More Diverse and Flexible: The gas market today is different from what it was just a few years ago, writes the Bundesnetzagentur (Federal Network Agency) and draws a positive conclusion regarding security of supply in the winter of 2025/2026
In a blog post on its website, the Bundesnetzagentur draws a positive conclusion regarding gas supply security in Germany in the winter of 2025/2026 – despite comparatively low gas storage fill levels. The functioning of the gas market has fundamentally changed, the authority states.
The cause for this is the loss of Russian pipeline deliveries and the stronger diversification of sources of supply. Whereas in the past the market had been strongly characterized by long-term import contracts with oil price linkage – the gas price followed the oil price – and fixed purchase volumes, the system has developed toward a more flexible interplay of various procurement instruments.
Historically, stable pipeline flows ensured that surplus volumes were injected into storage in summer and withdrawn in winter. Storage facilities thus fulfilled a central balancing function. In addition, they were partly operated by importers such as the Russian Gazprom independently of the market and served the technical safeguarding of deliveries.
With the energy crisis of 2022/2023, this structure changed fundamentally. The loss of Russian deliveries made short-term state interventions necessary, including binding fill-level requirements for gas storage facilities and their filling on behalf of the state. At the same time, LNG import capacities were established and gas flows in the network were newly aligned. Today, supply is based more strongly on LNG deliveries as well as Norwegian pipeline gas. LNG is currently traded predominantly in the short term on the spot market, whereby the price structure has changed: seasonal differences between summer and winter are smaller, while at the same time volatility is increasing.
Against this background, the function of gas storage facilities has also changed, writes the Bundesnetzagentur. They no longer serve primarily seasonal balancing, but are used together with LNG as a flexibility instrument. Traders increasingly secure their delivery obligations via futures markets and combine various procurement options. At the same time, gas consumption has declined, which means that less storage volume is required.
“The market can make provisions for the vast majority of cases and do so at competitive costs,” the authority concludes. Too early an intervention by the state would lead to higher prices, it says in the blog post with reference to the summer of 2025, in which a state obligation to inject into storage could have caused higher market prices. “In fact, the traders have injected the necessary volume and at the same time benefited from lower (spot market) prices in the winter of 2025/2026 (in part below 30 euros/MWh). Overall, the market has ensured supply security at an appropriate price.”
The fill-level requirements introduced during the crisis therefore increasingly no longer correspond to market conditions. According to the Bundesnetzagentur, state interventions should remain limited to extreme situations. A strategic gas reserve for crisis cases, as is currently being discussed, must also be designed in such a way that it does not cause additional price spikes. In the past winter, all actors – suppliers, importers, storage and network operators – fulfilled their individual obligations. “Therefore, we have always emphasized that supply security was and is ensured,” writes the Bundesnetzagentur, “it has only become more complex and one should no longer look solely at gas storage facilities.”
