The European Commission has urged member states to curb their energy consumption, warning that gas stocks remain “exceptionally low” and that rising global demand could put further pressure on the European market.

EU Energy Commissioner Dan Jørgensen, writing to the energy ministers of the 27 member states, called on governments to keep taking measures that boost supplies or limit gas and electricity demand “for as long as necessary”. He said the situation had not improved since his first warning in March.

Brussels does not currently see any immediate risk of shortages. However, it is putting on standby the demand-reduction measures used during the 2022 energy crisis, which followed Russia’s invasion of Ukraine, and has warned of a possible price crisis this winter. The letter says that although storage is exceptionally low and the situation remains difficult, there are currently “no immediate risks to security of supply”.

The latest figures from Gas Infrastructure Europe, the industry trade association, show EU gas storage at around 70% of capacity, about 12 percentage points lower than at the same point last year.

Continuing turbulence in the Middle East and fierce competition with Asian buyers for cargoes of liquefied natural gas (LNG) are keeping upward pressure on prices. The Dutch TTF, the benchmark for European gas prices, is trading at around €72 per megawatt hour (MWh), roughly €40 higher than before the US and Israeli strikes on Iran on 28 February.

Analysts warn that prices could climb above €100 per MWh at the peak of winter demand if LNG exports from the Persian Gulf do not increase, or if restrictions on Norwegian exports linked to maintenance work are extended.

Demand reduction measures

The Commission is examining measures used in 2022, although it is not proposing mandatory restrictions. Jørgensen noted that voluntary, well-planned measures proved useful during that crisis.

The options include cutting electricity use at peak hours, shifting demand through smart meters and tariffs, limiting heating in public buildings, banning or restricting outdoor heating, and switching off unnecessary public lighting at night.

The reasoning is that lower electricity consumption at peak times can reduce the amount of gas burned in power stations, easing pressure on both gas supplies and electricity prices.

What price will Europe pay?

Jørgensen also asked member states to use the flexibility built into EU gas storage rules, so as to avoid panic buying in an already tight global market.

The Commission believes that, under current conditions, an 80% fill target may be enough to secure the winter, rather than an aggressive push towards the 90% goal. Spreading purchases over time could reduce the risk of another price spike. Jørgensen added that the bloc is better prepared than it was before the 2022 crisis, citing new LNG import capacity, growth in wind and solar generation and lower gas demand.

The central question facing Europe this winter is not only whether there will be enough gas, but at what price it can be secured, particularly if global LNG markets remain constrained and European countries have to compete with Asia for the available cargoes.