Frankfurter Allgemeine Sonntagszeitung from 11.11.2023

“There are no reserves in Germany's energy supply system right now.”

Markus Krebber

Mr Krebber, one year ago there was a lot of concern that Germany could run out of energy during the winter. This no longer seems to be a big issue. Are we taking this matter too lightly?

Germany is definitely in a better position than a year ago, the gas stores are full to the brim and we have built up a liquefied gas import infrastructure. But we have not reached a point yet where we can feel completely at ease.

Where do you still see risks?

The gas from the storage tanks alone will not be sufficient. In order to get through the winter, we need continuous further supplies. In a normal winter that should not pose any problems. However, since there are no reserves in the system, an extremely cold winter or the loss of individual suppliers could still lead to critical situations. There are no reserves in Germany's energy supply system right now.

Should we put on a woolly jumper and turn down the heating, just to be on the safe side?

It is always good to save energy wherever possible. Even just from a financial point of view. But I believe we won’t need to take any drastic measures to get through the winter. We would expect it to get tight on occasion only if the winter is going to be extremely cold, on individual days and in certain regions.

How dangerous would it be if the pipeline supplies from Norway were to get interrupted?

The gas supply from Norway is extremely important for all of Europe.

And what would happen if there were interruptions?

That is a purely hypothetical scenario that we shouldn’t envisage. The question then is also: How long would the interruption last? I don’t want to speculate about that.
In cases of sabotage as with the Nord Stream pipeline and possibly also with the Finnish Balticconnector pipeline, longer interruptions might occur. What would happen then?
Then the gas markets would be different from today.

Meaning much higher prices?

Yes, in such a case we would have far higher gas prices again and probably also supply shortages. That’s why it is so important to never just have enough supplies in the energy system to cover demand. There need to be sufficient reserves to cope with individual interruptions at all times. And Germany is not quite there yet.

We import fracked natural gas from the US, some of it via RWE port terminals. As a logical consequence, should we not allow fracking in Germany as well?

RWE does not produce natural gas and won’t do so in the future. Looking at this from an energy policy point of view, the question is whether the effort would be worth it. In terms of their high population density, Germany and Europe are similar to New England on the US East Coast, where there is no fracking either. It is only practised in the lower-density regions in the US, like areas of Texas, for example. I don’t think that it makes sense to have this fracking debate for Germany.

Where will the electricity for Germany come from in the future, with supply mostly relying on wind and solar power plants, whenever they do not generate enough power due to weather conditions?

There will be three main sources. For short periods with an undersupply of green electricity, batteries and storage systems will play an important role. Investments are continuously growing in this area. In addition, we need hydrogen-ready gas-fired power plants, in particular for the winter. It is also important to further integrate the European electricity markets. Solar- and wind-based electricity production often balance each other out across Europe.

So everything is under control?

I am not concerned about a stable supply with the current electricity mix, because coal-fired power plants are still in operation. But we want to shut those down soon, as we all know. Therefore, we must urgently build hydrogen-ready gas-fired power plants to replace them. Otherwise we will not be able to decommission the coal-fired power plants. However, I am far less worried about the expansion of renewables, which has taken on great momentum.

Is it not hypocritical to shut down nuclear power plants here and then import nuclear power from France in emergencies?

I am the wrong person to ask. That’s a political question that was answered in 2011 with the decision to phase out nuclear power, which had the backing of the majority of the public. However, some mistakes were made in this process. Replacement capacities should have been proposed and started to be implemented straight after the decision to exit nuclear power, the expansion of renewables should have been accelerated massively. This did not happen for the longest time and only the current government coalition of Greens, Liberals and Social Democrats are now rectifying the situation. And unfortunately we still don’t have the proper framework in place for building hydrogen-ready gas-fired power plants. It is still possible to get these plants built by 2030, but Germany is lagging behind.

However, RWE’s nuclear power plants are shut down and will remain so?

Our brief as stipulated in the German Nuclear Phase-out Act is to dismantle the power plants. Pipes are cut there on a daily basis. I can’t imagine that the political decision in this regard will ever change.

Is it not a matter of common sense, in times of the electricity supply running without any safety margins, as you say yourself, to stop cutting pipes?

That was a political decision.

Sure, but what is your view on this?

The subject of nuclear power is so politically charged that it can hardly be resolved consensually at this stage. Even if the decision were to be reversed now, we would have to expect years of legal action. There aren’t any valid operating licences any more. The effort needed to bring 3.9 gigawatts of generating capacity back onto the grid would be disproportional. I would use the political capital that would be required to do this more effectively: to expand renewables, grids, and backup capacities. If we had 10 to 15 gigawatts of nuclear capacity to reactivate, I would come to a different conclusion. But that's not the case.

Are we too dependent on Chinese producers when it comes to solar cells, wind turbines, batteries, and other key technologies for the energy transition?

If we want to achieve our energy transition targets in the western world, we will need more equipment than individual producing countries can deliver. Europe will need more factories for wind turbines and solar plants for that reason alone. We have also learned during the recent pandemic and in trade conflicts that supply chains can collapse. Therefore, production must be diversified. Lastly, acceptance for building large plants to drive the energy transition is better when people see jobs being created in their own countries as a result.

Does this mean you advocate government support for the European wind and solar industries?

Yes, the government can, for example, set minimum requirements in terms of local value creation when putting areas for developing offshore wind farms up for auction, one possibility being that a certain proportion of the installed wind turbines must be manufactured in Europe. I think that would make sense. At the same time, it is important that these rules won’t slow down the expansion of renewables. But yes, if we need additional capacities in the wind and solar industries, these should be built in Europe.

This week, the German government has agreed on an electricity price package to relieve industry after a long argument within the coalition. What is your view on this?

It is good that the German government will lighten the burden. The high energy prices are a genuine challenge for many companies. The subsidies will help them through the next few years, but the root cause of the high energy prices can only be eliminated by accelerating the expansion of renewables and backup capacities to the maximum. After all, a temporary tax relief won’t increase the electricity supply.

The electricity tax will be reduced, but it only accounts for around six per cent of the electricity price for industrial customers and large consumers are already mostly exempt from it anyway. So will this make any big difference at all?

The relief package entails more than just a reduction of tax. It is the right measure to take and can be implemented quickly and pragmatically. The decision by the government is thus good news for the energy-intensive industries competing on the global stage.

Is this package sufficient to prevent the exodus of chemical plants, steelworks and other energy-intensive operations to other countries that many are fearing?

That will be determined by Germany's overall attractiveness as a location for industry. Many other tasks have to be completed in this context. Ultimately, policymakers must weigh up what types of energy-intensive industry they want to keep in the country, for example in terms of preventing to become too dependent on other countries and to maintain integrated value chains. We must not avoid these fundamental industrial policy questions in Germany.

And what will happen if the electricity price in Germany is still going to be higher than in other countries in a few years’ time? Will we have a permanently subsidised economy then?

That cannot be what we aim for. We must acknowledge that other regions of the world have an advantage in terms of their location when it comes to certain types of energy-intensive industrial production because energy prices are lower there. These advantages won’t disappear in the future, Germany cannot make up for this by subsidising the prices in the long term. We will see a change in our industrial culture.

The interview was conducted by Marcus Theurer.

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