Over a third of German local utilities plan to shut gas grids fully or partially, many unsure - survey

More than one in three of Germany’s municipal utilities plan to decommission their gas grids entirely or partially, while a similar share have still not decided what to do with them, according to a survey by municipal utility association VKU. Thirteen percent told VKU they plan to shut down their networks entirely, while 25 percent planned a mix of shutdown and converting or continuing to use some lines for hydrogen, biomethane, or both. Seven percent want to keep running their entire grid on biomethane and one percent on hydrogen.

The heating sector and the associated gas use is one of the main stumbling blocks in Germany’s drive to become climate-neutral by 2045, as emission reductions in the sector have been particularly slow. The country lags far behind earlier targets on switching to climate-neutral heating systems and renovations to make its housing stock more energy-efficient. Some of Germany’s states want to reach climate neutrality even earlier.

The country has more than 40 million households, of which 56 percent still heat with natural gas and a further 19 percent with oil, VKU said. The phaseout of natural gas is a massive financial struggle for municipal utilities, which also weighs heavily on municipalities’ administrative budgets. As more customers switch to heat pumps or district heating, grid costs will be spread across fewer users, which could make gas heating more expensive for those who remain.

Following a protracted controversy, the country adopted a new law for the decarbonisation of heating this summer, which allows new installations of oil and gas boilers and scrapped the previous government’s rule that new heating systems must run on at least 65 percent renewable energy.

Germany’s gas grid could be repurposed to carry climate-neutral fuels such as biogas or hydrogen. But both are expected to remain scarce and costly, also because they are very inefficient when compared to heat pumps. Think tank Agora Energiewende said in 2023 that climate neutrality would leave no foreseeable future for more than 90 percent of the country’s gas distribution grid.

Half of municipal utilities said they expected a mix of technologies, with a focus on heat pumps and district heating, to play “the central role” in their supply area. Thirty-seven percent said electricity and heat pumps would dominate, while 15 percent saw district heating in the lead.

Asked about plans for their gas grids, 38 percent said they did not know yet, compared with 46 percent a year ago. “Although uncertainty among municipal utilities has decreased compared to last year, it essentially remains,” said the lobby group’s head Ingbert Liebing. 

“While the federal government has provided some clarity through the Building Modernisation Act [often referred to as the “heating law”], key legislation on the heating transition is still lacking,” he said with reference to a biomethane strategy, a heat grid law, and rules for combined heat and power plants. 

Liebing said heating homes with green gases would require a “massive ramp-up” in supply, as biomethane is also in demand from industry and transport. “That is why the federal government’s refusal to draw up a biomethane strategy is completely incomprehensible, even negligent.”

A report by environmental think tank Oeko-Institut and the Fraunhofer Institute for Solar Energy Systems (ISE) found that biogenic residues are not sufficient in any German region to meet the total demand for methane in 2045. At the same time, the retrofitting of gas networks could make it more difficult to transport biomethane between regions, the report said.

Germany’s large cities had to submit their municipal heating plans by the end of June, detailing technology options available to households and businesses as the country moves to clean up its heat supply. But the plans vary widely in depth and detail, building research institute BBSR told Clean Energy Wire. Smaller municipalities have until mid-2028.

For its survey, the association contacted 757 utilities in August, 225 of which responded. Fourteen percent of respondents said they had no gas grid.