Russia has cut gas supplies to Germany. Coal-fired power plants should compensate for this, says Economics Minister Robert Habeck. The Germans should save energy and fill the gas storage tanks. Nevertheless, a new record was set in electricity generation from natural gas in May. How does that fit together?
More than 4000 gigawatt hours (GWH) of electricity were generated with natural gas in Germany in May 2022. More than ever in one May. And that at a time when natural gas should and must be saved.
In the current crisis situation, the resource of natural gas is – actually – considered too valuable to be burned to generate electricity. Because the problem is that in many industrial processes, natural gas cannot be replaced as quickly as one would like. In addition, numerous properties are connected to natural gas for heating. So if people are not to freeze with even lower gas supplies and parts of industry are not to stand still, the raw material must be saved.
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Also in accordance with the demands of Federal Minister of Economics Robert Habeck (Greens) to reduce the use of natural gas for power generation – and also in industry – it would have been expected that lignite and hard coal-fired power plants would reach their production limits. According to the minister, it is precisely these that are to be used again temporarily in order to save natural gas. And yet Germany set a new May record for power generation from natural gas.
“That’s quite surprising,” agrees Bruno Burger from the Fraunhofer Institute for Solar Energy Systems. “If gas is as expensive as it is currently, then as much electricity as possible is usually produced from other sources in order to save gas in order to be able to fill our storage facilities,” he says to FOCUS Online. But the opposite happened: “We had record production.”
In May 2021, just over 3000 GWh of electricity was generated from natural gas. In the previous year, around 4000 GWh were produced in Germany – slightly less than now in May 2022. A similar picture emerges in France and Austria. The French achieved a May record with 2,700 GWh of natural gas electricity, as did the Austrians with 599.5 GWh.
These record productions are a hindrance on the way to full gas storage facilities in Europe in autumn. The natural gas storage facilities in Germany are currently around 59 percent full. This is based on data from the Aggregated Gas Storage Inventory (GIE AGSI). For comparison: in the previous year, the filling level of the natural gas storage facilities in Germany was around 38 percent at the same time. So we are on the right track, but still a long way from the 90 percent that the federal government has set as a target for November 1, 2022.
The fact that the filling level is currently comparatively high can also be due to the sharp rise in prices, which means that more and more liquid gas LNG is being shipped to Europe. Data from the Federal Network Agency also shows that monthly gas consumption in Germany is consistently lower this year than in the previous year. But couldn’t the tanks be much fuller by now?
“These record productions can depend on many different factors,” says Burger. In Germany, for example, nuclear power plants have been shut down. “As a result, there will be a lack of 2,000 to 2,500 gigawatt hours of electricity in May, which will have to be compensated for somehow.” France has also shut down nuclear power plants. So there is a production deficit there, which means that 5 to 10 terawatt hours of electricity from nuclear power are missing on the European market and were partially compensated for by increased German exports.
It is striking that the daily fluctuations in electricity prices were very strong. “In 2020, however, when such price fluctuations occurred, the lignite-fired power plants reacted to them. In May 2022, however, it was the gas-fired power plants that were used, especially when prices were high. This raises the question of whether the merit order is still the right instrument for pricing on the electricity exchange given the current conditions,” the energy expert continues.
The merit order describes the order in which power plants are deployed, which is determined by the marginal costs of power generation. This means: Power plants with higher marginal costs are switched on until demand is met. The last bid on the electricity exchange determines the electricity price. This means that the most expensive power plant that is still needed to cover the electricity demand determines the electricity price.
The question of why the most expensive way of producing electricity is used in May of all times cannot be answered clearly from the outside. However, the problem is clearly recognizable: “The more expensive the gas electricity price, the more expensive the electricity price in general.”
It is also striking that German coal-fired power plants could have supplied more electricity in May 2022. Expensive natural gas could have been saved in this way, explains Burger.
In recent years, natural gas has experienced an enormous price increase. Over the summer, prices are almost 130 euros per megawatt hour. Despite the expected drop in prices, natural gas prices are expected to be three times higher than in previous years in 2024. So why isn’t the electricity produced using other energy sources?
A look at coal-fired power plants shows very clearly: “Those that are still running are not running at the limit of their capacity, so they could produce more electricity.”
The German coal-fired power plants could also have supplied more electricity in May. The power plant output in operation was far higher than the power generation of the power plants, explains the energy researcher.
“So hard coal and lignite power plants were not fully utilized in May. They could have lowered the electricity prices.” It is striking that in times of gas shortages, the records are not in lignite or hard coal power plants, but in the most expensive and scarcest energy source, gas. “In view of these events, the Federal Network Agency or the Federal Cartel Office could use the data on electricity generation and power plant utilization to check whether lignite and hard coal capacities might have been withheld,” the expert interjects.
FOCUS Online has asked the Federal Network Agency several times how the record month of May can be explained and why other energy sources have not been used to a greater extent in electricity production. A statement is still pending.
You can read more about the gas shortage in Germany here:
In any case, it cannot be due to the lack of raw materials that hard coal and lignite power plants were not running at full speed. Germany’s lignite reserves will last for hundreds of years. This is shown by data from the Federal Association of Brown Coal. And hard coal is no longer mined in Germany, but there is enough of it on the international market.
Burger does not believe that natural gas prices will ever drop again. “The war in Ukraine will probably last longer and we won’t get together with Russia so quickly after the war. Other capacities are also rare. We will therefore remain at a high price level for several years to come. And then the prices also reach the citizen.”
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If you can, you should get a solar system and generate your own electricity, says the expert. In principle, this is the only way out of the crisis anyway. “We must finally leave the age of fossil energies behind us and supply ourselves with renewable energies. There is no alternative, you have to say that very clearly,” warns Burger.