European households and businesses are using far less energy than in the past—as prices will continue to rise throughout the winter.
- During a period of warm weather, European households were able to reduce overall natural-gas consumption by turning off heating systems.
- Governments are asking citizens to cut back on energy consumption when they can as the region prepares for potential energy rationing during the colder months.
- Overall European gas demand dropped 22% in October as both residential and business heating systems were turned on less often.
- Electricity consumption increased by 14% during the same time period.
Why it’s news
The drop in energy usage isn’t just driven by the warmer weather—higher prices are encouraging citizens to put off turning on their heating systems.
Lead energy analyst at EnergyScan Julien Hoarau says that there are “emerging signs of behavioral change regarding heating usage,” that are creating “strong bearish pressure on spot gas prices across Europe and strengthened the continent’s ability to balance its gas system this winter.”
Conservation from residents has helped alleviate the worry that governments will need to ration energy supplies during the winter, but that worry isn’t completely gone.
Energy prices in Europe remain high, though they have dropped 60% lower than the peak in August. Prices are still triple the five-year average.
These high prices are resulting in a drop in demand. Residential and small business gas demand fell 33% in October. Large industrial user demand also decreased 27%.
How demand will look in the next few months is hard to predict as the severity of winter remains unknown and both nuclear and hydroelectric power options in Europe experience setbacks.
High prices seem to be driving the drop in demand, but some governments are looking to enforce price caps on energy. A price cap may take away the incentive to cut back on energy costs.