March 28, 2024

German storage neutrality charge extended to 2027

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The German gas storage neutrality charge is a levy seeking to recoup money spent purchasing strategic gas reserves at the height of the energy crisis in 2022. The levy was implemented in Oct’22, and was extended to all allocation exit quantities at cross-border interconnection and virtual interconnection points from January 2023.

The charge has increased to €1.86/MWh over H1-24, from €1.45/MWh in H2-23, and the end date for its enforcement has been extended to March 2027, from an initial expectation of Dec-2024.

The chart shows the impact on the cost of gas exiting the German gas grid. This has an outsized impact on CEE countries (i.e. Austria), especially amidst efforts to diversify away from remnant Russian piped imports, in part via access to global LNG markets via newly commissioned German LNG terminals. The charge is likely to drive larger intra-European hub differentials, causing greater fragmentation of the European gas market. This will be exaggerated if the mechanism is mirrored by other countries.

That being said, ACER is currently reviewing the levy following a request by the European commission. This could challenge the longevity of this mechanism, and the expansion of similar levies in other markets (e.g. Italy shelving plans pending the review).

German storage neutrality charge extended to 2027