How Dependent is Europe’s Power Supply on Natural Gas?

24/06/2022

RWTH research team has examined security of supply of electricity and economic costs of reducing natural gas consumption

 

Due to recent cuts in natural gas supplies from Russia, the German federal government has just triggered phase two of its three-stage emergency gas plan. Around one third of the natural gas consumed in the European Union is imported from Russia. In the EU, a comparable quantity of natural gas is consumed for the production of electrical energy in gas-fired power plants. As a result of the Russian war against Ukraine, the question arises to what extent European power supply can do without the consumption of natural gas in the short to medium term. This question has now been addressed by an interdisciplinary team of researchers from the Chairs of Energy System Economics and the Chair of Transmission Grids and Energy Economics at RWTH Aachen University.

According to the researchers' simulations, the power sector is able to reduce its own average natural gas consumption by 30 percent without risking major power outages and adverse economic effects. For example, a 30 percent reduction in natural gas power generation would result in a loss of 1.6 TWh in electricity (about 0.1 percent of EU electricity consumption) and an economic cost of 1.4 billion euros due to unmet electricity demand (about 0.01 percent of the EU’s gross domestic product) per year. "However, this presupposes that electricity consumption is intelligently rationed from an economic point of view in the event of a shortage," explains Professor Aaron Praktiknjo, Chair of Energy System Economics.

Without further measures, however, according to the researchers, a tipping point will be reached when the power sector's usual natural gas consumption is reduced by more than 30 pecent. Should the energy sector have to reduce its own natural gas consumption by an average of 40 percent in the medium term, the loss in annual electricity of 37.8 TWh (about 1.4 percent of EU electricity consumption) and the economic costs would increase to 77.8 billion euros (about 0.5 percent of the EU’s gross domestic product). "The results show that in situations of scarcity, parts of the natural gas used for power generation can be dispensed with in order to supply households and industry with the natural gas thus saved," concludes Professor Albert Moser, head of the Chair of Transmission Grids and Energy Economics.

Against the backdrop of the public discussion about reducing dependence on natural gas imports, the effects of a delay of the currently planned shutdowns of coal-fired power plants also has been investigated. In their brief study, the RWTH team concludes that such a delay would indeed – at least partially – compensate for the economic costs of reducing natural gas consumption in the power sector.

For example, by delaying the shutdown of coal-fired power plants in the 40 percent reduction scenario, the above mentioned adverse annual impact on the national economy could be reduced by around two-thirds to 26.4 billion euros; in the 30 percent reduction scenario, such a delay would even completely compensate for the adverse economic effects. However, the researchers emphasize that the negative effects on the environment of keeping the coal plants open have not been taken into account when modelling the economic costs.

The brief RWTH study is available online (in German): Wie abhängig ist das europäische Stromsystem von Erdgas?