Natural Gas

Natural gas is an important source of energy in the heating sector in many European countries. In power generation, natural gas also assumes an increasingly important role due to highly flexible power plants and relatively low carbon emissions. However, in some places it is facing challenges due to an overall decline in residual load, low CO2 allowance prices and competition with inexpensive coal. Despite numerous economic and environmental benefits the energy source plays a minor role in the plans of many governments and the EU as well.

Gas companies are confronted with a variety of challenges. The gas market is characterized by high competition, declining consumption and high pressure on sales margins. Additionally there are technical and regulatory changes. These developments pose difficult challenges to market participants. At the same time, changes have occurred and are still underway in the structure of the value chain itself. New models in the procurement and marketing of gas have been established, especially regarding the sale of gas to end customers in connection with different energy services. Interdependencies with other sectors of the energy industry are increasing significantly.

Company perspective

In this environment gas supply companies have to ask themselves which business model they should pursue to ensure business success in the future. Examples of relevant questions for individual companies are:

• What is the value of infrastructure assets today and how will it develop under different scenarios for the future of the energy industry?
• How have relevant competitors in the market positioned themselves along the value chain and which strategy are they pursuing?
• Are there niches with decent margins in the gas sales business and, if so, where can they be found?
• What is the minimum product portfolio required to be able to play a role at all in the business of selling gas to end costumers in the future?
• How does successful gas procurement look like today? How can a gas company procure flexibility and structuring services at favorable prices without having available a full-scale procurement department (i.e. traders, portfolio management, balancing group management etc.) of their own?
• Are there ways to reduce the carbon footprint per kilowatt-hour of gas sold and to comply with increasingly challenging regulation in this regard – be it through efficiency technologies, the combination with renewable heating technologies or by increasing the share of renewable gases? How cost-efficient are the different options?
• Are there perspectives for natural gas beyond the traditional consumption segments (residential households, commercial customers, industry customers and power generation) and, if so, what are those?

System perspective

In addition to the above-mentioned questions relevant from an individual company’s perspective, there are also several issues concerning the gas market and gas supply from a system perspective. For instance, in the light of declining European natural gas production the topic of security of supply is regularly the subject of controversial discussions. Furthermore, gas is expected to play a more or less important role in the context of a transformation of the energy system and a growing convergence with other energy sectors (“sector coupling”) – opinions about the potential role of gaseous fuels in the future energy system deviate considerably.

Consulting Services

In the context of these upheavals in the gas market we offer the following consulting services:

• Optimization of gas procurement along the entire process, e.g. through support in the preparation and conduct of tenders as well as in the negotiation of gas supply contracts
• Market and competition analyses, including the examination of long-term trends and developments of gas and energy markets
• Strategy development for companies of the gas and energy industry
• Gas industry expertise for individual issues of contractual, strategic or economic nature
• Surveys on issues concerning the overall gas system, for example on the topic of security of supply or on the transformation of the gas and energy system