German gas use could fall 3%-7% by 2030, McKinsey says

FRANKFURT (Reuters) - Germany's natural gas usage could fall some 3% to 7% by 2030 from current levels while it remains central to the country's energy supply, consultants McKinsey said on Tuesday.

McKinsey researchers said they had lowered their forecast, but less than those in economy ministry long-term scenarios, because McKinsey anticipates a slower-than-expected transition to electric heat pumps from gas-burning boilers, and stronger than anticipated gas demand in power generation and district heating.

WHY DOES IT MATTER?

Europe's biggest economy is at energy crossroads, with a conservative-led government expected to bring a more sober update to Germany's energy transition, after a hasty over-reliance on renewable power has turned out to come with some cost and supply risks.

McKinsey's six-monthly energy transition index captures trends towards an expected turnaround, which utilities say must address gaps created by the country's nuclear exit in 2023 and a planned withdrawal from coal generation in the coming years.

Since Ukraine on January 1 ended transit for Russian pipeline gas, Europe is turning more strongly to seaborne imports of liquefied natural gas (LNG) from the world market.

BY THE NUMBERS

McKinsey calculated a possible decline to between 690 to 720 terawatt hours (TWh) of German gas use by 2030, down from the current 740 TWh.

This would be above between 550 and 650 TWh cited by network development plans drawn up by grid operators on the basis of the minsitry scenarios, it said.

German households and businesses consume 45% of annual gas demand, industry uses 30% for its processes, and power stations 25%.

KEY QUOTES

"Germany will probably be dependent on natural gas for longer than previously assumed," said Thomas Vahlenkamp, ​​senior partner in McKinsey's Duesseldorf office.

An abstract from the report referred to the increasing shift to LNG reliance, pointing out, "a tight supply situation could lead to price spikes."

(Reporting by Vera Eckert, editing by David Evans)