21 August 2017
Security of Supply Needs Investment Security

By Andreas Renner, Managing Director of astora GmbH & Co. KG
Winter 2013


Natural gas storages can continue to play a central role in supplying energy to Europe - provided that legislators set the right framework conditions.

The German "Energiewende" was the most ambitious project of the old German federal government - and is probably now one of the biggest challenges of the new federal government. With the "Energiewende", Germany has positioned itself as Europe's frontrunner as we move forward to a new "energy era". However, the frontrunner has so often let go of the reins during the last few years and now threatens to gallop off on the wrong course. Too many players have been enticed by the tempting vision of living from the wind and sun without any negative effects on their own wallets and the security of supply in Germany. The reality has to be addressed. The EU quite rightly criticises Germany's lack of coordination with other European countries and weaknesses in implementation. Even in the third year of the "Energiewende", coherent strategies are still not evident.

We urgently need a convincing concept in order to secure our energy supply in an ecologically and economically sensible manner - at a German and European level. The fact is, we need to work more closely together in the EU, particularly in the energy sector, whereby even in the era of the "Energiewende" we will still remain dependent on fossil fuels for decades. In this regard, natural gas in particular can lead the way in creating a fundamentally changed energy system as we proceed towards "a green future". Faced with a lack of raw materials and declining production volumes in Europe, the EU countries are, however, increasingly dependent on cooperation with neighbours rich in raw materials such as Russia or Norway. Therefore, in order to further secure the energy supply, Europe should also rely on developing secure storage capacities.

However, the construction and operation of natural gas storages must also be worthwhile for the private sector in future, in particular when high investments have to be secured. This can only succeed when appropriate prices are achieved in this highly volatile market environment. This is where politicians need to act. Market-based instruments must be given fundamental priority over further regulatory interventions. The existing market environment already offers instruments in this regard, which in particular cover the logistical grid-based tasks provided by storages (e.g. load flow commitments, local balancing energy). Nevertheless one question remains unanswered: Who is responsible for ensuring a secure energy supply in Europe? Legislators have unbundled the formerly jointly operated storage, transport and trade segments, without, however, providing the players in this newly structured market with concrete and long term framework conditions. This is a serious omission, since without planning security there is no investment security. And without investment security there is no security of supply.

Given this context, Europe's energy supply can only be secured for the long term under three prerequisites: firstly, with an integrated concept for the future energy supply in which natural gas storages constitute an elementary component; secondly, with improved cooperation within the EU in regards to energy policy and, thirdly, with a targeted expansion of our international energy partnerships. The political decision-makers should address these tasks as soon as possible, since the success of industrial societies will also be decided in future by the capability of the energy infrastructure.

Andreas Renner is Managing Director of astora GmbH & Co. KG. The company, which is headquartered in Kassel, Germany, is currently one of the largest natural gas storage operators in Europe.