9. January 2023 By Jonas Schnorrenberg, Stephen Lorenzen and Maximilian Hammes
‘Emergency Plan for Gas’ – What will happen if the emergency level is declared
Following our previous blog posts in our series on the Emergency Plan for Gas in which we explored the early warning and alert levels, it is now time to look more closely at the third and final stage of the plan, the emergency level. This level outlines what will happened in the event of massive long-term supply failures.
What preparations have already been made? What indicators will be used to decide whether to declare the emergency level? What will happen in this scenario? And above all, how likely is it that this will happen?
In this blog post, we will present an overview of the current situation and summarise the most important points.
The current gas supply situation (as of 27 December 2022)
The alert level of the Emergency Plan for Gas was declared on 23 June 2022. The alert level means that the gas supply situation has deteriorated significantly due to a disruption in the gas supply or an exceptionally high level of demand. Despite the significant deterioration of the gas supply situation, the market is still able to cope with the situation and there is no need for government intervention within the gas supply sector. Nevertheless, the situation is still considered tense and the situation deteriorating further is still a possibility. The German Federal Network Agency (Bundesnetzagentur) is closely monitoring the situation and is in close contact with the network operators.
There is still no gas coming through the Nord Stream 1 pipeline. Russian gas will be replaced by supplies from Norway, the Netherlands, Belgium and Luxembourg. In addition, there are plans to build 11 LNG terminals on the German coast to replace Russian gas imports. The first LNG terminal opened on 17 December 2022 in Wilhelmshaven and has been in operation since 21 December 2022. The others are expected to be completed in 2023. The additional gas storage facilities are currently 88 per cent full. The cold winter weather at the beginning of December led to an increased consumption in gas, which in turn caused the storage levels to drop. The higher temperatures the country has seen recently has resulted in consumption falling and the storage tanks being replenished. This cycle is a common one during the heating season.
Current preparations for the emergency level
When the Emergency Plan for Gas was established in 2019, a description of what the final emergency level of the plan would look like for the Federal Republic of Germany was also published. Unlike the alert level, the gas supply would need to experience significant disruption, or the supply situation would need to deteriorate considerably in some other way for the emergency level to be declared. In this scenario, state intervention by the National Supply Coordinator would no longer be avoidable. Once the emergency level is declared, the German Federal Network Agency will then take on the role of National Supply Coordinator, in which it assumes responsibility for allocating the quantities of gas that are still available in the event of a crisis. This process takes place in coordination with the gas network operators. To this end, the German Federal Network Agency, the German Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz), the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft, BDEW) and the Federation of German Industries (Bundesverband der Deutschen Industrie, BDI) formed a number of working groups to discuss potential processes – the result of which was a flow chart. The working groups are also identifying the potential indicators that will be used to decide whether to declare the emergency level. Furthermore, the groups are running a variety of simulations that highlight different scenarios, taking into account the probability that they will occur.
Indicators for declaring the emergency level
The exact indicators are yet to be published. The Emergency Plan for Gas itself lists massive long-term supply failures, insufficient availability of balancing power, threats to supply to protected groups and failures of essential pipelines.
What happens next
The flow chart detailing what will happen if the emergency level is declared is a result of the working group and describes the planned procedure and communication should this occur. It is a living document that is being edited and supplemented by discussions that are still ongoing. The following procedure is planned (as of October 2022):
- 1. The German federal government declares the emergency level. The German Federal Network Agency will then take on the role of National Supply Coordinator. It is responsible for allocating the gas in coordination with the network operators.
- 2. The National Supply Coordinator may issue orders in the event of potential deficiency based on forecasts. This will limit gas consumption and stabilise it at a lower level of consumption. The aim is to guarantee the basic gas demand is met. To this end, non-protected groups such as industrial and major consumers shall, if they are able to, reduce their consumption by a specified percentage or absolute value 72 hours after the order was issued. Households and critical infrastructure are among the protected customers and are not affected. This must also be done sooner than 72 hours in exceptional cases. Individual orders can also be handed down for extremely large end consumers (≥10 MWh/h) in addition to the general orders. General orders will be announced in the media. Individual orders will be announced via an e-mail sent to the e-mail address stored in the ‘Security Platform Gas’. The orders shall be valid for seven to 14 days at a time. Balancing the reduction in consumption, especially in relation to the balancing groups, is currently still under discussion.
- 3. The National Supply Coordinator can also issue orders and decide on the quantity of gas withdrawn from the storage facilities.
- 4. A check will be made as to whether the order has been implemented after the 72 hours have elapsed. For this purpose, the exit network operators will receive the market location-specific load profile of the following day after the order takes effect. If the requirements were met and consumption was reduced, the target was achieved and the system is stable at a lower level. The order expires after 14 days and a new order can be issued.
- 5. If the requirements were not met, the exit network operator promptly reports the non-compliance to the National Supply Coordinator and contacts the group. Justification as to why the requirements were not met must be provided and the consumer can expect to face serious consequences. These include penalty payments enforced by the state police in addition to the exit network operator closing the shut-off facility. Details are currently still being discussed.
- 6. The system is stable at a lower level of consumption 48 hours after compulsory implementation at the latest.
According to the Federal Network Agency, there is still no prospect of the situation easing. A cold winter might hit us particularly hard. According to the Federal Network Agency’s pessimistic scenario in which consumption was as high as in recent years and supply falls by 20 per cent, reserves will only last until March 2023. If consumption can be permanently reduced by 20 per cent, we can safely get through the winter according to previous analyses – with storage facilities that are still sufficiently filled at more than 70 per cent capacity. This also forms a solid foundation on which we can prepare for the next winter. For that reason, it is vital that we continue to live up to our role as world leader in saving gas and continue to reduce consumption. In addition, the LNG terminals must be completed as soon as possible.
Preparations for the planned implementation of the emergency level are already underway as a precautionary measure. One tool that will be used to implement this is the flow chart presented in this blog post, which describes the planned procedure in the event that the emergency level is declared and how this will be communicated. The flow chart contains six points that can be summarised in four phases (declaration, issuing of orders, monitoring and sanctioning). Households and critical infrastructures will be protected. Industrial and major end consumers, meanwhile, must expect restrictions. However, the flow chart is still in progress and still contains some gaps. These gaps need to be filled by the working groups and further points need to be specified in more detail.
We will keep you posted with all the latest updates. Stay tuned!
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