Last year was one of the most challenging in recent history for the German gas industry. Russia's attack on Ukraine and the halt in Russian gas supplies are to blame. According to the industry association Zukunft Gas, the gas industry last year successfully met the challenges and managed to secure supplies during the current winter.
For the coming year, Zukunft Gas board member Kehler calls for maintaining the high pace of expansion of a resilient infrastructure and keeping the industry's transformation toward a hydrogen economy in focus in order to continue to ensure nationwide supply.
2022 in numbers
Natural gas maintained its significant role in Germany's energy mix in 2022 despite the Russian war of aggression against Ukraine and the resulting energy crisis. 23.8 percent of the primary energy consumed in Germany was supplied by natural gas last year. Compared with the previous year, the share thus fell by 26.7 percent, but natural gas was still the second most important pillar of energy supply. Only mineral and heating oil was larger, with its share of 35.2 percent (2021: 31.8 percent). Overall, natural gas consumption fell much more sharply (minus 13.6 percent) than primary energy consumption (minus 5 percent).
Dr. Timm Kehler, CEO of Zukunft Gas, sees this as an indication that business and society have taken the necessary savings from the energy crisis seriously:
"Together, we have stood up to the energy terrorism of Vladimir Putin. But we cannot overlook it: The 'fuel-switch' from gas to coal or oil made in many places is not good news for the climate. At the same time, the crisis is forcing us to rethink gas. This will give a new boost to our efforts toward decarbonization and transformation."
No all-clear on the price situation
However, Zukunft Gas believes that it is still too early to sound the all-clear with regard to the price situation. Wholesale prices for all energy commodities were extremely volatile in 2022 and also rose sharply in total. Natural gas increased in price by an annual average of 178 percent compared to the previous year, hard coal by 170 percent and crude oil by 44 percent.
"Our trading partners want to make contracts for ten or more years, if you don't have an answer to this, it will be difficult to guarantee security of supply in Germany in the long term." He also welcomes the speed with which the foundation for a German LNG infrastructure was laid last year. This pace must now be maintained, he says: "Well-diversified supply sources, storage facilities, and pipeline and LNG transport infrastructure are crucial to avoiding bottlenecks in the future," explains Gregor Pett, chief analyst at Uniper.
Natural gas in the electricity sector
Natural gas also plays an important role in the electricity sector, accounting for 13.3 percent of gross electricity generation last year. Kehler welcomes the expansion of renewables that took place last year, resulting in a 42.8 percent share of renewables in gross power generation (up from 39.5 percent in 2021).
"The increasing amount of fluctuating capacity from renewables is creating major challenges. According to our calculations, we need to close a gap of 15 gigawatts by 2030 in order to be able to supply flexible energy even when renewables are not available. We therefore welcome the discussion on a new market design as planned by the Federal Ministry of Economics." Last year, Zukunft Gas, together with the consulting firm enervis, submitted a proposal for a comprehensive capacity market in which remuneration also takes place for energy capacities held in reserve. "We want competition between technologies for the commodity of security of supply. Then the market can decide on an efficient technology portfolio," Kehler said.
Heating market and gas
Kehler also advocates competition between technologies in the heating market. Last year, a record number of 980,000 units were installed. Gas-fired heating systems dropped 8 percent, but at nearly 600,000 systems, twice as many were installed as heat pumps.
"Gas heating systems continue to dominate the market," Kehler explains. "Just under half of Germany's population heats with gas. Even if the jump in sales of more than 53 percent plus for heat pumps is impressive, we must not lose sight of the absolute figures and must above all offer an affordable perspective to the 41 million German citizens who now heat with gas," Kehler explains.