation. Such an obligation encroaches on the entrepreneurial freedom of gas traders and sets concrete guidelines for their procurement strategy. On the other hand, experiences from other European countries show that such instruments could certainly work.
Frontier Economics analyzed the effect of filling level specifications for gas storage facilities in a report published at the end of October last year for the Federal Ministry of Economics.
With the war in Ukraine, gas stocks have changed fundamentally. In the years before Russian supplies of pipeline gas ceased, the filling of the storage facilities followed the laws of the market: gas prices were regularly lower in spring and summer than in autumn and winter due to lower demand. That's why it was worthwhile for gas traders to start storing gas in the spring so that they could sell it again at a premium in the fall.
But this mechanism no longer works. The difference between summer and winter prices, the so-called “summer-winter spread”, has even reversed in some cases: gas is sometimes more expensive in spring and summer than in winter. This eliminates the incentive to store gas in summer.
THE has advertised long-term options
This is because the market has become more global. After the loss of Russian pipeline gas deliveries, Germany is more dependent on the import of liquefied natural gas (LNG), which is in demand worldwide all year round. This causes the seasonal differences to become blurred. In addition, the closure of the Strait of Hormuz led to high gas prices in the summer.
In recent weeks, Reiche has taken initiatives to increase filling levels. In September, it ordered the federally owned gas supplier Sefe to purchase eight terawatt hours of gas to fill the storage facilities.
In addition, Trading Hub Europe GmbH (THE) recently advertised so-called Long Term Options (LTOs). By paying a fee, THE secures the right to flexibly request quantities of gas from the contractual partners at a predefined price if necessary. This creates an incentive to keep gas stored for longer.
However, the ministry does not decide on the use; rather, the decision lies in the hands of THE shareholders. These are the operators of the gas pipelines in Germany. THE has the legally defined role of market area manager for the German gas network. THE organizes the balancing of gas quantities and ensures the safe, stable operation of the network.
