‘There’s not enough gas in the world’: Can Europe keep the heating on this winter?

Without Russian supplies there is simply not enough gas in the world, analysts say. The key to Europe getting through the winter will be the weather.

'There's not enough gas in the world': Can Europe keep the heating on this winter?
Will Europe have enough gas to get through a cold winter? (Photo by SEBASTIEN BOZON / AFP)

Europe is likely to scrape through this winter without cutting off gas customers despite reduced Russian supplies, but even adjusting to colder homes and paying more may not be enough in coming years, analysts say.

“I like a hot house, I have to admit… I really used a lot of gas,” said Sofie de Rous, who until this year kept her home on the Belgian coast at a toasty 21 degrees Celsius (70 degrees Fahrenheit).

But like millions of other Europeans, the 41-year-old employee at an architectural firm has had to turn down the thermostat after energy prices surged following Russia’s invasion of Ukraine in February.

Russia’s progressive reduction of gas supplies to Europe via pipeline triggered a bidding war for liquefied natural gas (LNG), sending prices sharply higher.

If certain countries like France and Spain froze prices for consumers, others like Belgium let suppliers more or less pass along the higher costs.

“I was a little panicked in the beginning,” said de Rous, who saw the gas bill to heat her 90-square-metre (970-square-foot) house in Oostduinkerke jump from 120 euros ($126) per month to 330 euros.

She has lowered her thermostat to 18 degrees and is looking into installing double-pane windows and a solar panel.

Like de Rous, the lack of concern about energy consumption of a whole generation of Europeans ended abruptly in 2022, and everyone is mindful of where their thermostat is set.

If previously natural gas was cheap and plentiful, it is now scarce and expensive.

The European wholesale reference price used to fluctuate little, hovering around €20 per megawatt hour. This year, it shot as high as €300 before dropping back to around €100.

“It’s the most chaotic time I’ve witnessed in all of those years,” Graham Freedman, a European gas analyst at energy consultancy Wood Mackenzie, told AFP.

Big drops in consumption

Sky-high energy prices have caused numerous factories, particularly in Germany’s chemicals sector which was highly dependent upon cheap Russian gas, to halt operations.

But European nations were able to fill their gas reservoirs and no one has been cut off yet.

“Until February, the very idea of Europe without Russian energy was seen as impossible,” said Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels.

“What was impossible became possible.”

A warm autumn that allowed many consumers to put off turning on their heating also helped put Europe in a better position for the winter.

But Europeans have also made dramatic cuts, with the EU using 20 percent less gas between August and November compared with the average gas consumption for the same months in 2017-2021, according to Eurostat.

In Germany, where half the households use gas for heat, data shows consumption down by 20 to 35 percent depending on the week.

“That’s much more than anyone expected,” said Lion Hirth, a professor of energy policy at the Hertie School in Berlin.

“And that’s completely contradictory to the talk that we’ve been hearing from doomsday talkers saying people just don’t respond.”

Energy bills are likely to remain high, and experts say a cap on gas prices agreed by the EU in December will only have a limited impact on bringing them down.

In the space of several months Russia has lost its top gas customer, Europe, with purchases passing from 191 billion cubic metres in 2019 to 90 billion this year.

Wood Mackenzie forecasts deliveries will fall to 38 billion cubic metres next year.

The EU has been able to import large quantities of LNG, but only by outbidding South Asian nations like Pakistan and India.

This has pushed these nations to increase their dependence on coal — negatively impacting global efforts to curb climate change.

In 2023?

Europe’s ability to import LNG has been limited by a lack of infrastructure. Port terminals capable of transforming the liquid in tankers back into gas and reinjecting it into pipelines are needed.

The continent’s top economy, Germany, scrambled to inaugurate its first facility in December, while plans for 26 new terminals have been announced across Europe, according to Global Energy Monitor.

And while the construction of more LNG terminals is underway, in 2023, unlike at the beginning of this year, Europe will mostly have to do without Russian gas to fill its reservoirs.

This could set up an even fiercer bidding war between European and Asian nations for supplies.

An EU gas price cap of 180 euros per megawatt hour that is scheduled to go into effect in February will likely have little impact in this case as it will not go into force if LNG prices are also high.

“The key factor is most certainly going to be: what is the weather going to be like this winter,” said Laura Page, a gas analyst at commodity data firm Kpler.

“If we have a cold winter in Asia, and we have a cold winter in Europe… this fight will intensify.”

The problem is that LNG supplies are limited.

“There isn’t enough gas in the world at the moment to actually cope with that loss of supply from Russia,” said Wood Mackenzie’s Freedman.

New LNG projects to boost supply won’t be able to come online before 2025, meaning Europeans will have to get used to living with homes heated to just 18 degrees.

Member comments

  1. What a manipulative article and a click bait.
    “ Without Russian supplies there is simply not enough gas in the world, analysts say.”
    What analysis? Who performed it and where’s the link to the original data?

  2. This is a highly misleading article. There is plenty of gas in the world. It’s just not conveniently available for Europeans on short notice.

    Western Canada has over something like 150 years of current reserves without looking for more. If they drilled they would almost certainly find more. This is in British Columbia, Alberta and Saskatchewan. They also have loads of hydro power in BC so they can export the gas if they want to. Venezuela has lots of gas. So does Saudi Arabia. And if course the US of A has loads of gas.

    It’s just a case of getting all this to Europe. Pay up and I’m sure they will gladly start shipping it.

    Or perhaps some should consider moving to Canada for the energy security, cheap gas, and lower costs of heating and electricity.

    We need a better discussion on this important topic than this article offers.

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What it means when Norwegian energy prices enter negative

After 18 months of high bills, consumers in Norway are now seeing energy prices enter into negatives. Here's what that means.

What it means when Norwegian energy prices enter negative

In the last year and a half, an energy crisis has left households in Norway dealing with record-high prices.

There is, however, a rare situation that can be seen as the exact opposite of what most have become accustomed to: households getting money off their bills to consume power.

What do negative energy prices mean for consumers?

It doesn’t happen often, but when it does, it makes the domestic headlines.

When electricity prices in Norway fall below zero in a certain part of the country, the residents of the area in question “get paid” for using electricity, as energy producers have to pay to sell electricity when the prices enter negative.

As Flow Power explains, negative prices refer to times when too much energy is generated. This has two effects: generators are discouraged from producing energy, and consumers are encouraged to use more power. The end result is that supply and demand are usually swiftly balanced out.

In order for it to take place, usually, several factors need to align: an abundance of snow in the mountains, heavy rainfall, limited electricity exports, lower energy consumption than usual (due to, for example, warm weather and summer vacations), or high energy imports (such as imports of nuclear power from Sweden).

You still have to pay grid rent and other fees

Electricity bills in Norway consist of multiple parts (electricity used, grid rent, and taxes/fees), and it’s important to note that negative prices refer only to the electricity used; they do not include the electricity companies’ surcharges, such as grid rent and other taxes/fees.

Grid rent is paid to the company that owns the electricity grid you are connected to, and it consists of a fixed part and a variable part that depends on how much electricity you use (regardless of what the electricity you use costs).

In addition, the vast majority of people in Norway have to pay a set amount in electricity tax to the state for every kilowatt hour they use, as well as VAT on this.

So, for it to actually pay for a consumer to use electricity, the negative price would need to be lower than the said tax plus the VAT on it, plus whatever you pay in grid rent – as well as any potential surcharges.

Furthermore, as negative prices are usually short-lived, the negative balance tends to end up lowering your average price, so the consumers don’t actually get paid.

Instead, electricity companies take the negative price into consideration when they calculate the average price per kilowatt hour you have used in the period covered by your bill (provided you’re on a spot contract).

Recent instances of negative energy prices

One of the most recent examples of negative energy prices in Norway was registered on May 21st, 2023, on a Sunday, when prices were negative in the entire country between 11am and 5pm, according to figures from the Nord Pool power exchange.

At the time, the energy sector outlet Europower reported that it was the longest period with negative prices in a single day in Norwegian history.

“The negative prices in certain hours are mainly due to low consumption of electricity in combination with high production,” power analyst Tor Reier Lilleholt at Volue Insight told the newspaper E24.

“The main reason why there are negative prices now is solar production in Europe. This leads to massive imports. At the same time, there is a lot of snowmelt in the mountains and a lot of water in the rivers,” Lilleholt said.

Periods with negative energy prices in Norway also occurred in July and November of 2020, as well as October 2021.