Natural gas consumption is falling more slowly than expected

Germany will probably remain dependent on natural gas for longer than planned. This is the key finding of the latest “Energy Transition Index” published every six months by management consultancy McKinsey.
Despite ambitious climate targets, it is clear that natural gas will continue to be a central pillar of the energy supply, according to McKinsey in a press release. New calculations indicate that total consumption will only decline slightly from the current 740 TWh to between 720 and 690 TWh by 2030. This is “significantly lower than the forecast from the network development plan, which assumes a natural gas demand of 550 to 650 TWh,” McKinsey reports.
According to the authors, one reason for the slower decline is the sluggish switch to alternative heating technologies and the increased demand for gas for electricity and district heating generation. Despite the increasing popularity of heat pumps, their expansion is lagging behind expectations: in 2024, only 193,000 new heat pumps were installed – a figure well below the target of 6 million units by 2030. Even the high installation rate in the new construction sector is not enough to achieve the expansion targets.

District heating and electricity production increase demand

At the same time, district heating is playing an increasingly important role in the heating supply. Currently, around 14 percent of households use district heating, and in the medium term, around 100,000 more buildings are to be connected to such networks each year. After this mark was first reached in 2023, the target appears realistic, according to McKinsey.
However, the targeted switch from decentralized heating systems to centralized district heating will increase the demand for natural gas. “Consumers’ switch from decentralized to grid-based heating increases the demand for centrally produced district heating, with many municipalities increasingly relying on natural gas for their heating planning,” the report says.
At the same time, the gradual phase-out of coal and nuclear energy requires more natural gas for electricity production, since renewable energies can only meet demand to a limited extent due to the volatility of their generation. While 140 TWh of natural gas was still being used for electricity generation and 55 TWh for district heating in 2023, this figure could increase to 170 to 175 TWh (electricity generation) and 75 to 80 TWh (district heating).
“Germany will probably have to rely on natural gas for even longer than assumed,” says Thomas Vahlenkamp, Senior Partner at McKinsey’s Düsseldorf office. In view of the discrepancies between planning and the possibility of higher demand, McKinsey recommends the following measures:

• Realistically assess gas demand: This requires a clear analysis of the facts and demand developments.
• Secure gas supply: Germany has increasingly switched to LNG (liquefied natural gas) supply, but a tight supply situation could again lead to price spikes for natural gas.
• Adapting infrastructure: With a view to the future of the 600,000-kilometer natural gas network, it is important to explore options for integrated optimization. Even if demand for natural gas continues to fall in the longer term, the existing infrastructure could still be of great use – for example, by repurposing pipelines for the transport of hydrogen or CO2 using CCS.