- Germany is preparing market incentives to accelerate storage injections, marking a shift from its previous reluctance to intervene.
- Storage was only about 53% full at the beginning of September, the lowest level for the time of year in 15 years.
- The proposed measures could reduce winter supply risk, but their effectiveness will depend on tender volumes, timing and whether traders respond quickly enough.
Germany is preparing to expand a government-backed gas storage tender after deteriorating European inventory levels raised concerns about the continent’s resilience to a cold winter.
Economy minister Katherina Reiche intends to increase the volume available through Germany’s Long-Term Options mechanism, according to reports. A formal decision was expected by 21 September, although the volume and financial terms had not been disclosed at the time of writing.
The scheme allows market area manager Trading Hub Europe to contract traders to make gas available for later delivery. It is designed to encourage injections without requiring the federal government to purchase and own gas directly.
Berlin has also reached an understanding with state-controlled energy companies Uniper and SEFE that their storage capacity should be used more intensively. Handelsblatt reported that SEFE had begun making incremental purchases, with the government seeking to lift national storage above 70%.
The measures represent at least a partial change of approach for Reiche, who had previously stressed the responsibility of suppliers and traders to prepare for winter.
Market signal failure
Germany’s storage facilities were approximately 53% full on 1 September, compared with 71% a year earlier. Industry association INES said this was the lowest level recorded at that point in the year since its data series began 15 years ago.
INES calculates that stocks could technically reach approximately 77% by 1 November. Achieving that level, however, would require Germany to inject more gas during the final two months of the filling season than it managed during the preceding three months combined.
“Simply having storage capacities booked is not enough,” INES managing director Sebastian Heinermann said. “Filling storage facilities must be economically viable.”
The underlying problem is not a physical shortage of capacity but a failure of the usual commercial incentive. Storage operators traditionally buy cheaper gas in summer and sell it during the higher-priced winter period. That seasonal spread has narrowed and at times turned negative, while elevated spot prices have increased both the purchase price and financing cost of stored gas.
INES estimates that 77% would be sufficient under normal winter temperatures, leaving storage around 38% full next April. Under an exceptionally cold scenario, however, the same starting level could produce daily supply shortfalls exceeding 25% during January. It argues that additional tenders must be combined with lower storage-network charges, preferential financing and a more durable security-of-supply framework.
INES’s modelling also highlights Germany’s growing dependence on pipeline imports and LNG.
Germany’s LNG terminals can cover only a relatively small share of peak winter consumption, making storage essential for meeting demand during cold spells. Uniper, which controls roughly a quarter of German storage capacity, has accordingly called for a mechanism that recognises the security value of holding gas rather than remunerating facilities exclusively through short-term trading opportunities.
The immediate lookout is price rather than physical supply. Britain has access to LNG terminals and North Sea production but comparatively little seasonal storage. During a cold European winter, it therefore competes directly with continental buyers for flexible LNG cargoes and can export gas through interconnectors when European prices rise.
Berlin’s intervention may consequently act as a regional insurance premium: costly in the short term, but potentially cheaper than entering winter with a dangerously thin buffer. The crucial questions are whether the tender is large enough and whether it arrives before the remaining injection window closes.
