European power demand is no longer increasing with GDP. Over the last ten years it has actually gone down by 4%. In Germany, for example, power demand has been on a downward trend since 2006, going only slightly up last year. Data suggest we are past peak demand. It is clear that this decreasing trend is here to stay.

This also affects gas demand, noting that not all gas is used for power generation. European gas demand was 11% lower in 2014 than 2004. There was a slight increase in 2015 but it was still second lowest since 1995. In Germany it was down by 14% and in the UK by 9%.

The main factors contributing to this trend are:

• Efficiency of use

• Robustness of coal subsidies, plus low costs, plus absence of a meaningful carbon price

• Growth of renewables – direct support through subsidies, mandated shares, Europe-wide targets

The net result is falling demand and falling prices as we all well know. 

To read the rest of this article, click here to sign up for your complimentary copy of our Natural Gas World Magazine!