Germany’s solar surge set to cut gas demand, cushion Europe from crisis

Germany is expected to significantly boost solar power generation this summer, easing pressure on gas demand and helping shield Europe from the economic impact of tensions linked to the Iran conflict.

Solar output in Germany — Europe’s largest power market — is projected to average about 16.5 gigawatts between April and September, a roughly 31% increase from a year earlier, according to BloombergNEF.

The rise in renewable energy is expected to reduce gas demand for power generation by around 29% over the same period — equivalent to approximately nine liquefied natural gas cargoes, based on Bloomberg calculations.

The expansion is being driven by a rapid increase in solar installations, with the number of panels in Germany forecast to grow by 15% this year. The surge is likely to ease competition with Asian buyers for LNG supplies at a time when Middle East tensions are pushing up global energy prices.

Additional renewable output is also expected to provide some relief as Europe works to rebuild gas storage levels ahead of next winter after recent drawdowns.

As solar generation rises, gas-fired power output in Germany is projected to drop to around 2.5 gigawatts in July, while coal generation — still a key part of the country’s energy mix — is expected to fall by about 63% to roughly 3.2 gigawatts between April and September.

Despite the decline, gas is expected to remain critical for balancing the grid and setting electricity prices, particularly during periods of low renewable output.

By Sabina Mammadli