Natural gas consumption in OECD Europe fell by an estimated 16%, or 55 billion cu m (bcm), year-on-year (y-o-y) during the 2022-23 heating season (October through March) – its steepest drop in absolute terms for any winter season on record, according to data from the International Energy Agency (IEA).
“High gas prices continued to weigh on gas use in industry, while milder weather conditions – together with energy saving measures – depressed distribution network-related demand and gas burn in the power sector,” IEA said.
Distribution network-related demand fell by 16%, or 25 bcm, y-o-y during the 2022-23 winter season, accounting for around 45% of the total reduction in OECD Europe’s gas consumption. Heating degree days stood 7% below their 2021-22 levels, weighing on space heating requirements in the residential and commercial sectors.
“Notably, unseasonably mild temperatures in October and the first half of November delayed the start of the European heating season by almost a month. Nevertheless, weather-related factors explain only 40% of the demand decline experienced in the residential and commercial sectors. Gas-saving measures enacted in public buildings (such as mandatory temperature controls), fuel-switching in rural households (including to biomass, fuel oil and waste), the installation of heat pumps, efficiency gains and behavioral changes all played a critical role in reducing distribution network-related demand,” IEA said.
Rising affordability issues also contributed to lower gas use in households. The share of people unable to heat their homes in the European Union (EU) stood at 6.9% in 2021. This situation is expected to have significantly worsened during the 2022/23 winter season.
Gas burn for power generation declined by an estimated 12%, or 10 bcm, y-o-y during the 2022-23 heating season. This was largely driven by lower electricity consumption, which fell by nearly 7%, its largest drop in absolute terms for any winter season in IEA’s records. Milder weather, energy saving measures, and lower electricity use in industry were the main drivers behind this sharp decline.
Gas demand in industry fell by close to 20%, or 20 bcm, y-o-y during the winter season, with high prices leading to continued fuel-switching and reduced operating rates in the most gas-intensive industries. The steep drop in gas prices in first-quarter 2023 supported gas use in industry, which increased by an estimated 20% compared with fourth-quarter 2022.
OECD Europe’s gas demand is forecast to decline by 5% in 2023. This is largely driven by lower gas burn in the power sector, down by nearly 15% amid rapidly expanding renewables. Gas use in industry is expected to recover by close to 5% as lower gas prices enable demand recovery in the second half of the year. Considering the declines seen in the first-quarter, demand in the residential and commercial sectors is expected to fall by 4% in 2023, EIA said.
