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Germany - Energy

Germany was the largest energy consumer in Europe and the seventh-largest energy consumer in the world in 2019, according to BP Statistical Review of World Energy. It was also the fifth-largest economy in the world by gross domestic product (GDP) by purchasing power parities after China, the United States, India, and Japan in 2019. Germany’s size and location give it considerable influence over the European Union's (EU) energy sector. However, Germany relies heavily on imports to meet most of its energy demand. In 2019, energy imports accounted for 71% of the German energy supply.

Germany was the largest consumer of natural gas in Europe in 2019, consuming 8.6 billion cubic feet per day (Bcf/d) of natural gas. Natural gas represented 25% of Germany’s total primary energy consumption, and consumption of natural gas increased slightly in 2019. In 2018, imports accounted for about 97% of total natural gas supply. Russia, the Netherlands, and Norway are the largest natural gas exporters to Germany. Natural gas imports from the Netherlands continued to decrease because Groningen is expected to end natural gas production in 2022 as a result of concerns about earthquakes triggered by production drilling.

Germany had no liquefied natural gas (LNG) terminals, but it was well connected with the rest of Europe by natural gas pipelines. Germany imports natural gas from Russia through the Nord Stream pipeline and Yamal-Europe pipeline.

Construction of Nord Stream 2—a 745-mile natural gas pipeline owned by Gazprom and designed to pump Russian natural gas directly to Germany, bypassing Ukraine and Poland — had been delayed repeatedly. Citing concerns of increased European dependence on Russian energy and lack of diversification of natural gas supplies, several Nordic and Eastern European EU countries tried to prevent construction of the pipeline.

Berlin was forced to quickly shift its heavy reliance on Russian fossil fuel imports in the wake of Moscow's invasion of Ukraine in February 2022. Germany's bid to avoid energy shortages also includes reactivating aging oil-and coal-fired power stations as well as extending the life of Germany's remaining three nuclear plants.

German energy prices skyrocketed since the Russian invasion of Ukraine, leading several companies to consider relocating to cheaper locations. Siegfried Russwurm, the head of the German Industry Federation (BDI), stated that the energy situation is bad enough for companies to seriously consider relocating their operations. Russwurm explained “A lot of family-owned companies... have very operational plans to relocate” due to the plethora of obstacles they are facing in Germany. Germany is not the only country to be facing high energy prices, with many European states experiencing high oil and gas prices following the Russian invasion of Ukraine.

Germany’s situation has been especially bad due to the heavy reliance on Russia for its gas. While some countries, such as the UK, were able to shift fairly easily to supplies from other countries, Germany found it difficult to wean itself off of Russian energy, which provided 60 percent of its gas supplies before the war.

After the breath-taking spike in energy costs Germany saw in 2022, by 2023 at least wholesale prices for electricity and gas had fallen back to pre-war levels. By January 2023, the wholesale cost of gas across Germany and Europe has sunk below pre-war prices. TTF, the gas trading platform in The Netherlands which is considered the reference for gas prices in Europe, lay at 72,75 euros per megawatt hour, the lowest price since February 21, 2022. Between March and August 2022, the TTF assessed wholesale prices remained consistently high, between 345 euros and 342 euros per megawatt hour.

Rising European energy prices and the Russia-Ukraine war led to a permanent shift in Germany’s energy and foreign policy. Germany, being Europe’s leading economy, needs to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left the country with few options. Accelerated capacity expansion for renewable energy and investments in LNG and hydrogen infrastructure will be the key elements in making the country less dependent on Russian fossil fuel supplies.

Germany’s gas imports totaled 142 bcm in 2021 with about one third being piped Russian gas. Germany made unprecedented changes in its energy and security policies following the Russian invasion of Ukraine. The decision to invest in LNG infrastructure and to begin the construction of two new LNG facilities had long been overdue. Given the fact that hydrogen will play an increasingly important role in the longer term, the German government also said they want to make sure any LNG infrastructure is hydrogen compatible.

As a rule, major construction projects in Germany take much longer to complete than originally planned. But thanks to streamlined planning procedures, the first floating import terminal for liquefied natural gas (LNG) opened in Wilhelmshaven in northern Germany shortly before Christmas — after just shy of 10 months of planning and construction.

German Chancellor Olaf Scholz and other senior government officials officially opened the country's first floating liquefied natural gas (LNG) terminal on 17 December 2022. The opening of the LNG import terminal was a milestone in Germany's plans to find alternate sources of natural gas. The facility opened off of Wilhelmshaven was slated to feed an estimated 6% of Germany's gas demand into the energy grid each year.

The terminal, floating off the North Sea coast, was built in a record time of just under 10 months. The project shows that Germany "is capable of new beginnings and speed," Scholz said at the inauguration ceremony. The chancellor added that Germany's LNG projects will help make the country "independent from pipelines out of Russia." Economy Minister Robert Habeck, Finance Minister Christian Lindner and Lower Saxony state premier Stephan Weil were also in attendance. "We are taking a very important step today for energy supply security in Germany," Habeck said. The Green Party politician also emphasized that the government is "pushing renewable energy" sources with the same zeal.

The liquefied natural gas facility was the first of five terminals that are due to be opened by the end of 2023. Another LNG terminal was slated for construction in Wilhelmshaven, while there will also be facilities in the northern cities of Brunsbüttel, Stade and Lubmin. The LNG terminals will be able to provide a third of Germany's natural gas needs.

In addition to two onshore terminals in Wilhelmshaven and Brunsbuettel, the German government leased Floating Storage and Regasification Units (FSRU) - a converted LNG tanker which is permanently moored - in the short term, one of which was installed in winter 2022/2023. Due to the fallout of Russia’s war against Ukraine there is international competition for FSRUs, of which there were just under 50 worldwide. Germany’s first, of possible four, floating liquefied natural gas terminal was operational in Wilhelmshaven by the end of 2022 and had a capacity of 7.5 bcm per year, equivalent to 8.5% of total German gas demand.

The second floating facility would be built in Brunsbuettel, northwest of Hamburg, would be operational in 2023, and have a capacity of 5 bcm per year. The northern cities of Stade, Rostock, and Hamburg, as well as Eemshaven in the Netherlands were possible locations for the other two FSRUs. On behalf of the German government, RWE chartered two special ships with which liquefied gas can be imported and fed directly into the German gas grid.

On 26 May 2023, the licensing authority issued the project developer, Hanseatic Energy Hub GmbH, approval for early commencement of the construction work on the floating LNG terminal (Floating Storage and Regasification Unit – FSRU) in Stade. FSRU Stade is one of five special ships that had been chartered by the German government to re-gasify the liquefied natural gas (LNG) transported to the port of Stade/Bützfleth in a tanker to be fed into the German gas supply network. FSRU Stade has an annual regasification capacity of up to 7.5 bcm.

At the beginning of 2027, the FSRU Stade was to be replaced by the LNG terminal on the mainland. It is being planned in a way so as to allow its flexible use in the future and its immission control approval procedure is being carried out coterminously. The onshore terminal is planned to have a regasification capacity of 13.3 bcm/a and a feed-out capacity of 21.7 GW. Planning and implementation are ammonia-?ready in order to support the market ramp-up of hydrogen.

The energy transition in Germany known as the “Energiewende”, is the country’s planned transition from a clear dominance of coal, oil and nuclear to a low-carbon and nuclear-free economy based on the utilization of renewable sources. The ambitious goal is to cut CO2 emissions by 80% and increase the share of renewable energy in total energy consumption to 60% by 2050. Investments in offshore wind, photovoltaics, grid expansion and energy storage projects will be necessary as well as the implementation of a new, smart energy infrastructure that can balance the fluctuating supply of renewable sources. Energy efficiency will play a central role. For decades, Germany has been the global pioneer in applying renewable energy and environmental technologies.

However, Germany has maintained a high degree of oil and natural gas to maintain electricity supply security. The lack of natural resources has led to an energy sector that highly depends on imports. Oil and gas are almost exclusively imported. These dependencies have created two situations of instability. First, global price changes strongly affect German energy importers and end users. Second, market developments depend heavily on Germany’s international relations with certain countries, with Russia playing a crucial role. The planned nuclear and coal phase-outs at the same time are set to increase the country’s reliance on natural gas, making it increasingly important to continue efforts to diversify gas supply options, including through liquefied natural gas imports.

Although the share of electricity produced from renewable sources fed into the grid has been constantly increasing, there have been no remarkable incidents of power interruptions thus far. Commercial and private consumers can rely on a stable, continuous energy supply, for Germany has one of the lowest power interruption rates worldwide.

Germany aims to fulfil all its electricity needs with supplies from renewable sources by 2035, compared to its previous target to abandon fossil fuels by 2045. Germany intends to increase the share of renewables in final consumption to 30% in 2030. It aims to reduce GHG emissions by 65% in 2030 and to reach carbon neutrality by 2045. The policy includes phasing out nuclear power by 2022 and the phase out of coal and lignite will be advanced to 2030. The two pillars of the “Energiewende” are renewable energy sources and energy efficiency.

Germany is the largest energy consumer in Europe followed by France and the UK. As of 2021, primary energy consumption amounted to 12,193 Petajoule, with more than 75% coming from fossil sources, 16.1% from renewables, and 6.2% from nuclear energy. Energy consumption is still noticeably lower than before the outbreak of COVID 19. Price developments in energy markets also caused a noticeable reduction in consumption. The phase-out of nuclear energy by the end of 2022, the incipient phase-out of coal and the continued promotion of renewable energies have caused changes in the 2021 energy mix. Mineral oil remained the most important source of energy with a share of 32.3%, followed by natural gas with 26.8%. Lignite accounted for 9.2% and hard coal for 8.5%. The contribution of nuclear energy was 6.1%. Renewable energies slightly reduced their share of total energy consumption to 15.9% due to weak wind and at the same time colder weather. Biomass, which accounts for more than 50% of renewable energy, recorded a 3% increase in consumption. Hydroelectric power stations increased by a 4%. Power generation from PV systems increased by 1%. Onshore wind farms saw a 15% drop in power generation and offshore plants fell 1%.

Domestic energy generation was able to cover 29% of total consumption and increased by 4.9 percent to 3,552 PJ in 2021. The most important domestic energy source is now renewable energy with a share of 54.7%, a decline of 4% compared to 2020. Lignite follows with 32.4%. Domestic natural gas production increased slightly and added 4.6%. The other energy sources reach shares in the low single digits. Hard coal mining stopped in Germany at the end of 2018.

A major part of electricity produced and fed into the grid in Germany in 2021 came from conventional energy sources and accounted for 57.6% of total electricity production. Lignite-fired power plants increased their net production to 99 TWh. Net electricity generation from nuclear power was at 65.4 TWh, from gas-fired power plants around 51 TWh and from hard coal-fired power plants at 46.4 TWh. The proportion of electricity produced from renewable energy sources and fed into the grid decreased by 7.6% to 42.4%.

Germany was the seventh-largest generator of nuclear energy, with 75.1 terawatthours (TWh) or 12% of total electricity generation, which is down from 133 TWh (28% of total generation) from 2010. The dramatic decrease is the result of planned decommissioning of older nuclear stations. The German government had planned to close remaining nuclear power stations by 2022.

Germany switched off its last three nuclear reactors on 15 April 2023, exiting atomic power even as it seeks to wean itself off fossil fuels and manage an energy crisis caused by the war in Ukraine. While many Western countries are upping their investments in atomic energy to reduce their emissions, Germany is bringing an early end to its nuclear age. Europe's largest economy has been looking to leave behind nuclear power since 2002, but the phase-out was accelerated by former chancellor Angela Merkel in 2011 after the Fukushima nuclear disaster in Japan. The exit decision was popular in a country with a powerful anti-nuclear movement, stoked by lingering fears of Cold War conflict and atomic disasters such as Chernobyl in Ukraine.

Due to weather conditions, the share of renewables in the net electricity generation fell to 45.7 percent, compared to 50.0 percent in 2020. Electricity from wind power amounted to about 113.5 TWh and with a share of 23.1% wind was again the most important source of electricity. German photovoltaic systems generated about 48.4 TWh electricity, about 44.6 TWh of which were fed into the public grid and 3.8 TWh were self-consumed. Hydropower contributed 19.4 TWh to electricity generation. With hardly any change in installed capacity, biomass generated slightly more electricity in 2021 (43 TWh). In total, renewable energy sources produced about 225 TWh in 2021, about 6% below 2020’s value.