With a share in primary energy consumption of 20.5 per cent, natural gas plays a key role in the Federal Republic's mix of energy sources.
Natural gas has a wide range of possible uses
Natural gas will continue to make a significant contribution to energy supply in Germany over the coming decades. The heat market is still by far the most important market for natural gas. Nowadays, however, the use of gas is not restricted solely to heat generation. In addition to its role as a raw material primarily in the chemical industry, gas is a flexible and versatile energy source for generating electricity, storing energy and - looking to the future - as a storage facility for renewable electricity as well as for mobility. Natural gas is also more climate-friendly compared to other fossil fuels as it produces less CO2.
With the appropriate level of processing, biogas (biomethane) can be upgraded to the quality of natural gas and fed into the existing natural gas grids. It can therefore help to reduce the burden not only on the heat market, but also on electricity and fuels.
With the electricity generated from renewable sources varying considerably depending on factors such as weather conditions and season, natural gas-fired plants can play an important role in offsetting such fluctuations.
Another important and promising use for the natural gas grid is emerging. By converting electricity from renewable sources into hydrogen or methane and feeding it into the natural gas grid, the latter could serve as a huge reservoir for several billion kilowatt hours of energy. A number of very encouraging research and demonstration projects aimed at using this technology on a large scale over the next decade are currently underway.
Finally, as a cost-effective and climate-friendly fuel, natural gas is also playing an ever more important role in the area of mobility.
Natural gas is the second most important primary energy source in Germany's energy mix, after petroleum. In 2014, its share of primary energy consumption (i. e. the total amount of energy used in a country each year) amounted to 20.5 per cent. Based on figures from , an energy industry working group, domestic consumption in Germany stood at 2,674 PJ (LHV).
Europe's biggest gas markets are Germany, the United Kingdom and Italy. Germany will in future continue to be highly dependent on imports of natural gas. In relation to this issue, serious consideration of whether and to what extent any future extraction of natural gas from unconventional deposits (tight gas, shale gas, coal gas [coal bed methane, firedamp], aquifer gas and gas hydrate) would be able to decrease this share further is still not possible at the present time.
The growth in domestic demand is largely determined by trends in consumption in the individual sectors. In private households, natural gas is the most important energy source on the heat market, accounting for approximately 40 per cent. Here, more than 90 per cent of natural gas is used as a source of heating.
Natural gas and biogas (biomethane) as fuel are important elements in the fuel mix of the future. According to the , 79,065 passenger cars powered by natural gas were registered on 1 January 2014. In Germany, there are currently 925 natural gas filling stations.
The pipelines which go to make up the gas grid are essential for transporting and distributing natural gas. They enable widely varying quantities of gas to be transported safely over long distances. Considerable amounts of gas are transported across Germany to other EU states. In addition to this is a closely intermeshed network for distributing gas right through to the end consumer. The total length of the German gas network is more than 510,000 km.
The EU's Third Internal Energy Market Package created a planning instrument for setting up and preserving a network infrastructure required to achieve a unified single market. Under this package, the German transmission system operators (TSOs) are required to submit a Ten Year Network Development Plan on a regular basis. In accordance with the revised Section 15a of the Energy Industry Act which was enacted on implementing the Internal Energy Market Package, the transmission system operators submitted the first ever joint national Gas Network Development Plan on 1 April 2012.
The Gas NDP, which is updated each year, includes measures for the expansion of the network in line with demand and for ensuring secure supply and safe and reliable network operation. The first Gas NDP in 2012, which covers the period between 2012 and 2022, became binding upon the publication of the amendments requested by the Federal Network Agency (BNetzA) on 10 December 2012.
On 17 November 2014, the Federal Network Agency concluded the procedure for drawing up the third Gas NDP. The Gas NDP 2014 lists 51 measures for expanding the national gas infrastructure. The planned investments include grid expansion amounting to 748 km as well as the construction and expansion of compressors with an increase in capacity of 344 MW. The investment volume will increase to a total of 2.8 billion euros by 2024.
On 22 December 2014, the European Commission launched a pan-EU public consultation on potential projects of common interest (PCI) to modernise and extend the electricity and gas infrastructure. Some of the projects that have been put forward deal with a planned expansion of the gas network. Government agencies, companies, business associations, environmental organisations and private households wishing to respond to the consultation can do so up until 13 March 2015. For more information about the public consultation, please consult the .
Regulation and trade
The German gas market is characterised by a large number of privately organised operators in the areas of networks, storage operations and gas trading. There are currently two market areas in Germany (NCG and Gaspool), each with their own coordinator who ensures that access to the gas grid and market activities are both carried out in an efficient fashion. As at 1 August 2013, there were 17 gas transmission system operators in Germany. Other players are the distribution system operators, storage facility operators and commercial enterprises.
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, redefines the areas of activity of market players. To promote competition, the operators of gas supply networks and storage facilities are separated from natural gas trading activities.
Natural gas: import and domestic production
In 2014, overall consumption on the German gas market came to around 85 billion cubic metres. Demand for gas is forecast to fall slightly in future due, among other things, to technical progress and energy conservation.
Domestic production of natural gas, although falling slightly, is currently sufficient to cover just under 10 per cent of gas consumption. Germany will therefore remain highly dependent on imports of natural gas in future. At present, some 90 per cent of overall demand is supplied by other countries exclusively via pipelines. According to figures from Arbeitsgemeinschaft Energiebilanzen e. V. (AGEB), 38 per cent of the gas imported in 2014 came from Russia, 22 per cent from Norway, 26 percent from the Netherlands and 4 per cent from other countries. The publishes a monthly balance of how much natural gas is supplied and consumed on a monthly basis, as well as the price for German imports of gas.
Both biomass and its derivative, biogas, can be used domestically in helping to secure gas supply. In 2013, a total of around 520 million normal cubic metres of biogas with the quality of natural gas were fed into the grid. Further information can be found in the Biogas Monitoring Report published by the Federal Network Agency.
Prices and costs
As is the case for other goods and services, natural gas prices are not regulated but are set according to supply and demand. Prices are based on different cost components.
Acquisition costs include the gas purchase price as well as all transport costs. Distribution costs are all the costs involved in transmitting natural gas to the end customers. These costs also include all costs associated with the expansion and maintenance of the natural gas grid.
The natural gas tax is based on the Energy Tax Act under which the level of natural gas consumption in the various areas of application is taxed.
Network operators must pay the concession fee to the respective local authority as they use public areas for laying and operating gas pipelines.