Uniper rescue to cost Germany an extra €25 billion euros

Troubled gas giant Uniper on Wednesday said the German government would need to spend an additional €25 billion under a planned nationalisation to stave off the firm's collapse in the wake of Russia's war in Ukraine.

Uniper headquarters in Düsseldorf
The Uniper headquarters in Düsseldorf. Photo: picture alliance/dpa | Federico Gambarini

The German government agreed in September to nationalise the debt-laden company after Moscow’s closure of a key gas pipeline and sky-high energy prices left Uniper facing bankruptcy.

But the initial €8 billion cash injection from the government “will not be sufficient to stabilise Uniper”, the company said in a statement.

Another capital increase to the tune of €25 billion will be needed to help cover “the enormous additional costs of the Russian gas cuts that continue to be primarily borne by Uniper”, CEO Klaus-Dieter Maubach said.

The revised figure comes after Berlin scrapped a controversial plan to make German consumers pay a gas levy to help importers cope with rising prices, which would have covered some of Uniper’s costs.

READ ALSO: Germany reaches deal to nationalise troubled gas giant Uniper

The government will finance the rescue out of a €200 billion “special fund” designed to cushion the impact of the energy crisis on households and businesses.

Uniper said it would ask shareholders to formally approve the rescue deal on December 19th.

As Germany’s biggest gas importer, Uniper has been hit especially hard by the fallout from the Ukraine war, which forced it to buy gas at significantly higher prices on the open market.

It has reported a €40 billion net loss for the first nine months of the year, one of the biggest losses in German corporate history.

Germany’s government stepped in to save the company on fears that its collapse could endanger gas supplies and wreak havoc on Europe’s biggest economy.

Germany, which was heavily reliant on Russian gas imports before the war, has raced to find alternative suppliers and fill reserves before the colder winter weather arrives.

The country announced last week that its gas storage facilities were 100 percent full.

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Germany’s power supply secure ‘even with earlier coal exit’

Germany's electricity supply during this decade is secure even if the country were to bring its coal exit forward to 2030, according to a government-commissioned report on Wednesday.

Germany's power supply secure 'even with earlier coal exit'

The Federal Network Agency found that Germany’s power needs can be met “at all times” between 2025 and 2031 if the country follows through on plans to massively ramp up renewables and expand the energy grid.

“This will also be the case if energy consumption rises significantly because of new consumers such as electric vehicles and heat pumps, and the coal phase-out takes place by 2030,” the report said.

Europe’s biggest economy is speeding up its green energy transition after Russia’s war in Ukraine sent gas and electricity prices soaring and left Berlin scrambling to diversify supplies.

READ ALSO: Energy prices could double long-term in Germany, utilities companies warn

To help compensate for the shortfall in Russian gas deliveries, the government even restarted mothballed coal-fired power plants.

But Economy Minister Robert Habeck — from the ecologist Green party — has repeatedly said the measure was temporary and that Germany remained committed to quitting dirty fossil fuels.

The government aims to bring forward Germany’s coal exit to 2030, but has faced pushback from several eastern states that prefer to stick to the previous 2038 deadline.

Habeck on Wednesday acknowledged that there was “no agreement” on the end-date yet.

By 2030, the government wants 80 percent of Germany’s electricity to come from wind and solar power.

Berlin has pledged to cut red tape for installing wind turbines to meet the ambitious target, but observers say the pace is still too slow.

“We’re working on all fronts to become faster, more efficient,” Habeck told reporters in Berlin.

As part of the shift away from fossil fuels, the government also plans to only allow new gas-fired power plants if they can be converted to run on clean hydrogen.

“Gas is OK for the transition phase, but we need to get away from gas and switch to hydrogen power as soon as possible,” Habeck said.

READ ALSO: Is now a good time to switch energy providers in Germany?