German and European gas supply resilient to serious crises – report

Germany and Europe are well prepared to deal with serious disruptions to their gas supply in the long term, according to a report by consultancy PwC assessing the reliability of gas infrastructure. While "massive effects" can occur immediately after a disruption, energy markets would recover over a five-year period and return to pre-crisis levels within ten years, the report on behalf of the economy ministry (BMWK) concluded.

"The analysis shows that, even in the event of serious and persistent disruptions, gas markets are able to make significant corrections within a relatively short period of time," the report found. "[The results] also show that the German and European gas supply system is highly resilient and that the effects of crises are therefore mainly short-term, although these can be significant."

The consultancy, together with industry institute EWI and energy agency dena, analysed the resilience of gas supply against seven risk scenarios up to 2035, such as the failure of pipelines or low liquefied natural gas (LNG) capacities, as well as the transition from gas to hydrogen.

The scenarios approach or exceed the disruptions of the 2022 energy crisis, when Russia halted gas deliveries to Germany. It then evaluated the impact on prices and quantities, the utilisation of pipelines and storage, and the diversification of the import infrastructure.

"Germany's role as a transit country is particularly evident in the analysis: disruptions in the northern or southern supply infrastructure can potentially lead to infrastructure-related demand bottlenecks and price increases," PwC wrote in a press release.

To sustainably strengthen the resilience of Europe's energy market in the long term, the consultancy recommended policymakers to monitor and cooperate at the European level and diversify imports, as well as to expand renewables and promote technologies that would reduce gas consumption.