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Highlights


Powergen gas demand in 990-1400 TWh range in 2040

Italy, Germany have biggest potential for gas gains

High-end range still in line with EU 2050 CO2 goals

EU power generation demand for natural gas will still be significant in 2040, potentially ranging from 990 TWh (90 Bcm) to over 1,400 TWh (127 Bcm), compared with an estimated 825 TWh in 2020, according to EU gas and power transmission system operators.

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EU nations most sensitive to coal/gas switchEven the top end of the estimated range would still be on a realistic pathway to achieve the EU's goal to cut its emissions by at least 80% on 1990 levels by 2050, formal EU gas TSO body Entsog and EU power TSO body Entso-e said in the final version of their first 10-year network development plan joint scenario report published at the end of March.

In the short term EU power generation demand for gas could rise more than 70% to 1,415 TWh in 2025 if gas goes before coal in the merit order, the two TSO bodies estimated. Even if coal goes before gas in 2025 they still estimate gas demand would rise 19% to 984 TWh.

The two bodies based these "best estimates" on TSO inputs and taking account of all national and European regulations. They included the coal versus gas merit order analysis in response to stakeholders' interest in this variable. Gas and coal prices are key uncertainties for future power generation, even in the relatively short term.



Entsog and Entso-e assume that gas goes before coal in all three of their longer term scenario pathways to a decarbonized future. The results still show large variations, with a potential EU peak of 1,477 TWh in 2030 under an EC scenario which assumes a 30% by 2030 EU energy efficiency target. The EU is in the final stages of agreeing this target, with 30% still an option.

EU power generation demand for gas is high and stable at around 1,425 TWh to 1,450 TWh in the sustainable transition scenario, which assumes the EU reaches its low carbon goals through national regulation, the EU Emissions Trading System, subsidies, and making the most of existing infrastructure.

It drops to its lowest by 2040 at around 992 TWh in the global climate action scenario, which assumes full speed global decarbonization, and large-scale renewables growth in both power and gas sectors.

EU power generation demand growth for gas is slow and limited in the distributed generation scenario, which sees "prosumers" driving demand for decentralized energy, particularly solar, batteries, hybrid heat pumps, electric vehicles and demand side response. This leaves power generation demand for gas at around 1,112 TWh by 2040, which is 22% or 314 TWh lower than the sustainable transition scenario.


ITALY, GERMANY BIGGEST GAS POTENTIAL


At national level, Italy has the biggest potential power generation demand for gas in absolute terms, up nearly 80% to an estimated 302 TWh in 2025 from an estimated 168 TWh in 2020, in a gas before coal scenario. In the coal before gas scenario, Italy's gas demand for power would rise just 15% to an estimated 193 TWh.

Germany is second, with an estimated 200 TWh gas demand for power in 2025 in a gas before coal scenario, nearly double the estimated 101 TWh for 2020. This is also a huge rise compared with Germany's estimated 117 TWh gas for power demand in a coal before gas scenario in 2025.

EU28 + gas demand scenarios to 2040Greece has the potential for a big relative rise, with estimated gas demand for power almost tripling to 56 TWh in 2025 from just 19 TWh in 2020 in a gas before coal scenario. In a coal before gas scenario Greece's gas demand for power would only reach an estimated 20 TWh in 2025.

Other countries that would see relative big rises on smaller volumes in a gas before coal merit order in 2025 include Austria (an almost tenfold increase to 18 TWh), Croatia (a more than eightfold increase to 11 TWh), and Hungary (nearly quadrupling to 10 TWh).

Spain also has the potential to more than double its gas demand for power to 128 TWh in 2025 from 52 TWh in 2020, in a gas before coal scenario, compared with 82 TWh in a coal before gas scenario.

The UK has the highest estimated gas demand for power in the EU in 2020, at 224 TWh, and also in 2025 in a coal before gas scenario, at 249 TWh. But it is overtaken by Italy's estimated 302 TWh in a gas before coal scenario in 2025, with the UK reaching an estimated 288 TWh, up 28% on 2020 estimates.

Italy's power generation demand for gas could peak at 378 TWh by 2030 in the sustainable transition scenario, well ahead of Germany on 261 TWh and the UK on 180 TWh.


NEXT STEPS


These scenarios feed into Entsog's and Entso-e's work on their separate 2018 ten-year network development plans. They plan to publish both as drafts for public consultation in the third quarter of this year, then the final electricity plan by the end of 2018 and the final gas plan in spring 2019.

-- Siobhan Hall, siobhan.hall@spglobal.com
-- Edited by Maurice Geller, newsdesk@spglobal.com