How the coronavirus is changing the energy sector in Germany
How the energy industry is coping with the effects of the coronavirus pandemic, what assistance and rescue measures are being provided, and why the energy supply remains secure.
The effects of the coronavirus pandemic are currently being felt by consumers in almost all areas of life. But one thing they don't need to worry about is continuing to get basic supplies. This also includes their energy supply, as the German Association of Energy and Water Industries (BDEW) and others have explained. According to the Association, the energy sector is well positioned for facing this crisis. During the coronavirus pandemic, it is implementing plans to protect staff working in power plants but does not currently see any risk to supply security. The processes for crisis and emergency management are tested and assessed on a regular basis. In view of the changing situation in Germany and the rest of the world, risk assessments are currently a feature of daily life. In addition, amid the coronavirus crisis, the large energy providers are no longer cutting off customers' electricity and gas supply if they default on payments. The current crisis is, however, having an impact on the energy sector. So what are the key changes in the industry and what help is being given?
Changes to auctions for renewable energy and combined heat and power generation facilities
The level of subsidies for electricity from renewable energy, such as ground-mounted PV installations and wind turbines, is determined via auctions. Changes due to the coronavirus crisis are affecting auctions that have already been completed as well as auctions that are currently running or still pending. So this crisis is affecting both companies that have already had their bids approved and new bidders alike. Supply chains are interrupted, and work to implement a large number of projects is coming to a standstill. The Bundesnetzagentur [Germany's Federal Network Agency] has therefore adopted a whole range of different measures. It is using its website to provide current information on bidding deadlines and auction dates, the publication of the bid quantities submitted and the deadlines for the realising of bids that have already been accepted. Many fines for breaches of contract are to be waived until further notice.
Postponement of energy audits
Another aspect affected by the coronavirus crisis is the conducting of energy audits. Energy audits are extensive energy consultations which large companies are obliged to undertake every four years under EU law. Small and medium-sized enterprises (SMEs) are exempted from this rule. At present, the energy consultations carried out on site by a trained expert are often unable to take place on time. Provided there are justified reasons for the delay, the energy audits can be postponed until the crisis is over, for example to protect staff from infection, if companies have closed due to the crisis, or if external persons are banned from going onto the site. However, energy audits can still only be completed in full after an on-site visit has been made. The Federal Office for Economic Affairs and Export Control (BAFA), which is responsible for undertaking this visit, recommends that energy companies document the reasons behind any delayed on-site inspections. The Federal Ministry for Economic Affairs and Energy has also made a statement announcing that no random checks will be carried out during the coronavirus pandemic. Once the crisis is over, BAFA plans to set a 'reasonable period of time for catching up' on audits, which it will announce on its website.
Energy Export Initiative – virtual conferences providing an alternative
In the absence of being able to hold conferences as normal, the Energy Export Initiative and its partners are making use of digital solutions to keep their dialogue alive during the coronavirus crisis. Face-to-face meetings with representatives of Germany's Chambers of Industry and Commerce abroad are now taking place digitally, in the form of virtual expert conferences and meetings via video link. The digital specialist conference held by the German-Chilean Chamber of Industry and Commerce on hydrogen technologies, for example, was followed by 481 participants online.
Gas industry: market area conversion suspended across certain regions
Across Germany, a process of market area conversion has been underway since 2014. This involves a switchover from use of low-calorific gas (L-gas) to high calorific gas (H-gas). This has become essential as L-gas is being produced at lower rates and will cease to be available in the long term. In preparation for this change, some 500,000 gas appliances in Germany have already been adapted to be able to receive H-gas over the past few years, and around 400,000 more will undergo the process this year. To do this work, technicians need to go into households, commercial enterprises and industrial operations. Because of the current restrictions on daily life, however, they are in many cases unable to do so. A large number of the companies affected are therefore now calling for the process to be modified to take account of the new situation. Responsibility for the market area conversion and any possible changes to this process lies with the network operators. So far, they have each made differing assessments depending on the situation in their particular region. Some still consider it feasible and reasonable to continue the work of adapting consumer appliances; others want to suspend this work for the time being. The Bundesnetzagentur [Federal Network Agency] and the Federal Ministry for Economic Affairs and Energy have issued a joint press release on this issue which can be read here.
Financial assistance during the coronavirus pandemic
Since the start of the coronavirus pandemic, some €50 billion of immediate assistance has been made available for small companies from right across the economy, as well as for own-account work and members of the liberal professions with up to 10 employees. Companies with 5 employees or fewer are eligible to receive a one-off payment of up to €9,000 euros, and companies with a staff of 10 or under can receive up to €15,000.
In addition to immediate assistance for small enterprises, there are also comprehensive loan programmes available. These include the KfW Special Programme 2020, which was launched on 23 March 2020 and offers lower interest rates and a simplified risk assessment. The programme is available to small and medium-sized enterprises as well as to large companies.
Large companies can also receive assistance from 600-billion-euro Economic Stabilisation Fund. The Fund's support measures also apply to small enterprises deemed 'essential', firms operating in the field of critical infrastructure and to certain start-ups as well. An overview of the entire assistance programme for employees and companies can be found here.
In addition, more low-interest loans are now able to be granted. Following a decision by the European Commission, the promotional banks of the Länder can now offer loan programmes at conditions which are just as favourable as those of the KfW Special Programme. The Federal Government has also agreed a more extensive KfW Instant Loan for small and medium-sized enterprises.
In order to provide more extensive support during the coronavirus pandemic, companies and employees are being granted tax subsides. This year (2020), employee bonuses up to a total of €1,500 will be tax-free. Members of the liberal professions, self-employed persons and other entrepreneurs can apply for tax payments to be deferred and for changes to be made to their advance payments. Debt enforcement is also being relaxed in certain ways.
In order to help start-ups during the coronavirus crisis, a €2 billion start-up booster can be accessed and a range of tailored support has been made available too.
The Federal Ministry for Economic Affairs and Energy is providing support for the costs of consulting for small and medium-sized enterprises (SMEs). In addition, members of the liberal professions affected by the coronavirus pandemic can also claim back consulting costs of up to €4,000 without having to make any cost contribution of their own. The enhanced funding for professional consulting services will remain in place until the end of 2020.