2023-08-10 00:20:16
Gas demand was down 19% in the second quarter across the European Union. And Belgium is right on trend.
The gas demand was down from 19% in the second trimester in the European Union compared to the average demand over the same period between 2019 and 2021, shows the tracker developed by the European think tank Bruegel.
The Belgium is right on trend, with demand down 19% also in the second quarter. And the phenomenon increased in July, with a decline of 27%, largely due to the drop in demand from gas-fired power plants (-64%). Still in July, in Belgium, industrial consumption fell by 18%, and that of households by 14%.
“Most of the reduction in demand is due to high prices, which have encouraged substitution and investment in alternatives.”
The price effect
Following the war in Ukraine, the European Union set itself the objective of voluntary reduction of gas demand by 15% between August 2022 and March 2023 compared to the average consumption of the previous five years. And this objective has been extended for a year.
But for Ben McWilliams, a researcher in energy policy at the Bruegel Institute, even if this has created a favorable framework for reflection on the reduction of demand and, no doubt, for the implementation by governments of certain actions, this is not the main reason for this sharp reduction in gas consumption. “Most of the reduction in gas demand is due to high prices of the last 18 monthswho encouraged short-term alternatives, et longer-term investments in alternatives which structurally reduce demand, such as domestic heat pumps”, he analyzes.
The very sharp decline in gas power plant consumption in July, it seems to be a much more volatile phenomenon, even if it is not specific to Belgium. “Electricity production from gas-fired power plants is down 7% across the European Union compared to July 2022 thanks to slightly lower electricity demand and increased production from renewables”, locates Ben McWilliams. “This may be due to the accelerated deployment of solar panels and wind turbines in Europe, but also to more favorable sun and wind conditions.”
Steady decline in the industry
The decline in household gas consumption also presents a certain volatility, particularly linked to weather conditions. Industrial demand, on the other hand, is showing a much more consistent decline: -15% at least since July 2022, with a low point of -33% in October 2022, with the only exception of June 2023, when it was only -10%. But it has since returned to -15% in July.
This sharp decline in gas demand, combined with imports of LNG (liquefied natural gas) which remain very high, explains the exceptional filling rate of storage facilities of gas – in Belgium, where they represent the equivalent of seven days’ consumption in the event of extreme cold, they are full.
For’coming winterBen McWilliams shows up rather optimistic. “We are no longer facing the same acute crisis as a year ago. disaster scenario with for example a very cold winter in both Europe and Asia or North America and interruptions in global LNG supplies can still lead to shortages, but is very unlikely.“
Europe is not, however, out of the woods, he warns, however. “THE prices should stay highwhich means still high bills for households and a challenge for businesses.”
The summary
- Gas demand remains in sharp decline: -19% in the second quarterfor the whole of the European Union as in Belgium.
- THE high prices over the past 18 months have encouraged the search for solutions de substitution and theinvestment in alternatives.
- The decline concerns all categories of consumers. But the reduction in demand for gas power plants is very volatile, whereas that of industry is much more constant.
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