There has been a lot of excitement for some time about what will happen to gas networks if gas demand continues to decline as a result of the energy transition and the achievement of climate targets. A sharp drop in natural gas use is expected by 2045. According to major scenario studies, a reduction in natural gas consumption of between 28 and 63 percent will be achieved by 2035 compared to 2022. In 2045, in These scenarios will only consume small residual quantities of natural gas. This inevitably involves a gradual dismantling of gas networks, as they can no longer operate economically without significant burdens on consumers.
If Germany no longer needs natural gas in 2045, gas networks will not be economically viable
The gas network in Germany is more than 500,000 kilometers long. Gas is mainly used for heating; Approximately half of the homes in Germany heat with gas. Gas is also used to produce electricity and process heat for industry through so-called combined heat and power plants. The proportion of natural gas used to generate electricity is currently around 10 percent.
In Germany there has long been a strong gas lobby, which for decades has promoted natural gas as the so-called “bridge technology”, without which it would supposedly be cold in Germany and the electricity would be cut off. Of course, this is not true, since heating can also be achieved without natural gas, for example by using much more efficient heat pumps or district heating. Electricity can also be produced without natural gas, especially from renewable energy. However, the strategy was and remains very successful, as was recently evident in the huge outcry over the supposed destruction of “national wealth” when natural gas networks were shut down.
The fact is that the need for natural gas will decrease, driven by the heating energy transition, which is motivated by financial subsidies and increases in natural gas prices due to rising CO2 prices. The use of natural gas will also decrease in the industrial sector, mainly for cost reasons. Due to the decrease in natural gas consumption, more and more natural gas distribution networks will have to be closed, otherwise a decreasing number of end customers will have to pay gas network costs.
If the gas network is not dismantled, the few end customers will have to pay the increasing costs of the network.
In particular, low-income households are at considerable risk. The heating plans developed by the federal states and municipalities will show how and how an orderly dismantling of gas networks can be carried out. However, not much has happened so far, as our recent study shows: Concrete heating plans have existed in Baden-Württemberg for some time, but they have not yet given rise to future plans, in particular to shut down the supply of gas. networks.
Network charges for remaining gas customers will increase as more consumers disconnect from the gas network, for example by switching to a heat pump. We are already seeing this evolution in France, where network rates have recently increased due to reduced customer numbers. Analysis of the effects of declining gas consumption on network costs by British energy regulator Ofgem shows that network tariffs could rise 10-fold in 20 years. And the longer communities wait and don't prepare, the more expensive it can be. Unprepared municipalities could be forced to change their heating supply at certain times. The longer it takes, the more expensive it can be.
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The EU Commission will therefore rightly ask countries, as agreed in the gas package, to create framework conditions to depreciate and decommission gas networks more quickly. Neither of those things is currently possible. On the contrary, there are still incentives to carry out extensions and replacement investments in the existing gas network rather than preparing for decommissioning. This has different reasons. On the one hand, the current regulation of natural gas distribution networks does not yet systematically provide for their dismantling. Added to this are the concession agreements, which have made many municipalities economically dependent on the sale of natural gas. A premature closure would result in significant stranded assets.
Simply hydrogen in the old networks? A technical myth
To make matters worse, the uncertainties are fueled by the promise that gas networks could continue to operate if hydrogen were used instead of natural gas. However, this is absurd both from a technical and economic point of view. From a purely technical point of view, an existing natural gas infrastructure cannot simply be powered by hydrogen. This is due to the lower energy density, higher flow resistance and corrosive effects of hydrogen.
The supposed “hydrogen readiness” of infrastructure and gas systems is a myth. Furthermore, hydrogen must be produced in a complex way, requiring large amounts of green electricity and water. The use of hydrogen in the heating sector is inefficient and too expensive, as more than 50 independent studies have shown. It is more of a hoax than a realistic option.
Be more realistic in heat planning.
So what does all this mean for the gas network? And for the clients? Lack of planning and uncertainty about heating plans can lead to high individual and financial costs. Instead, realism is the order of the day. Municipalities must develop heating plans as quickly as possible that ensure that the orderly shutdown of gas networks and alternatives for gas customers is possible. In particular, municipalities must be careful not to fall victim to the fallacy that possible remunicipalization is the solution. This can be very expensive and there are also dismantling and conversion costs to consider.
The most efficient form of heat generation is usually provided by individual heat pumps, but local and district heating options can also be attractive if they are generated by renewable energy or large heat pumps or if unavoidable waste heat is used. Instead of investing in the existing natural gas network, it would be better to invest in the conversion. Every euro that is now invested in past and obsolete technologies is not needed to invest in real technologies of the future.
The framework conditions must be adapted quickly so that realistic plans can be implemented. With the Green Paper, the federal government has prepared the first good proposals for its application in the event of a possible early depreciation of the gas networks. Gas customers should be offered help reorienting instead of installing gas heating. Hopefully the focus will remain on the consumer. Otherwise it will be very expensive. For gas customers and the German economy.