Joint Crisis Center – Supply security/infrastructure

Effects of rising energy costs

The war in Ukraine is having immense effects on energy supplies in Germany and Europe because the West has imposed sanctions on energy supplies from Russia in order to put pressure on the government in Moscow.

An embargo on oil deliveries from Russia is part of the sixth package of sanctions. However, the planned measures will affect not only the Russian economy; rather, they will also impact the European energy market because there are varying levels of dependency on oil and gas from Russia throughout the countries of Europe.

While the current supply situation still seems to be secure, the German Federal Government and Federal Network Agency (Bundesnetzagentur) are nevertheless preparing for shortages. In March, the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz – BMWK) declared that it was entering the “early warning level” of its emergency gas planning so that it can implement measures immediately should an emergency arise.

Moreover, the expansion of renewable forms of energy is being accelerated in order to achieve greater independence from Russian energy imports. This means that existing wind farms are being modernized or replaced by more powerful systems. The expansion of renewable forms of energy now provides a locational advantage because companies are increasingly basing their investment decisions on the availability of green energy.

By the same measure, LNG terminals are currently being constructed at a rapid pace in Schleswig Holstein in order to ensure continued supply security in future.

The development of energy prices and the conclusion of long-term strategic supply contracts as well as the diversification of energy supply sources is therefore becoming increasingly important for companies in order to counteract distortions in competition due to rising energy costs.

Most urgent questions in relation to supply security and infrastructure

• What does robust risk management look like in times of rising prices on the energy market?
• Which scenarios have to be considered in order to prepare companies as effectively as possible for changes in the energy market?
• Is there a highly integrated form of supply monitoring that continuously analyzes and assesses whether changes in production need to be implemented?
• How can companies ensure that – despite rising and volatile energy prices – they do not find themselves at a disadvantage to competitors?
• How can companies remain competitive during the energy transition?

How we can assist you

• Analysis of the relevant data for determining the energy quantities to be procured, including a forecast process.
• Preparation for and assistance with the development of crisis concepts and emergency planning.
• Preparation of letters to network operations to justify claims for prioritized gas supplies/to demonstrate the systemic relevance of the company.
• Implementation of procurement and risk strategies.
• Portfolio management and intraday optimization.
• Settlement management relating to energy procurement.
• Reporting and monitoring.
• Advice on energy law.
• Legal support with the identification of claims for privileged arrangements on a company-specific basis (under emissions trading law, the German Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz – EEG) etc.).
• Guidance regarding official procedures and assistance with communications with authorities, e.g. the German Emissions Trading Authority (Deutschen Emissionshandelsstelle – DEHSt), the Federal Office of Economics and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle – BAFA) and the Federal Network Agency (Bundesnetzagentur).