This year, Germany is facing its biggest challenge yet as far as its energy policies are concerned: within the space of a few months, landmark decisions had to be rolled back and new ones made in order to ensure the country’s energy security now and in the future. After several decades, the country is now reducing its dependence on Russian pipeline gas at an unprecedented rate and is positioning its energy supply according to a new and broader strategy.
Germany needs to diversify its gas supply within a very short period of time through alternative import options. In 2021, more than 50% (around 46 billion cubic metres) of natural gas was procured from Russia via pipelines. Norway was the second largest gas supplier, accounting for around 30%, followed by the Netherlands (13%). Within a few months, dependence on Russian pipeline gas has already been reduced to close to 10%.
(as of September 2022)
On behalf of the German Federal Government, KfW is currently supporting energy security projects to feed Liquefied Natural Gas (LNG) into Germany’s gas transmission network and natural gas storage systems as quickly as possible. LNG is deep-frozen under pressure, transported in liquid form by ship, landed, heated, regasified and then pumped into the networks.
In May 2022, there were 41 LNG terminals in operation throughout Europe, able to process up to 241 billion cubic metres of natural gas liquids. There are currently plans for a further 32 terminals throughout Europe, including the projects in Germany. To replace Russian natural gas in the medium to long-term, Germany requires at least four terminals to meet its gas demand, which amounted to 95 billion cubic metres in 2021 alone.
Energy security for Germany
(Source: KfW Group/Detlev Karres/Thomas Schuch)
In spring 2022, the Federal Government decided that the three ports of Brunsbüttel, Stade and Wilhelmshaven would initially be the best locations for LNG terminals.
However, in line with German climate targets, the permits for the new LNG terminals will be limited to 31 December 2043. Further operation of the terminals beyond this time will be permitted only for carbon-neutral hydrogen and its derivatives (such as ammonia). This is intended to ensure the goal of carbon neutrality in Germany can be achieved by 2045 at the latest.
Brunsbüttel's port is situated near the confluence of the Kiel Canal and the Elbe river. Within the next three years, a high-capacity terminal will be built here that will initially process natural gas liquids, followed by green hydrogen for Germany’s energy supply. KfW is participating in a consortium for the construction of the proposed LNG terminal in Brunsbüttel together with the German energy group RWE and the Dutch gas network operator Gasunie.
From 2025/26, the operating company “German LNG” intends to land, store and process up to 8 billion cubic metres of liquefied natural gas per year. The two tanks will each have a storage capacity of 165,000 cubic metres of gas.
The location of the site is nearly ideal for this ambitious project. The LNG tankers from export regions such as North America, Australia, North Africa and the Gulf States can be used here at two landing stages (known as jetties).
Part of the onward journey is in liquid form by bunker ship, tanker or railway. The other part is regasified, i.e. heated and compressed. The gas then flows into the gas transmission network via a short pipeline.
Another approx. 55-kilometre-long pipeline to Hamburg will also be built; this will mark the first application of the LNG Acceleration Act adopted by the Bundestag this year. The act is intended to significantly speed up the long approval processes that were previously required.
Wilhelmshaven and Stade
In addition to Brunsbüttel, plans for two further LNG terminals in the two ports of Wilhelmshaven and Stade in the State of Lower Saxony are also in full swing.
The proposed LNG terminal in Wilhelmshaven is expected to process at least 10 billion cubic metres of natural gas liquids per year from 2025/26. In Stade, the private consortium Hanseatic Energy Hub (HEH) expects an annual capacity of more than 13 billion cubic metres of LNG. Together, this would account for a good 25 per cent of Germany’s gas requirements, which could then be met with LNG.
Floating LNG terminals
With the fixed LNG terminals only able to process the first natural gas liquids in a few years' time, Germany has had to secure an urgently needed interim solution that is much quicker to implement in the form of five floating terminals – known as Floating Storage and Regasification Units (FSRU).
Each of the five special ships, which are around 300 metres long, is able to take on 170,000 cubic metres of LNG from tankers in a single unloading process, transfer it to a gaseous state on board and then feed it into the gas transmission network.
The two floating terminals in front of Brunsbüttel and Wilhelmshaven will be operated temporarily by RWE and Uniper until a special-purpose company takes over operation. ENBW, i.e. its subsidiary VNG – alongside RWE and Uniper – are responsible for supplying the FSRUs. For the floating terminals to contribute as much as possible, their capacity must be fully utilised from the point of commissioning.
With an annual regasification capacity of up to 12.5 billion cubic metres, the terminals offer a direct opportunity to procure LNG for the German market from (at present) 20 countries that cannot be reached by gas pipelines. The terminals therefore increase the security of supply for Germany and contribute to greater independence from previous pipeline-bound natural gas imports.
Lower Saxony’s Minister for Environment and Energy Olaf Lies is convinced that the first LNG will be able to flow into the gas transmission network and gas storage systems by as early as 21 December this year. However, the already approved pipeline measuring approx. 26 kilometres in length from Wilhelmshaven to the next feed-in point of the Norddeutsche Erdgas-Transversale (NETRA) pipeline near Friedeburg-Etzel needs to be completed first.
In future, up to 20 billion cubic metres of gas per year could be transported via this pipeline.
In the past, such a project often took up to eight years from start to commissioning – this time it will only take ten months.
In Brunsbüttel, those responsible also expect that the connection between the FSRU and the comparatively short pipeline of Schleswig-Holstein Net (SH Net) into the long-distance gas network will be in place by the turn of the year 2022/23.
At the port of Stade on the Elbe river, the third floating terminal is not expected to be available and operated by HEH until the end of 2023. In addition, the fourth FSRU, chartered on behalf of the German government and operated by RWE and Stena-Power, will then also be connected off Lubmin (Mecklenburg-Western Pomerania).
Another FSRU will also anchor firmly off Wilhelmshaven. This fifth special ship has a capacity of at least 5 billion cubic metres per year and is scheduled to enter service in the 4th quarter of 2023. Excelerate, the owner of the vessel, will provide the FSRU to the consortium of TES/E.ON/Engie companies and operate it technically as well as provide other necessary services.
In parallel, TES will set up a landfall of green hydrogen at the terminal in Wilhelmshaven. TES aims to seamlessly integrate the import of green hydrogen already during the first 12 months of operation of the FSRU. The aim is to operate the FSRU with the landing of LNG at the Wilhelmshaven site only until the green gas hydrogen terminal is commissioned; according to information from TES, this is expected to be the case as early as 2025.
Natural gas storage
In addition to the injection of LNG into the long-distance gas grid, the storage of gas is of particular importance for Germany's energy security. All German gas storage facilities together have the capacity to supply the whole of Germany with gas for about two to three months. To do this, however, the huge storage facilities must be at least 95 per cent full of gas by 1 November. In Mid-September 2022, the average fill level of all German gas storage facilities is already over 90 percent.
This means that gas can be released from the storage facilities into the market as planned in the winter along the legally prescribed withdrawal path: Storage levels may accordingly drop again to 40 percent in February 2023.
On behalf of the German Federal Government, KfW has provided Trading Hub Europe GmbH (THE), a consortium of eleven German gas transmission system operators, with a credit line in the double-digit billions to ensure that the gas storage facilities are filled. This will provide THE with the liquidity it needs to purchase extremely large quantities of gas and inject them into the networks and storage facilities. The loan is secured by a guarantee from the Federal Government. This financial coverage was urgently needed in the particularly critical situation on the gas market in the summer of 2022 in order to fill the storage facilities as high as possible by the autumn.
Published on KfW Stories: 22 August 2022, updated on 20 September 2022.
The described project contributes to the following United Nationsʼ Sustainable Development Goals
Goal 9: Build resilient infrastructure, promote sustainable industrialization and foster innovation
Non-existent or dilapidated infrastructure hinders economic efficiency and thus engenders poverty. When building infrastructure, the focus should be on sustainability, for example, by promoting environmentally-friendly means of transport. Factories and industrial facilities should also ensure that production is in line with ecological aspects to avoid unnecessary environmental pollution.
All United Nations member states adopted the 2030 Agenda in 2015. At its heart is a list of 17 goals for sustainable development, known as the Sustainable Development Goals (SDGs). Our world should become a place where people are able to live in peace with each other in ways that are ecologically compatible, socially just, and economically effective.