EC urges gas, power demand reductions amid market strains

The European Commission has urged EU member states to take measures to reduce natural gas and electricity demand as the continent grapples with persistently high energy prices linked to the war in the Middle East and recent hot, dry weather, according to a letter signed by Energy Commissioner Dan Jorgensen on Sept. 23 and seen by Platts, part of S&P Global Energy.

"I invite you to consider taking or continuing to take measures that can sustain [gas] injections or reduce gas and electricity demand for as long as necessary," Jorgensen said in the letter to ministers. "In the context of constrained global supply and high price volatility, demand reduction can be an effective tool to help contain prices."

The Commissioner went on to describe several possible interventions, such as using smart metering, encouraging retail market demand-side flexibility, limiting temperatures in public buildings, preventing outdoor heating, and turning off unnecessary public lights at night.

Jorgensen also reiterated a push for member states to use flexibilities under the EU's gas storage regulation to lower gas stocking targets to 80% from 90%.

EU-wide gas storage is currently just 70.9% full, according to the latest data from Gas Infrastructure Europe.

At the same time, the Commissioner urged caution around moves targeting prices.

"Any measures regulating prices must be defined with care," Jorgensen said in his letter. "They should be well-targeted and temporary so that they do not lead to undesired effects like sustaining unnecessary or even increasing gas demand, have negative cross-border impacts or distort the internal market."

Stable supply 'for the time being'

An EC spokesperson reaffirmed the EU's current supply security in comments to Platts on Sept. 28.

"The EU's energy supply remains stable for the time being," the spokesperson said. "We have mechanisms in place to ensure our security of supply."

Jorgensen's letter comes as the war in the Middle East and associated trade disruptions enter an eighth month and Europe prepares for winter on the heels of a hot summer that tested power systems across the continent.

"In addition to the tense situation on global LNG markets, an exceptionally dry and hot summer has put pressure on the electricity system of several Member States," Jorgensen explained in the letter. "Consequently, prices remained high and volatile, and gas storage injection reduced as gas was consumed for power generation."

EU energy ministers are scheduled to discuss energy security and affordability at an informal meeting in Dublin on Sept. 29.

Platts, part of S&P Global Energy, assessed the DES Northwest Europe LNG marker at $23.535/million British thermal unit on Sept. 25. The index has eased from recent highs but remains about 121% higher than the same time last year.