Mild winter forecast sparks hope for avoiding gas shortage in Germany, economists remain wary

The projection of a mild winter in Europe is spurring hopes that Germany can avert a severe gas shortage in the next months. The country’s meteorological service DWD presented its winter forecast in a joint press release with the national grid agency BNetzA. “Germany’s heating energy consumption is mainly determined by outside temperatures,” the BNetzA said. Almost half of German homes are heated with natural gas. According to DWD calculations, the winter in 2022/2023 could be among the warmest since 1991, with an average temperature of at least 2 degrees Celsius, more than 0.5°C above the reference period’s average. French and British counterparts have made similar projections like those from DWD. “The winter prognosis is good news for all energy consumers,” DWD's Tobias Fuchs said. BNetzA head Klaus Müller said a comparatively mild winter could help saving at least 20 percent of heating gas in the next months. “Thanks to full gas storages, we have a running start but must not slow down now. Just a few cold days are enough to bring up demand and empty the storages quickly,” Müller warned. Despite losing its former main fossil fuel trading partner Russia as a supplier earlier this year, Germany’s gas storages were about 99 percent filled by early November. The DWD explained that the long-term prognosis is less reliable than shorter forecasts and that, despite the expected trend for warm weather, some periods throughout winter could be even colder than during the reference period.

Economists from research institute ZEW also warned against complacency in light of full gas storages. “The worst-case-scenario must not be forgotten,” the institute said, urging the government to take preliminary steps to avoid a “collapse” of the country’s gas market due to a supply shortage. Saving gas would remain as important as ever, ZEW head Achim Wambach said. In case of a market breakdown, the state had to jump in and allocate gas volumes at fixed prices. “Even though a market collapse is not just a theoretical possibility, the question of how it should be dealt with in practice is mostly overlooked,” Wambach said. Plans that outline who receives what in a supply crisis should be made now to avoid chaotic reactions that could cause further economic damage. “If companies assume they’ll continue to receive gas as a priority customer at moderate prices, there’s little incentive to prepare. The continuously high consumption then increases the likelihood of a shortfall,” he argued.