The heating season begins. The gas supply is quite secure. But it’s worth paying attention to the prices. Getty Images / Daniel de la Hoz, Sean Gladwell
It has become colder and many households are now starting to heat. This begins the second heating season since Russia’s attack on Ukraine changed so much.
The starting position is significantly better than a year ago. The gas storage facilities are full and supplies are considered assured. But there are also still risks for the gas supply and therefore for the price.
The state will soon intervene in the gas price with taxes, the CO₂ price and price brakes. In any case, heating remains expensive and saving is worth it. Here are the most important questions, answers and tips for winter 2023/24.
Autumn was warm for a long time. Now it’s getting colder and many households are turning on the heating. This marks the beginning of the second heating season since Russia invaded Ukraine. The starting position is significantly better than before the crisis winter of 2022/23: “The gas supply is stable. Security of supply is guaranteed,” writes the Federal Network Agencyr. The price of gas is currently barely higher than before the war, but lower than a year ago. However, there are still risks, there is a lot to consider when it comes to prices – and it is worth continuing to save energy.
Here are the most important questions, answers and tips to help you get through the fall and winter well.
How secure is the gas supply?
The starting position is significantly better than a year ago. At the beginning of 2022, Germany purchased 55 percent of its natural gas from Russia. Over the course of the year, Russia gradually turned off the gas tap and has stopped supplying gas since September. Germany had to buy gas quickly and expensively on the world market. A gas shortage has long been a realistic danger.
Things look better today. Germany has built up a large reserve of natural gas. The storage tanks are more than 98 percent full. Germany receives more gas through pipelines from Norway and also large quantities of liquefied natural gas (LNG). For this purpose, three LNG terminals were built in Wilhelmshaven, Brunsbüttel and Lubmin. Three more terminals are being planned: in Wilhelmshaven, Stade and Mukran on Rügen.
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Last year, companies and households also significantly reduced their gas consumption. In industry, some companies switched to other energy sources such as oil, while others cut back on energy-intensive production. Households and smaller companies reduced consumption. A mild winter also helped.
The Industry association DVGW calculated that the gas stocks will now be sufficient until the end of April 2024 given current deliveries, average temperatures and consumption as last year.
Nevertheless, Economics Minister Robert Habeck and the head of the network agency, Klaus Müller, point out that there are still risks for gas supplies.
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The risks for the gas supply in winter 23/24
The biggest risk is the weather. When it gets really cold, gas consumption increases significantly. If there is a long period of extremely low temperatures, the gas storage facilities will empty quickly. Then more gas would have to be purchased.
There are also risks with deliveries – especially from Russia. It still delivers large quantities of natural gas to Europe via two pipelines: via “Turkstream” through the Black Sea, and via “Transgas” through Ukraine to Austria and Italy. If Russia were to reduce or stop these deliveries, Germany would also be required to send more gas to the affected countries in the European gas network.
The third risk concerns disruptions to existing pipelines. In 2022, the Nordstream 1 and 2 Baltic Sea pipelines were deliberately destroyed. To this day it is still unclear who is responsible. Just a few weeks ago, a pipeline between Finland and Estonia had to be shut down after it was damaged – apparently by sabotage. The pipelines from Norway are also vulnerable. And the lines to southern Europe run through war zones in Ukraine and the Black Sea.
The fourth risk concerns other supply bottlenecks. Israel had to close a gas field in the Mediterranean because it was within range of Hamas rockets. From there, LNG also reached Europe via Egypt. A strike by workers at LNG terminals in Australia shows how nervous the situation is. Gas prices on the world market immediately rose noticeably.
“We are well prepared for the heating season, which is now slowly beginning,” says Berenberg Bank’s chief economist, Holger Schmieding. But: “There are always residual risks. If everything went wrong at the same time, a gas shortage could not be completely ruled out.” Or an impact on prices.
This is how the gas price is currently, this is how it is developing
The price on the European gas markets rose by around 15 percent after the incidents on the pipeline in the Baltic Sea. “It previously looked as if consumers’ gas bills this winter could be slightly lower on average than last winter,” says Schmieding. “With the current prices on the futures markets, this would probably not be the case or would hardly ever be the case.”
When it comes to the current gas price, a distinction must be made as to whether these are new customers or existing customers. New customers pay according to the data Comparison portal Verivox currently just under 9 cents per kilowatt hour of gas (Kwh). At the height of the gas crisis, the price for new customers rose to 40 cents per kilowatt hour. It is now back to the level of autumn 2021, when the price of gas began to rise as Russia prepared for war.
According to the data, existing customers currently pay an average of around 12 cents per kilowatt hour of gas. Before the Ukraine crisis, the average price was seven cents. At the height of the crisis it had risen to 22 cents.
The different prices for new and existing customers show that it can be worth changing providers.
The consumer portal Finanztip also points this out. The experts recommend switching if your gas price is currently above 10.6 cents per kilowatt hour. This threshold is important because of foreseeable changes in gas prices due to government intervention.
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What interventions in the gas price is the state planning?
The state will likely influence the price of gas in the coming months through three decisions:
First: In October 2022, the government temporarily reduced the VAT on natural gas from 19 percent to seven percent. The time limit ends at the end of March 2024. The federal government wants to increase the VAT on gas again to 19 percent as early as January 1, 2023. She cites the lower gas prices as the reason. However, the increase is controversial because prices could then rise in the middle of the heating season. The Bundestag still has to decide on it.
Second: The CO₂ price for natural gas is expected to rise from 30 to 40 euros per ton of CO₂ in 2024. “The kWh of gas will therefore be 0.2 cents (net) more expensive,” calculates Finanztip. Together, the higher VAT and the higher CO₂ price would make the price of gas for households 13 percent more expensive. Anyone who already pays more than 10.6 cents would then face a price of 12 cents per kilowatt hour. This is important for the third government intervention, the gas price brake.
Third: The state has cushioned the rise in prices for consumers with a price cap. For gas it is currently 12 cents per kilowatt hour and applies to 80 percent of the previous year’s gas consumption. If the price of gas rises above 12 cents, the state covers the difference for this amount of gas.
The gas price brake initially applies until December 2023. Economics Minister Habeck is committed to extending the gas price brake. This is also likely at least in the event that the VAT on gas is actually increased on January 1, 2024.
Why is it worth saving energy?
There are three reasons why you should continue to save gas:
Firstly: you save money. Every degree of living room temperature, every optimization of your heating, and every other saving measure immediately reduces your consumption and therefore your gas bill.
Secondly. You protect the climate. Gas is a fossil energy source. If it is burned to produce heat, the climate-damaging CO₂ is released. Every kilowatt hour of gas you use less helps against climate change.
Third: Germany is no longer dependent on Russia for natural gas, but is still almost entirely dependent on imports. All suppliers always benefit from higher demand on the world markets, including Russia. Parts of the liquid gas that Germany has used to replace Russian gas also come from states with undemocratic governments, such as Qatar, where the terrorist Hamas is based. Or it comes from the controversial fracking mining in the USA. Germany is trying to reduce its dependence on imports, primarily by expanding renewable energies.
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What is the best way to save money on heating?
Many people have already reduced their gas consumption. They have shortened their personal heating season, set the control temperature lower, and taken shorter and less hot showers. We have described in numerous articles how you can save energy and therefore money in everyday life. You can find a compilation of the best tips here.
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