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High prices and weak economy reduce energy consumption

Energy consumption in Germany in the first six months of the current year was around 7 % lower than in the same period last year. According to preliminary calculations by the Working Group on Energy Balances (AG Energiebilanzen), domestic primary energy consumption reached 5,561 PJ or 189.7 mtce in the first half of 2023. This was 7.1 % less than in the first half of the previous year (Figure 1).

Fig. 1. Development of primary energy consumption 1st half of 2023, changes in %. Total 5,561 PJ or 189.7 mtce. Source: AG Energiebilanzen

According to the AG Energiebilanzen, the high energy prices and the weak economic development are responsible for the considerable decline in consumption. The weather had little effect on increasing consumption in the first half of the year. Only the population increase in the course of the current refugee movements caused an increase in energy consumption, which, however, was significantly lower than the consumption-reducing effects.

The AG Energiebilanzen assumes that prices essentially determine the course of energy consumption. Although quotations on the energy markets have declined noticeably compared to the first half of 2022, the price level is still significantly higher than in 2021. Energy prices, according to the AG Energiebilanzen, thus continue to develop impulses for saving energy, albeit at a slightly weaker intensity. In its analysis, the AG Energiebilanzen distinguishes between current, behaviour-related energy savings and investments in energy efficiency with longer-term effects. The consumption-reducing effects of the overall economic development are also currently strongly influenced by the significantly reduced production output of the energy-intensive industries (chemicals, metals, paper and glass). While the production of the entire manufacturing sector stagnated in the first five months of the year, the energy-intensive industries recorded a minus of 13 %.

The consumption of heating energy was only slightly influenced by the weather conditions in the first six months. Temperatures in the reporting period were somewhat lower than in the same period last year. However, in the first three months, which are particularly important for heating demand, it was warmer than in the previous year. Adjusted for the slightly consumption-increasing effect of the weather, energy consumption would have fallen by 7.6 % in the first half of the year.

Fig. 2. Structure of primary energy consumption in Germany 1st half of 2023, shares in % (previous year’s period in brackets). Source: AG Energiebilanzen

The consumption of mineral oil decreased by 2.0 % in the first six months of the current year (Figure 2). While the consumption of petrol rose by just under 6 %, there was a slight decline of just over 1 % in diesel fuel. Sales of aviation fuel increased by 7.5 %. The supply of raw petrol to the chemical industry decreased by almost 20 %. Sales of light heating oil, on the other hand, rose by 16 % because many consumers increased their stocks.

Natural gas consumption decreased by 10.1 % in the first half of 2023. On the one hand, the decline is due to the lower use of natural gas in industry. On the other hand, consumption by household customers and small businesses was around 10 % below the long-term average. According to preliminary calculations, electricity generation from natural gas fell by about 4 %, and the generation of district heating decreased by a good 2 %.

The consumption of hard coal decreased by 10.8 % in the first half of the year. The use in power plants recorded a decrease of almost 19 %. Changes in fuel prices and the lower demand for electricity led to a reduction in the use of coal in power plants. Sales of hard coal to the iron and steel industry decreased by 2 % in the reporting period. This showed that carbon-intensive oxygen steel production fell by only 1.7 %, while electric steel production declined by 13 %, as high domestic industrial electricity prices are not competitive by international standards.

The consumption of lignite decreased by about 18 %. This decline is largely in line with the development of deliveries to public supply power plants and is mainly due to the significant drop in domestic electricity consumption as well as favourable generation conditions in neighbouring countries. Despite the high decline, lignite remained the second most important electricity generation energy in Germany after renewables, with a share of just under 18 %.

Electricity generation from nuclear energy fell by 57 % in the first half of 2023 compared to the same period in the previous year. The decline in production is due to the stretch operation of the last three nuclear power plants in Germany (Neckarwestheim 2, Emsland and Isar 2) and their final decommissioning on 15th April 2023.

Electricity deliveries abroad in the first half of the year were 3.1 bn kWh higher than the electricity volumes flowing into Germany from abroad. In the same quarter of the previous year, the electricity exchange balance was still 17.3 bn kWh. In the second quarter of the current year, Germany became a net importer with an import surplus of 6.4 bn kWh. Germany’s higher import balance is considered a sign of a functioning European internal electricity market. Germany was able to benefit in part from cheaper generation options in neighbouring countries. In addition, weather conditions temporarily ensured higher electricity generation from hydropower in the Alpine region and Scandinavia. In addition, the expansion of renewable energies in other European countries progressed and increased the supply. Finally, the decommissioning of the last three nuclear power plants in Germany and the higher availability of nuclear energy in France compared to the previous year are also reasons for the import surplus in the second quarter of 2023.

The contribution of renewable energies increased slightly by 0.6 % in the first half of 2023. Electricity generation from renewable energy sources decreased slightly by 1 %. The provision of heat increased by 5 % and there was a 3 % increase in the transport sector.

The somewhat less favourable weather compared to the previous year caused slight decreases in both photovoltaics (-1 %) and wind power generation (-3 %). Electricity generation from biomass decreased by 4 %. Hydroelectric power, on the other hand, increased by 9 %. AG Energiebilanzen assumes that environmental heat harnessed by heat pumps increased by about 13 % and the use of wood by private households and in the commercial and service sectors grew by about 7 % in the first half of 2023.

According to a preliminary estimate by AG Energiebilanzen, energy-related CO₂ emissions fell by more than 8 % in the first half of 2023 compared to the corresponding period of the previous year. This corresponds to a reduction in the order of 28 Mt. (AG Energiebilanzen/Si.)