March was another month of big drops in gas demand across Europe, driven by mild weather and higher renewable generation. Even as gas prices plummeted, power sector gas demand fell across Northwest Europe, as wind generation hit record highs. And despite weak demand, aggregate supply was a touch higher y/y in some regions as massive incremental rises in LNG sendout offset lower pipeline receipts. Europe ended the gas winter with an impressive 42.6 bcm in stocks, 25 bcm more y/y, setting the stage for a very bearish summer, especially if renewable generation continues to provide a headwind to thermal output.
Total UK consumption fell by an impressive 1.9 bcm y/y (21%) y/y last month. Power sector demand fell by 0.2 bcm, owing to record highs in both wind generation and net power imports. The UK shed 3.5 TWh y/y (89%) in coal-fired output, but gas-fired generation fell too, by 1.1 TWh (10%), as wind generation rose by 1.2 TWh y/y (32%). Mild weather and rising power imports from the new Nemo Link interconnector with Belgium cut total power generation by a hefty 4.2 TWh y/y. LNG sendout was 1.1 bcm higher y/y, but Norwegian receipts plummeted by 1.2 bcm (32%).
A combination of mild weather and higher renewable generation also cut gas demand across continental NW Europe. German gas into power fell by 0.28 bcm (29% y/y). Mild weather cut total German power demand, while wind and solar generation rose by a total of 3.3 TWh y/y, leading coal- and gas-fired output to shed a total of 3 TWh (26% y/y). High wind and solar were also behind drops in French and Belgian power sector gas demand, with nuclear generation broadly unchanged y/y in France and a touch lower in Belgium. Despite weak demand, high LNG sendout ensured a y/y increase in aggregate supply, leading the region to cut storage withdrawals sharply.
Weak renewables output and lower gas prices bouyed Spanish gas-fired generation. Despite a 3 TWh drop y/y in total generation on low HDDs, gas-fired output gained by 1.2 TWh y/y (36%) while coal generation fell by 0.5 TWh y/y. On the supply side, oil-indexed North African flows continued to lose market share to LNG sendout (+0.4 bcm y/y) and French pipeline supply (+0.3 bcm y/y).
Similar dynamics occurred in Italy. Power demand shrank on mild weather, while hydro generation dropped by a considerable 1.1 TWh y/y (32%). But thermal generation was almost unchanged y/y (-1%), as higher solar output y/y (+0.7 TWh, +60%) offset hydro’s decline. That said, a 0.2 bcm y/y (10%) increase power sector gas burn indicates some coal-to-gas fuel switching. North African deliveries into Italy dropped by a hefty 1.6 bcm y/y, while European pipeline imports (+0.7 bcm) and LNG sendout (+0.6 bcm) gained y/y. Italian withdrawals from storage were 0.9 bcm lower y/y, growing the y/y storage surplus to 0.94 bcm.
|European consumption and end-user supply, bcm|
|Source: Country SOs, GIE, Energy Aspects|