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Current natural gas consumption in the residential and commercial sectors

Alexander Roth, Felix Schmidt

The data of this section is updated every Thursday.

Temperature-corrected consumption

The German Federal Network Agency assumes that natural gas consumption in Germany has to fall by at least 20 percent compared to previous years to avoid a gas shortage in the winter of 2022/2023. In September 2022, the Federal Network Agency pointed out repeatedly that the achieved savings of households and the commercial sector were too low. Since then, the agency reiterated its plea to save several times (e.g., in December 2022).

To avoid a gas shortage, absolute savings are the relevant measure, i.e., the actual consumption regardless of the outside temperature and, thus, the heating demand. However, evaluating the consumers' behavioral response, and their effort to save, requires adjusting for weather-related differences between the time of interest and a reference period. This is particularly important for the consumption of households and the commercial sector, whose gas demand mainly derives from heat demand and is thus highly temperature-sensitive. Below, we devise a model to decompose total savings into weather-related and behavioral savings.

Based on consumption and temperature data from 2018-2021, we use a linear forest method (see methodology box below) to determine a relationship between outdoor temperature and natural gas consumption by households and commercial customers. On this basis, we estimate the consumption in 2022 that would be expected based on current temperatures if natural gas consumer behavior had not changed compared to recent years. The difference between this "expected" (counterfactual) consumption and the actual consumption volumes allows for drawing conclusions on German gas saving efforts in response to higher prices, a looming shortage, or simply the agency's pleas to save. The focus here is on the period beginning in September 2022, or calendar week 36.

The figure shows that the expected natural gas consumption (dotted line) is significantly higher than the actual natural gas consumption. This means that households and commercial customers are currently consuming significantly less gas than would be expected given current temperatures and unchanged behavior.

Savings: weather and behaviour components

Using the estimated "expected" consumption, we can specifically decompose the natural gas savings of the residential and commercial sector in 2022 into a "weather component" and a "behavior component". As evident in the figure above, 2022 savings vary considerably between weeks compared to the 2018-2021 average. September 2022 (Weeks 35-39) was exceptionally cool, reflected in a positive weather component. The expected natural gas consumption in these weeks was higher than the average in previous years. Despite substantial behavioral savings, this caused consumption in weeks 37 and 38 to increase compared to the average for the respective weeks in the last years. In October (from week 39), however, unusually mild weather helped to reduce gas consumption, and weather-related savings exceeded behavioral savings. While consumers saved very little over Christmas, saving efforts improved in the new year, albeit below the 20% target.

In order to put cumulative savings due to changes in consumption behavior into perspective relative to alternative measures of ensuring security of German gas supply, we compute an equivalent number of liquefied natural gas (LNG) shipments. Details on the conversion can be found in the methodology box below. For comparison: A long-term contract concluded with Qatar in November 2022 has a volume of up to 2 million tons of LNG per year; this corresponds to a bit more than 26 average LNG tanker shipments.

Reaching the savings target

In total, household and commercial natural gas consumption has decreased by about 20 percent since September 2022 compared to the 2018-2021 average consumption. The cumulative consumption has been meandering around the target reduction for the last months, as can be seen from the figure above. While a gas shortage in the remainder of this winter season seems unlikely at this point, saving efforts need to continue to maintain a comfortable buffer in storage levels for the 2023/24 winter.

Our data is also shown by the two German newspapers Süddeutsche Zeitung (SZ) and Tageszeitung (TAZ) in their respective energy dashboards.

Methodology and Data

Using a "linear forest", a machine learning method, we estimate residential and commercial gas consumption based on average, maximum, and minimum daily temperatures for the current and the last three days. We aggregate data from hundreds of weather stations across Germany using the median to prevent bias from extreme data points, such as from the Zugspitze. In addition, we control for the current calendar month and weekend or public holidays to account for the seasonality inherent in gas consumption (beyond temperature variations) and different consumption behavior on non-working days.

We train our model using daily data between July 2018 and December 2021. We obtain temperature data from the German Weather Service and gas consumption data from Trading Hub Europe. We validated the quality of the model's prediction against the actual consumption levels between January and June 2018 to determine the best-performing model. In this way, we compared a range of machine learning models, including a neural network, a LASSO estimator, linear trees, gradient boosting, random forests, and linear forests. A linear forest specification had the lowest mean squared error and thus performed the best.

We use the resulting model to predict consumption in 2022. It is not trivial to determine the cutoff time after which we would expect actual natural gas consumption to deviate from the consumption estimated based on previous years. Comparable publications start forecasting as early as September 2021, when gas prices began to rise at European gas trading hubs. Another approach would be to select the beginning of the Russian war against Ukraine. We only consider households and commercial customers who are usually only affected by wholesale market developments with a long delay. Therefore, we deem it plausible that including training data through to December 2021 will not introduce bias into the forecast.

We compare our forecast with consumption data from the German Federal Network Agency in weekly resolution, as it provides more up-to-date data than the Trading Hub Europe.

More details on model selection and estimation can be foundin this notebook.

We convert the cumulative gas savings based on behavioral changes in consumption to LNG shipments by assuming an average vessel capacity of170 000 cubic metres. This corresponds to an energy of nearly 1.2 TWh (not considering losses during transportation and regasification).