# Germany braces for energy supplier casualties
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German Power Suppliers Face Insolvency Amid Soaring
Meta Description: Energy experts warn of potential insolvencies in German power suppliers as wholesale prices skyrocket, similar to UK companies going bust.
URL: https://financedigest.com/germany-braces-for-energy-supplier-casualtieshtml

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By Vera Eckert

FRANKFURT (Reuters) – Some German power suppliers could go insolvent due to soaring wholesale prices that are hitting consumers worldwide and have squeezed out companies in Britain, energy experts said on Tuesday.

Several small UK retail energy companies, caught between promises of bargain prices and the need to cover high purchase costs, have gone bust.

When power futures double, as we have seen this year, this can lead to extreme problems when the [supplier has to buy expensively on the spot market,”](https://www.financedigest.com/new-suppliers-race-to-plug-in-to-electric-car-market.html "New suppliers race to plug in to electric car market") said Andreas Schwenzer, principal consultant at Horvath & Partners. \[EL/DE\]

This makes us certain that we will also see [insolvencies in Germany](https://www.financedigest.com/in-germany-energy-price-shock-triggers-fears-of-insolvency-wave.html "In Germany, energy price shock triggers fears of insolvency wave"), namely within weeks and months,” he said.

[Energy prices are rocketing due to factors ranging from Asia’s economic recovery to Europe’s](https://www.financedigest.com/europes-energy-crisis-and-the-nuclear-path-out.html "Europe’s energy crisis and the nuclear path out") carbon allowances policy and a period of lighter winds.

Unlike Britain, [Germany does not have a utility price](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") cap. Its 41.5 [million households buy](https://www.financedigest.com/iag-agrees-to-buy-80-stake-in-air-europa-for-400-million-euros.html "IAG agrees to buy 80% stake in Air Europa for 400 million euros") their energy in a flourishing but mostly unsupervised retail sector that was liberalised to create choice and dismantle monopolies.

The Bundesnetzagentur (BNetzA), the country’s regulator, said it was not tasked with monitoring procurement [strategies or pricing](https://www.financedigest.com/global-compressor-controllers-market-outlook-2021-pricing-strategy-industry-latest-news-research-report-analysis-and-share-by-forecast-2028.html "Global Compressor Controllers Market Outlook 2021, Pricing Strategy, Industry Latest News, Research Report Analysis And Share By Forecast 2028") mechanisms at suppliers.

When suppliers adjust their prices, they [must inform customers](https://www.financedigest.com/lost-in-translation-why-banks-must-learn-the-language-of-their-customers.html "Lost in Translation: Why Banks Must Learn the Language of their Customers") and allow them to cancel the contracts,” a BNetzA spokesperson said in a written reply to questions.

The authority also pointed to the high share of fixed elements within [household utility bills](https://www.financedigest.com/44-of-uk-households-are-worried-theyll-have-to-foot-the-bill-for-net-zero.html "44% of UK Households are Worried They’ll Have to Foot the Bill for Net Zero").

The state has a 51% share in final [power bills](https://www.financedigest.com/new-uk-pm-must-be-radical-to-stop-power-bill-catastrophe-think-tank.html "New UK PM must be radical to stop power bill catastrophe – think tank"), mainly to support renewables, which insulates the final price somewhat from fluctuations in the wholesale market.

Digital utility Tibber, a market newcomer, said state [taxes and fees must](https://www.financedigest.com/a-taxing-issue-ten-tax-invoicing-pitfalls-that-international-businesses-must-avoid.html "A taxing issue: Ten tax invoicing pitfalls that international businesses must avoid") come down.

Tibber sees its business [model of offering wholesale-tracking prices](https://www.financedigest.com/tesla-cuts-u-s-model-s-and-model-x-prices-between-4-and-9.html "Tesla cuts U.S. Model S and Model X prices between 4% and 9%") as superior to alternatives guaranteeing prices over certain periods if they aren’t backed up by underlying purchases.

I believe there will be insolvencies of distribution companies for [electricity and gas in this country in the next](https://www.financedigest.com/start-up-etioca-eyes-nasdaq-listing-next-year-as-it-unveils-electric-taxi.html "Start-up Etioca eyes Nasdaq listing next year as it unveils electric taxi") few months,” said Marion Noeldgen, Tibber’s managing director in Germany.

(Reporting by Vera Eckert Editing by Douglas Busvine and Mark Potter)


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