German industry curbed gas demand by a fifth in crisis

© Reuters. FILE PHOTO: Model of natural gas pipeline and German flag, July 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

FRANKFURT (Reuters) – German industry cut its gas consumption by nearly a fifth last month, sustainability experts said on Tuesday, after a plunge in Russian gas exports sparked a continent-wide energy crisis that led to soaring energy prices.

Releasing a working paper that assessed savings measures to date and also looked ahead, researchers at the Berlin-based Hertie School’s Centre for Sustainability said that lower usage was a prerequisite for overcoming the crisis.

“A further reduction in gas consumption in industry is likely in view of persistently high gas prices,” they said.

Their data did not count special temperatures and macroeconomic effects to allow for a year-on-year comparison of standard consumption for a given month.

Manufacturing industries saved six terawatt hours (TWh) in its processes in September in absolute terms, saving 19% year-on-year over September 2021. By comparison, Germany 1,003 TWh of gas in 2021.

To cope with the high costs, industry operators charged more for their output, switched to alternative fuels or substituted energy-intensive products with imports.

German households, half of whom heat with gas, increased savings to 36% year-on-year in September, having saved 10% in March, the study said.

The researchers explained these findings with delayed billing effects, delayed saving appeal campaigns and a lower price exposure of household prices to the wholesale market.

It was unclear whether householders would continue to voluntarily turn thermostats lower in the cold season, they said.

Gas spot prices on the Dutch wholesale hub, the Title Transfer Facility (TTF), averaged 100 euros ($98.83) per megawatt hour between October 2021 and mid-2022, peaking at 240 euros/MWh in August.

This compared with a long-term, pre-COVID-19 price level of 15-20 euros/MWh.

Germany’s expert gas commission on Monday presented proposals to the government for a gas price cap to help citizens and encourage companies to keep up operations and protect jobs.

($1 = 1.0118 euros)

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