German Minister Tells US to Back Off
Germany's foreign minister Heiko Maas (SPD) has asked the US ambassador in Berlin, Richard Grenell, to stay out of an economic project that would ensure energy security in Europe. Grenell had reminded Uniper and BASF of the US policy or threat to impose sanctions on companies involved with the 100%-Russian-owned Nord Stream 2 gas pipeline, but Germany sees no alternative to the 55bn m³/yr line if it is to survive the energy transition; nor does it welcome outside advice.
Maas however reportedly advised the two known recipients of official US warnings not to support Nord Stream 2 to hold their fire, according to news sources. The new CDU chairwoman Annegret Kramp-Karrenbauer spoke of a "rather unusual diplomatic manner."
Grenell sent a letter to the German companies BASF and Uniper, warning them of a significant sanctions risk when engaging in activities of the Russian energy export pipeline sector. Other German companies are also involved in different aspects, but lobby group Zukunft Erdgas told NGW January 15 that "according to our information, they are the only two companies involved in the project that received this letter."
There have been no reports of US ambassadors in other countries writing to the other investors in the project. Austrian OMV, French Engie and Anglo-Dutch Shell are also each covering a tenth of the cost of the line, and have already parted with most of their cash. The line is due to start flowing gas late this year.
Need for more gas
The German government and gas industry say the country needs more, cheap gas from elsewhere as UK, Norwegian and Dutch gas output all decline and intermittent renewables grow. LNG will play a part in that, but pipeline gas from Russia is expected to be cheaper. And the economics of the existing route through Ukraine are uncertain, as the tariffs have not been finalised for beyond this year. Some Ukrainian capacity will still be needed however.
Uniper is planning to build a 300-MW gas-fired power plant at Irsching, after winning a tender held by grid operator Tennet. Its existing power plants at Irsching have been working only rarely as they depend on a higher power price, which Uniper says subsidised renewables have undermined. This plant though will be paid regardless.
COO Eckhardt Ruemmler said January 9 he was glad "Uniper won the competition for a 'special grid facility' to assure a reliable supply of electricity. For this, we will build and operate a new gas power plant. Their high flexibility makes gas power plants ideal for balancing out the increasing share of non-controllable electricity generated from wind and solar energy. They should therefore play an important role when it comes to Germany achieving its ambitious climate goals without incurring excessive risks in supplying industry and homes with electricity. Given the anticipated stable earnings it will generate, this project is a further step in implementing our strategy to significantly increase revenue that is not dependent on the wholesale market.”
Finnish engineer Wartsila has also gained from German renewables, selling gas-fired combined heat and power plants and service contracts to two German utilities needing near-instantaneous generation capacity in the the event of a renewable electricity cut. Not the most efficient way to generate power from gas, the engines can however reach full capacity in a few minutes, enabling grid balancing, unlike combined-cycle gas turbines. And the heat is also economically useful.