German utilities call for emergency funding amid energy crisis

The Russian invasion of Ukraine continues to have major repercussions for Germany’s energy sector, leading to growing concerns about increasing prices and limited liquidity. The German Association of Local Utilities (VKU) is now calling for government assistance in the form of financial security, namely emergency and bridging loans from state development banks, as well as energy tax cuts. “In addition to large suppliers and energy traders, municipal utilities are also systemically important and must therefore be jointly protected against imbalances due to short-term price fluctuations,” the German Association of Local Utilities (VKU) said in a statement. Securing liquidity is essential so that “higher prices for raw materials can be paid, default obligations can be assumed and futures trading transactions can be secured with collateral” under adverse circumstances.

The Russian invasion of Ukraine and the resulting sanctions have exacerbated a global energy price increase “of unprecedented magnitude” that began last autumn, said VKU head Ingbert Liebing. A delivery or import stop could have serious consequences for the entire economy, he added. The German Association of Energy and Water Industries (BDEW), meanwhile, warned against cutting off Russian energy imports. “An embargo on energy supplies from Russia would have massive negative effects on our economy and on consumers [...] As of today, we can only partially replace the import of Russian natural gas,” said BDEW head Kerstin Andreae.

As part of its strategy to become climate-neutral by 2045, Germany plans to use natural gas as a bridging technology while phasing out nuclear power and coal. The country is among the world’s biggest gas importers, with some 94 percent of its gas consumption met by imports.