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Utilities in Germany secure funding in the face of exploding energy prices.

As natural gas prices in Europe continue to hit record highs, utility companies in Germany are scrambling to secure millions of euros in extra liquidity to ensure they can meet future contracts.

Steag, Germany’s fifth-largest utility, said on Wednesday that it had organized financing in the “low triple-digit-million euro” range through an investing partner.

“We needed to gain more liquidity to secure future contracts,” said Daniel Mühlenfeld, a spokesman. He stressed that the financing was not a credit from a bank, but had been organized through another business partner. Steag operates several coal- and gas-burning power plants in western Germany, and generates power from renewable sources including wind, biomass and geothermal.

Last week another leading German utility, Uniper, announced that high energy prices had forced it to seek extra credit worth 10 billion euros ($11.4 billion). Most of the money, €8 billion, came from Uniper’s parent company, Fortum, based in Finland. The rest is from Germany’s state-owned development bank, KfW, and was secured as a backup to mitigate future price swings, the company said.

Other German energy companies, including RWE and EnBW, said they had taken similar steps to ensure they had sufficient credit to weather the volatility in the European energy market, but declined to give details. They all face the same challenge of needing to hedge their sales of gas and electricity to cover price differences across different markets.

In a statement explaining the decision to provide Uniper with extra financing, Fortum said European gas prices reached “unprecedented levels” in December. In Germany, the price for energy to heat and power homes in November rose more than 101 percent from a year earlier, the country’s official statistics office, Destatis, said.

In Britain, the sudden price rise has led to the collapse of several smaller energy suppliers.

Global demand for energy jumped last year, after the world economy reawakened from widespread shutdowns aimed at slowing the spread of the coronavirus pandemic. When many economies started up again last spring, the need for natural gas shot up. Natural gas is crucial for generating electricity, running factories and heating homes across the continent.

While European countries normally stock up on gas in the summer, when prices are relatively cheap, the pandemic and a cold winter last year drew down levels of stored gas, leading to the wild swings in prices.

Prices for natural gas have risen about sixfold, to record levels. The surge means the wholesale price of electricity has reached stratospheric levels, making headlines across Europe as consumers, battered by the pandemic, are now hit by big increases in their home energy bills. Many European countries have tried to buffer the shock to consumers with price caps, subsidies and direct payments.

These high costs are also undermining the economics of companies that make fertilizer, steel, glass and other materials that require a lot of electricity.

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