De-coupling from Russian gas: German industry begins to adapt
18 September 2024
The abrupt loss of piped Russian gas has sent shockwaves through Germany's industrial landscape, prompting a fundamental re-evaluation of energy reliance and business models. As energy-intensive users grapple with declining gas consumption, a shift towards sustainable, flexible and affordable energy sources becomes imperative.
The impending transformation of German industry will see a migration of low value-added, energy-intensive production, accompanied by a surge in energy efficiency measures. The next decade promises a redefined industrial landscape, with a notable decline in gas consumption.
German gas prices have come down significantly from their shocking highs of 2022. Germany has successfully transitioned to non-Russian source of gas and built regasification facilities in record time. Gas storage capacity is at a high level and energy security, according to the BNetzA (Bundesnetzagentur), is assured. But gas demand in Germany has declined by over 20% since early 2022 and signs are that this decline in consumption will continue. So, what is happening? This paper explores the drivers behind Germany’s falling gas demand and attempts to separate the cyclical from the structural determinants. The analysis points to a future of less gas demand, particularly as the industrial make-up of Germany changes.
Reach out to our gas expert, Peter Thompson for more.
About the author
Paul Hennemeyer is a seasoned energy executive with deep expertise in origination, project development, and finance. Most recently he was Managing Director, GE Capital where he and his team catalysed $3bn of third party capital for GE energy projects in Europe, Africa, and Latin America. Prior to that Paul led the energy equity team at Siemens Financial Services with a focus on building out Siemen’s investing presence in renewable energy, particularly offshore wind.
Paul also has over a decade of experience working as a project developer for both renewable and conventional power at BrightSource, Advanced Power, and Steag. He is also Managing Director at Avrio Energy and Ioema Fibre – two development companies. He has lived and worked in various countries including the UK, Germany, Brazil, Mexico, South Africa, and India. Paul holds degrees in Economics from Tufts University and John Hopkins University. He was a Fulbright Scholar in Germany and is multi-lingual.
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