Yes Energy’s Natural Gas Demand Forecast Details Three Trends to Watch in Europe

Boulder, CO – Drawing on our expert-backed demand forecasts, Yes Energy has identified three trends to observe this winter regarding electricity demand in Europe.

Our team has decades of experience forecasting gas and electricity demand for both wholesale markets and custom solutions, with offices across America, London, Bucharest, and Auckland.

They’ve identified three likely trends this winter.

While storage levels entering winter were comfortably above the 90% target, recent cold snaps have depleted stores down to approximately 60%. Germany’s gas market trading hub has recently proposed a subsidy to help replenish stores over the coming months, which may cause further market disruption.

1. Gas for Industrial (IND) Use

While natural gas for industrial use has rebounded year on year, consumption is still broadly below pre-COVID and price crisis levels. On the continent, there has been limited recovery across 2024 in Germany, France, and Italy, while the UK has experienced further contraction before closing out the year at a similar level to 2024.

While gas transmission system operators for Germany and the Netherlands don’t directly provide breakdowns of consumption data for non-domestic distribution company (LDC) sectors, we derive and forecast demand for industrial and gas for power usage.

As the largest consumer of natural gas in Europe, Germany is of particular focus for many natural gas traders. While 2024 was considerably lower than the average between 2017 and 2022, from spring onwards, there was consistent growth against 2023. Initial data from 2025 indicates a continuation of this trend.

After adjusting for realized weather conditions using our TESLA Energy Demand Weather Decomposition tool, which strips out the impact weather has on demand and approximates what demand would have been under seasonally normal weather conditions, we see year-on-year growth across all of 2024.

Adjusting for weather gives a much clearer picture of underlying market trends without cold or hot spells influencing analysis. The growth has been relatively meager, but it points toward lessening demand destruction into 2025 and beyond.

2. Gas for Domestic (LDZ/LDC) Use

Certainly the most temperature-responsive of sectors, gas for domestic use takes a strong seasonal shape.

As temperatures fell across the continent, European natural gas demand levels rose considerably above those seen across the summer. With this winter starting mildly similarly to winter 2022-2023 and 2023-2024, plummeting temperatures and cold snaps across Europe as we entered 2025 provided a serious test to markets.

Current weather forecasts for February indicate warmer than seasonally normal conditions, but uncertainty increases substantially for longer-range weather forecasts.

While it’s still too early to produce any reliable weather forecasts beyond February, our long-term demand forecasts provide multiple scenarios to approach future trends. Our baseline forecast, which assumes seasonally normal weather, is produced with a two-year horizon and captures the underlying market trends.

In addition, our Weather Risk/Weather Years Tool gives greater forecasting power. Our team creates demand forecasts using observed weather from the past 40 years, which can also be viewed as percentiles. Viewing past weather events using current market assumptions provides far greater forecasting power and allows us to visualize extreme weather events.

Yes Energy has seen a considerable change in consumption behavior because of the price crisis, and by forecasting this into the future using past weather conditions, we see significant changes to demand compared to when these conditions were originally observed.

For example, while we’ve observed demand destruction, the degree to which we see this changes dramatically depending on temperatures. Higher prices have caused consumption to drop, but this behavior lessens as temperatures drop further.

While people make every effort to reduce their natural gas demand, primarily from reduced heating applications, there comes a point where temperatures become cold enough that usage returns to similar levels as seen before the higher prices. This is further affected by the length of a cold snap, as the longer conditions remain below seasonally normal temperatures, the greater the impact this has on consumer behavior, and hence demand.

Yes Energy’s TESLA Demand Forecast Weather Year Solution reveals the baseline demand forecast plus demand under a very cold scenario.

In the images below, we’ve used the Weather Year Module to view the full range of forecasts produced using 40 years of historical weather, with 2018 shown as the yellow dotted line.

The image above includes the 0, 20th, 50th, 80th, and 100th percentiles, while the image below highlights the 50th percentile.

In 2018, Paris ground to a halt during the heaviest snowstorm in 30 years, with extreme cold reaching across Europe. If the „Beast from the East“ weather event happened again, where temperatures in Paris dropped to -8°C, we forecast demand for gas in French local distribution zones (LDZs) to almost double.

Customers can use our Weather Year Solution to leverage past weather patterns and incorporate current trends to create forecasts that provide greater confidence in managing upcoming risks.

3. Gas for Power Use

Gas for power use remained extremely low from the first to third quarter in 2024, before the fourth quarter showed high demand. Prolonged periods of low output from renewables, particularly offshore wind, increased the need to call upon gas-powered generators.

This showed how quickly markets can change, as the profitability of gas for power soared.

Various factors play a role, particularly growing renewable generation capacity across Europe continuing to disrupt markets, with 24.5% of final energy use in the EU in 2023 coming from renewable sources. With a target set at 42.5% for 2030, the increased rollout will only continue to lessen the demand for gas for power.

According to Réseau de Transport d’Électricité (RTE), the French transmission system operator, the French nuclear fleet is broadly back to 2021 capacity levels. Having recovered from widespread outages in 2022 and early 2023, this provides yet another source of decreased demand. Weather-adjusted French gas for power demand in 2024 averaged -58% versus 2023, starting from a low base.

Italian gas for power saw remarkably low demand across most of 2024, with the monthly average weather-decomposed demand for January to June being the lowest on record (for data available post-2010).

Autumn showed some recovery, with demand at a similar level to 2024, but exceptionally strong figures for November and December highlight how quickly demand destruction can dissipate under the right conditions. Initial data for 2025 shows continued strong demand, but how quickly might demand drop again come spring?

How will European natural gas demand look once the desire for heating falls, and will the reaction to cooler weather be similar to previous years? How will the need for gas for power change as renewables continue their strong growth?

About Yes Energy Demand Forecasts: Our power demand forecasting solutions enable customers to make informed decisions when buying and selling in energy markets worldwide.

Using advanced statistical models and forecasting techniques, we accurately forecast natural gas demand for domestic (LDZ/LDC), industry and gas for power across Europe. With a wide product offering, use our baseline forecast in conjunction with Temperature Steps, Weather Decomposition, and Weather Risk/Weather Years Modules to increase your confidence, with long-term forecasts providing a two-year horizon. Learn more at https://www.yesenergy.com.

Media Contact:
Gerard Laurain
VP, Marketing
gerard.laurain@yesenergy.com
(720) 234-2794