First German supplier gives up gas sales

Gas meter

Deutsche Energiepool ceases gas sales.

(Photo: dpa)

Dusseldorf The drastic rise in gas prices is now forcing a first supplier in Germany to give up. DEP Deutsche Energiepool GmbH from Lower Saxony announced on Friday that it would “completely cease the nationwide supply of natural gas”. Many customers have already had their supply contracts terminated. The company now wants to “focus on services in the energy sector”.

In the last few months the procurement prices for natural gas and electricity on the futures market have tripled and the prices for short-term procurement have increased by around fivefold, the company justified the drastic step: “Hardly anyone in the energy market expected such a rapid and unprecedented development.”

In August 2020, one megawatt hour of natural gas cost 4.80 euros in the spot market. In the meantime, prices of EUR 75.04 have been reached. An end is not in sight.

The development on the spot market reflects price peaks, but in fact the situation on the European gas market has worsened across Europe in recent months. After a cold winter in which the gas storage facilities were clearly emptied, the demand for gas remained unusually high. On the one hand, the global economy picked up significantly faster than expected after the corona pandemic. On the other hand, the demand for liquefied natural gas (LNG) from Asia increased rapidly.

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The prices for the fossil energy source have been rising unusually sharply since January. On a long-term average, one megawatt hour (MWh) of natural gas normally costs between 15 and 20 euros. However, the price is currently 65 euros per MWh. The situation in Great Britain is particularly tense. Seven energy companies have already gone bankrupt there this year.

Eon steps in and delivers to customers

The affected customers of Deutsche Energiepool will continue to get gas. The energy company Eon announced that it would step in. According to its own statements, the company is the responsible basic and replacement supplier in “large parts of Germany” and has to ensure delivery – usually at higher prices than the low-cost providers on the Internet.

In contrast to the low-cost providers, the traditional suppliers do not buy at short notice, but staggered purchases on the futures market. “We buy the required amounts of energy long-term and with foresight in order to avoid the price peaks that we are currently experiencing in the interests of our customers,” emphasized Eon Energy Manager Christoph Müller.

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Industry experts therefore consider further insolvencies of low-cost providers in Germany to be possible – but not a flood of insolvencies as in Great Britain. “As a rule, gas procurement begins years in advance, and the customer contracts that are being supplied today have been in place for a long time,” says expert Fabian Huneke from the market research company Energy Brainpool. Because utilities and public utilities operate “mostly good risk management”, they should therefore survive the crisis reasonably well.

Deutsche Energiepool emphasized that it had also procured futures market quantities, but according to its own information it also had to buy additional spot quantities on a daily basis. This would have tripled its own procurement prices. “This is a situation that we can no longer maintain from a commercial point of view due to economic unreasonableness,” explained the company.

The federal government sees no bottleneck

As things stand, the federal government does not expect any supply bottlenecks in Germany: “The security of supply in Germany is still high,” a spokeswoman for the Federal Ministry of Economics assured on Friday. The gas storage facilities in Germany with a total capacity of 24.6 billion cubic meters are filled to 64.69 percent, this percentage increases weekly. Compared to Great Britain, for example, Germany has built 16 times more capacity.

The operators of the German gas storage facilities themselves see the situation as relaxed. “There is currently no threat to security of supply for the first half of winter,” said Sebastian Bleschke, chairman of the Natural Gas Storage Initiative (INES), most recently at the Handelsblatt gas conference. A good 90 percent of all German gas storage companies are organized in the association.

“The current situation is special, but not exceptional,” a spokesman for the gas supplier VNG dismissed on request. Even if the company’s own storage facilities, at only 73 percent, are significantly emptier than in previous years, a secure supply should be guaranteed. The north German energy company EWE, where the fill levels are also still well below 80 percent, made a similar statement. The stores are “adequately” filled.

Also read about the gas crisis:

Handelsblatt Energy Briefing

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