Utilities call for state money to fund decommissioning of German gas grid

Germany’s local utility association VKU has called for public support to finance the decommissioning of the country’s natural gas grid and avoid high fees for customers, news agency dpa reported in an article published on news website n-tv. “Once it becomes clear that a smaller customer base and rising grid costs will make prices rise to levels that are so far unheard of, we will have to talk about whether we need a state-funded compensation account,” VKU head Ingbert Liebing said. “The state funds the ramp-up of the new [energy] world with tax money, but retiring the old world also costs money,” Liebing argued.

The compensation account could be used to bridge the gap caused by retiring grid infrastructure and shortened amortisation periods, meaning the utilities wouldn’t have to raise their fees to fully recover their costs, the lobby group argued. “Gas customers would thus be spared painful cost increases,” Liebing said.

Amid the transition towards a climate neutral energy system, many local utilities are faced with the decision whether to retire and deconstruct their natural gas grids or to retrofit them for transporting “green gas,” such as hydrogen made with renewable power. However, retrofitting is not always an option and as more and more people become disconnected from the gas grid thanks to heat pumps or district heating solutions, the per capita costs for grid users would have to rise accordingly. A compensation account could help make these price rises manageable for customers and support utilities in transitioning away from a fossil energy supply, VKU added.

The economy and climate action ministry (BMWK) earlier this year released a set of proposals for managing the transition of Germany’s gas grid, which currently has a length of about 500,000 kilometres, and asked stakeholders to give their opinion. VKU head Liebing argued the proposals were too focused on retiring infrastructure and did not spell out how retrofitting or parallel construction of electricity grids to supply heat pumps should be financed. The current gas grid is primarily used for heating homes or for supplying larger industrial customers that use natural gas in their production processes, which can often only be replaced with hydrogen-based procedures.