German energy U-turn

Following the commencement of hostilities in Ukraine, Germany is reconsidering its long-term energy policy by extending the life of coal and nuclear facilities scheduled for closure. This move would lower dependency on Russian natural gas, which currently meet a sizable portion of Germany’s energy needs. The nation also plans to build more liquefied natural gas (LNG) import facilities.

The nuclear U-turn is particularly surprising as the deadline for closure of all German nuclear plants is 2022. Remaining coal facilities were given until 2030.

Chancellor Olaf Scholz said:

"The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security. We must change course to overcome our dependence on imports from individual energy suppliers.”

His plan includes the construction of LNG terminals in Brunsbuettel and Wilhelmshaven, both with direct access to the North Sea. The chancellor also plans to raise national natural gas reserves. This move could eventually signal an end to policy that marginalized natural gas power generation. A massive combined cycle plant in Irsching built a decade ago, for example, has been unable to run profitably due to restrictive grid policies that place its output at the back of the line.

Such moves follow Germany’s halting of the Nord Stream 2 Baltic Sea gas pipeline project which would have brought Russian gas to Western Europe.