Germany’s gas storage industry calls for strategic crisis reserve
Clean Energy Wire
Germany faces mounting calls to create a national gas reserve for emergencies as the Iran war drives prices higher and storage levels at the end of the winter are low. The country’s gas storage operator association INES called on the government to create a “strategic resilience reserve” with at least 78 terawatt-hours of natural gas, which would be able to cover a 90-day interruption of pipeline deliveries from Norway, Germany’s most important supplier.
"Normal winter temperatures have spared us a serious test this year. However, low storage levels combined with the current geopolitical situation have shown how vulnerable our gas system is,” said INES head Sebastian Heinermann.
“Higher storage levels significantly strengthen the resilience of the system: they buy time, cushion price spikes, and increase security of supply in the event of a crisis,” INES said, adding that building up a reserve of this size would cost between two and four billion euros, depending on gas prices.
Germany’s gas storage levels stood at 75 percent at the start of winter in November, which INES said was lower than in previous years and insufficient to prepare the country for a very cold winter. Freezing temperatures pushed gas storage levels to just above 30 percent by the end of January, comparable to the levels experienced during the winter of 2021-2022, just before Russia launched its full-scale invasion of Ukraine. Currently, storage levels reach just over 20 percent.
Germany's grid agency has said that storage levels are no longer the sole decisive factor in whether supply is secure because LNG terminals at the North and Baltic Sea coasts “give Germany an additional degree of security.” Before the US/Israeli attack on Iran, Germany's economy ministry has reacted with caution to calls for a strategic reserve and insisted that filling storages should be driven by markets and not the state.
German wholesale gas prices spiked by 50 percent to around 50 euros per megawatt-hour following Iran’s attack on Gulf states and its closure of the Strait of Hormuz, through which about 20 percent of the world’s oil and gas passes. Earlier this week, Germany reactivated its task force to monitor gas prices amid news that Qatar had halted its LNG operations following Iranian attacks.