Germany to invest in gas-fired plants in coming decades

Germany welcomes private-sector investment in LNG infrastructure: Germany's deputy minister for economic affairs and energy

S.Ahmet Aytac  | 02.05.2019 - Update : 27.09.2019
Germany to invest in gas-fired plants in coming decades


Germany is committed to diversifying its energy supply in order to compensate for reduced power production from nuclear and coal, Germany's Deputy Minister for Economic Affairs and Energy, Thomas Bareiss, told Anadolu Agency (AA) on Wednesday.

Speaking exclusively to AA, Bareiss said that Germany will phase out nuclear power and coal to a degree by 2022, effectively shutting down roughly 25% of the country's electricity supply.

"This means that together with the envisaged phase-out of coal by 2038, in the coming decades, we will lose approximately half of our total electricity supply. We need new, safe, clean and cheap supply sources. Natural gas is a good option for us," Bareiss said.

The German deputy minister added that the potential share increase in natural gas in the country's energy mix might also be driven by carbon emission prices.

The carbon emission prices may rise extensively in the coming years, according to Bareiss, even beyond the current level of about €25 per metric tonne of CO2 in the EU within the next six or seven years, which would make gas more profitable than lignite.

As a result, Bareiss said that Germany will need flexible gas in the next few years because power derived from renewables like wind and solar power is intermittent.

New investments in new gas power plants are likely in the coming years, supported by the country's energy transition, the Energiewende, he explained.

"Initially, this will be natural gas, but in the years to come it will shift more and more to hydrogen of different origins and to synthetic gases," he added.

- Nord Stream 2

The Nord Stream 2 natural gas pipeline project plays a crucial role in offsetting the diminishing share of nuclear and coal in Germany’s energy mix. At the same time, the project also serves to compensate for the declining level of natural gas production in Western Europe. However, the project is encountering opposition from some European countries, which are concerned about a potential increase in EU reliance on Russian natural gas.

The project will pass through the territorial and exclusive economic zones of the countries located along the shores of the Baltic Sea, including Russia, Finland, Sweden, Denmark and Germany.

It will add two additional pipelines to the original Nord Stream project and plans to have a 55 billion cubic meter capacity, delivering gas from Russia to Germany across the Baltic Sea.

Recently, Denmark, the only country that has yet to give authorization for the pipeline to cross its territorial waters, has suggested that the Nord Stream 2 pipeline should follow a more southernly route due to environmental concerns.

Bareiss said that Nord Stream 2 AG and the Danish government are working on this issue. "This proposal for rerouting will delay the commissioning of Nord Stream 2, but ultimately the pipeline will be completed. The EU’s new Gas Directive has laid down common principles among EU member countries for gas infrastructure," he said.

The Gas Directive establishes new rules for all import pipelines – existing and new ones – and, unlike the previous Directive, also applies to the territorial waters of the member states.

"Germany has always stressed that the countries of Eastern Europe must be involved in this process. Let me also strongly emphasize that we remain fully supportive of upholding the secure transit of significant gas quantities via Ukraine. We are backing the trilateral talks between Russia, Ukraine and the EU to come to a solution that works for everyone," he said.


Meanwhile, the U.S. is looking to challenge Russia by stepping up its exports of LNG to Europe. In July 2018, European Commission President Jean-Claude Juncker and U.S. President Donald Trump agreed to strengthen U.S.-EU strategic cooperation on energy.

The parties agreed to work towards greater facilitation of U.S. natural gas shipments to Europe to diversify and safeguard the EU's energy supplies. In 2017, only about 10% of U.S. LNG exports went to European countries.

Representatives from the EU and the U.S. gathered in Brussels on Thursday for the first-ever business energy forum to discuss enhancing transatlantic LNG trade, the role that competitively-priced U.S. LNG can play on the EU market, and the growing opportunities for LNG usage in the transport sector.

"For us, energy security, that is the diversification of supply routes and sources of natural gas into the EU and its member states, is a crucial topic," Bareiss said.

He added that consequently, Germany is supportive of investments in the country's natural gas transport infrastructure, be it in the form of import pipelines or LNG infrastructure of which the main responsibility lies with the private sector.

"Whether companies opt to import LNG via the existing and planned LNG infrastructure across the EU, including Germany, is a question of how competitive LNG is on price compared with the natural gas delivered by pipelines from Russia, Norway and Algeria. Currently, there are a number of LNG terminals in the EU whose capacity utilization is below 30%," Bareiss said.

The German deputy minister added that investors are currently planning to construct LNG terminals along Germany’s northern coastline, in Stade, Brunsbuttel and Wilhelmshaven. He underlined that financial support may be available to back the construction of a domestic LNG import terminal. Such support would stem from existing financial support programs, including a regional financial support program and a program that is part of the government’s mobility and alternative fuel strategy.

"Should the investors of these LNG terminals seek public funding, they have the opportunity to apply for funding from existing financial support programs," he stressed.

- Germany's 'Energiewende'

Germany has agreed to switch its energy supply more towards renewables and to become increasingly energy efficient, a process that the country calls the 'Energiewende.'

"We have to recognize that Germany has an ambitious carbon emissions target for an industrial nation: a 40% reduction in CO2 emissions by 2020. We set ourselves this target assuming that we would have more nuclear power plants than is now the case," he explained.

Bareiss said after the Fukushima nuclear disaster in 2011, Germany decided to bring forward its nuclear phase-out while retaining its high carbon emission targets, which made the targets difficult to reach by 2020.

"Our response has been to say that we must definitely achieve our 2030 targets. We are taking measures in all sectors: in energy (electricity and heat), industry and mobility. Heating is very important. Over half of the German energy consumption is used to provide heat to buildings, industry, and the commerce and trade sector," the German deputy minister said.

Renovation in the housing sector is not progressing as fast as they would like, as the necessary investments can be quite high, according to Bareiss.

"We are offering financial incentives to homeowners for investment in energy efficiency and renewable energy. We are spending a lot of money, roughly €3 billion a year, to promote investments in new heating systems and insulation," the deputy minister noted.

Bareiss also underlined that Germany will see an increase in e-mobility in the next ten years, but highlighted the need for efficient combustion engines in the meantime.

"We are working to make the engines more efficient, especially in the truck sector, which covers longer distances and needs more powerful engines," Bareiss added.

He contended that, rather than setting the target of 100% renewables, 80% would be more viable and secure.

"Experience has shown us that the last 10 or 20% tend to be very expensive. So our goal is to show the world that the energy transition works and makes sense. We have to demonstrate that the energy transition is feasible, affordable, viable and secure. Other countries will only follow us if they see that it works in Germany," he concluded.

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