Gas will continue to make a major contribution to Germany’s energy supply in the coming decades. Only a small proportion of the natural gas used in Germany is produced in the country, while 94 per cent is imported from Norway, the Netherlands and other countries. Natural gas reaches Germany via pipelines, and is subsequently fed into the German long-distance gas grid and the downstream distribution grids.
An important role in the energy transition
Natural gas is one of the most important primary energy sources in Germany’s energy mix, second only to petroleum. In 2016, its share in Germany’s primary energy consumption amounted to 22.6 per cent.
Whilst the heat market is still by far the most important market for natural gas, this type of fuel is now being used for other purposes as well. In particular, gas can play an important role in the transition from fossil fuels to renewables in the power sector. Furthermore, natural gas also lends itself to being used in the transport sector. It has lower carbon emissions than other fossil fuels and is therefore more climate-friendly.
The total length of Germany’s gas grid is 511,000 km. The pipelines which make up the gas grid are essential for transporting and distributing natural gas. They enable widely varying quantities of gas to be delivered safely over long distances. Considerable amounts of gas are transported across Germany to other EU states.
The Gas Network Development Plan, which is updated on an annual basis, stipulates which parts of the network are to be expanded that year to ensure a secure supply and safe and reliable operation of the network, in line with demand.
Natural gas production in Germany: Fracking
In 2016, approx. 8 billion cubic metres worth of natural gas was produced in Germany, of which 8.5 billion cubic metres by means of hydraulic fracturing, or “fracking”. Conventional fracking has been used in Germany for many years and is a proven method of extracting natural gas from sandstone rock formations. Safety always comes first, which is why fracking is banned in sensitive areas. The Federal Government has also clearly stated its opposition to the use of “unconventional fracking”; no experience has been gathered with this in Germany so far. .
Playing safely with the gas supply
For a country as dependent on gas imports as Germany, it is vital to have instruments in place that . Germany’s natural gas supply is highly secure and reliable. At close to 24.1 billion cubic metres, Germany has the world's fourth-largest gas-storage capacity, which is also the largest within the European Union.
Gas trade and regulation of the gas market
The German gas market is characterised by a large number of privately organised operators that specialise in networks, storage operations and gas trading. Germany is currently divided up into two market areas (NCG and Gaspool) that each have their own coordinator who is in charge of organising access to the gas network and of ensuring that market activities are conducted efficiently. There are 16 long-distance gas companies are currently operating on the German gas market. Other players include the distribution system operators, storage facility operators, and traders. The EU internal market package for the liberalisation of the market for electricity and natural gas, most recently amended by the Third Internal Energy Market Package, sets out the scope of activity for each type of market player. Under the Third Internal Energy Market Package, the operators of gas supply networks and storage facilities have been separated from those trading in natural gas. Germany’s power grids and gas networks are regulated by the and the regulatory authorities of the Länder.
Gas price and costs
Just like other goods and services, gas prices are determined by supply and demand rather than by way of regulation. There are different cost components.
Acquisition costs include the gas purchase price and transport costs. Distribution costs are all the costs involved in transmitting natural gas to the final customers. These costs also include all costs associated with the expansion and maintenance of the natural gas network.
Natural gas duty is levied on the consumption of natural gas depending on the amount and on the field of application. The exact provisions can be found in the Energy Tax Act.
Where network operators use public land for laying and operating gas pipelines, they are subject to a concession fee payable to the respective local authority. You can find out more about the gas prices .
Power-to-gas: using gas to store energy
There is now an emerging trend towards using the natural gas grid in a different way that is highly promising. Electricity from renewables can be converted into hydrogen (and possibly methane) and fed into the natural gas grid, which could serve as a huge reservoir for several billion kilowatt hours of energy. A number of highly encouraging research and pilot projects are currently being conducted around this technology, to see how it could be used on a large scale, starting some time in the coming decade. For more information, please click .
One possible way of reducing carbon emissions from transport is to use natural gas as a fuel. This has the added benefit of also cutting emissions of particulates and nitrous oxides by a massive margin. For these reasons, the Economic Affairs Ministry has launched a Round Table on Gas-Based Mobility. The aim here is to enable the transport sector to increase the share of gas-powered vehicles to at least four per cent of Germany’s final energy consumption by 2020. .