Possibilities for phasing out Russian gas for the 2022/2023 winter from the EU energy supplyUploaded: 1 of June, 2022

The goal of the project was to assess the impact of partial and full reduction of fossil fuel supply on the short term (the upcoming winter), and to estimate the supply and demand side mitigation options that the EU can apply. The focus was to assess the gas sector, where the dependency on Russian supply is the most serious.

A modelling-based assessment of the building sector was carried out by the TU Wien / E-Think modelling group using the INVERT model. They were providing the input on the short-term demand reduction options (turning down the thermostats, ventilation, quick and easy to apply energy efficiency improvements, etc).

The power sector modelling was carried out by REKK using their electricity sectoral unit commitment and economic dispatch model (EPMM). They provided input on the switching potential of the power sector on the short term.

For the industry sector no modelling team was available on such a short notice. Based on studies of other think tanks and expert judgement there were no short-term demand reduction potentials assumed for the industry sector, as any fuel switch or energy efficiency measure needs more time than the less than one year time horizon of this project. It was assumed that demand reduction potential of the industry is mainly based on full or partial shutdowns due to high prices. Price elasticity of the industry for the gas sector modelling was set by literature values (a uniform 0.1)

The European Gas Market Model (EGMM) of REKK was applied to first estimate the impact of the reduced Russian gas supply in two scenarios (a “REPowerEU scenario” estimating that only 55 bcm gas is purchased from Russia instead of the pre-war 150 bcm/yr, and a full Russian gas cut scenario, where 0 bcm gas arrives from Russia). In the second part of the gas market modelling the sectoral models (INVERT and EPMM) provided a demand reduction scenario, while different supply side scenarios were build based on the infrastructure projects that are under development in the EU (pipelines and LNG terminals).

For the oil and coal sectors no modelling was carried out, supply options and alternative transport routes were assessed to see the switching potential to alternative suppliers. During the project timeline the EU member states agreed on the sanctions for the oil and coal sector, therefore the gas sector remained the main focus.

Reducing Russian gas purchase to the level of the REPowerEU scenario would lead to approximately 35 bcm (355 TWh) curtailment for the EU consumers, that would mainly impact Germany, Italy and Central Eastern European countries. Gas prices without any further measure would skyrocket doubling the REPowerEU, increasing three times in the full cut scenario. Prices would diverge in Europe: Western Europe with modest price Central-Eastern Europe being the most expensive the Balkan in between the two.

Modelled natural gas demand reduction potential of the building sector and power sector range from 608-990 TWh.

Infrastructure investments that are long planned and under construction (GIPL, Baltic Pipe) can mitigate the supply crisis partly. The newly proposed LNG terminals for Germany can counterbalance the missing Russian volumes and bring substantial price relief to the most impacted parts of Europe.