Russia is turning off the gas tap and Germany is building three floating liquefied natural gas terminals at record speed. A further eight terminals are to be added over the next three years. Too much, too expensive and too late – and not necessary for energy security, say experts.
Practically from one day to the next, half of Germany’s gas imports disappear when Russia turns off the tap. The extraordinary situation means that everyone is pulling together and three floating liquefied natural gas terminals are being built in the north at record speed. The first cubic meters of LNG have been flowing into German ports for a few weeks. And that’s just the beginning – the federal government plans to build five more floating and three fixed terminals. But a new calculation shows: “The government is overshooting the target,” says Gunnar Luderer, Professor of Energy Systems at the Potsdam Institute for Climate Impact Research in an interview with ntv.de
Because according to the study commissioned by the Federal Ministry of Economics, seven floating and one fixed terminal would be sufficient to cover the gas requirement. That would be the equivalent of 47 billion cubic meters of liquid gas per year, as reported by the media, citing the study by the Energy Economics Institute of the University of Cologne (EWI). The federal government’s plans would create capacities of around 77 billion cubic meters – almost 40 percent more than the necessary capacities calculated by the study – and far more than the 55 billion cubic meters that were otherwise imported from Russia.
The extent to which the government is overshooting the mark could be even greater. Because the lost Russian gas does not necessarily have to be completely replaced by LNG in Germany.
Even before the end of Nord Stream, Germany was not only buying gas from Russia. The European gas market certainly provided security in this regard. How well this works was shown in the summer, when more and more Russian gas was lost – but the German storage facilities were still well filled. Belgium and the Netherlands in particular replaced the lost gas from Russia with higher deliveries. “We are making good progress with the current gas supply – also because good progress has been made in saving gas,” said Luderer. “And that, although only a small part of the LNG capacities planned for Germany is on the grid.”
LNG imports to Germany did little to avoid bottlenecks in the winter of 2022. The first cubic meters have only been flowing into German terminals since December 20th. A second terminal was added at the beginning of February 2023. In total, the three floating terminals that have been put into operation have a capacity of 14 billion cubic meters. They will therefore make a good contribution to the gas supply in the coming year – a significant relief in the current emergency situation.
However, the remaining five floating and three fixed terminals that the BMWK is planning have a much longer time frame. The last – and largest – terminals will not be operational until 2026. “This is a point in time when the gas crisis will be largely over and the gas market will already be characterized by a further drop in demand due to climate protection measures,” says Luderer.
Terms of up to 20 years are planned for this. That would mean LNG supplies for after 2045 – the year the federal government legally committed to becoming carbon neutral. “After 2025, no additional capacity will be needed,” says Luderer. The last three – and largest – terminals planned by the federal government would then only be relevant as a replacement for the floating terminals. It would then also have to be ensured that they are suitable for the subsequent conversion to hydrogen.
Even the EWI’s estimate, which is much more conservative than that of the BMWK, could be too generous. The Cologne study assumes that gas consumption will remain constant. But that will drop significantly over the next few years. It is true that more gas will have to be used to generate electricity as a result of the phase-out of coal and nuclear power. But this will have little effect on the total amount of gas. Because only a fraction of the total amount of gas is converted into electricity in Germany.
In contrast, around half of gas consumption is accounted for by the heating sector. If the traffic light government implements the exit from fossil fuel heating agreed in the coalition agreement, this would have a significant impact on gas demand. Even without such a law, the demand for renewable heat is already shooting through the roof – and has contributed to the low gas consumption in the past year. “Instead of creating even larger gas capacities, we have to save on the demand side in order to achieve our climate targets and at the same time restore our energy sovereignty,” says Luderer.
Especially since the LNG projects are not cheap. As the Handelsblatt reports, the market research company Icis expects that the terminal in Wilhelmshaven will cost a total of around 1.9 billion euros over the planned ten-year period. Depending on how high the margin for liquid gas imports is, the terminals could even become a loss-making business – in the worst case a loss of up to 200 million euros.
The high gas prices in the summer and the impending shortage show the uncertainties and imponderables in the energy supply – a possible reason for the overzealous planning. “There’s nothing wrong with planning generously and having a bit of a surplus,” replies Luderer. “But you shouldn’t overshoot the target – especially since these capacities are created when the demand for gas is already falling.”
