Gas shortage: Will heating become a luxury in Germany?

Many people in Germany are starting to get unpleasant letters in the mail. Utility companies are passing on the increased costs of gas to their customers. Gas heats more than half of the homes in Germany, and many residents will struggle to pay for it.

Prices have more than doubled since the end of last year, to €0.13 ($0.13) per kilowatt hour. Some suppliers have increased prices even more. Energy giant, Vattenfall, is charging new customers in Berlin €0.25 per kilowatt hour.

Starting October 1, costs will go up again. Gas customers will have to pay a "solidarity levy" of €0.05 per kilowatt hour. The money aims to prop up gas importers affected by Russian cutbacks that then have to buy more expensive gas elsewhere.

In Germany, an average four-person household in a 100-square-meter apartment uses around 18,000-kilowatt hours per year. For that, they were paying €1,080 ($1,099) last year. At current prices, that consumption would now cost €3,240 — an average monthly income.

Economy Minister Robert Habeck, whose popularity has risen since Russia invaded Ukraine, has said that additional measures would cushion low-income households to keep them above the poverty line despite the added levy.

Run on electric heaters

Summer temperatures mean the heat is off. With winter just a few months away, however, tenants and homeowners are starting to realize that uncomfortable months likely lie ahead. They lack an alternative to gas heat.

It is almost impossible to schedule heating maintenance or have more efficient systems installed. Technicians are booked out, and there is a shortage of materials, such as heat pumps that run on electricity. Firewood, portable radiators, and electric heaters are selling out.

Technicians warn that the power supply is not designed for high additional demand from such devices and local networks could overload on cold days.

Hanover presents an energy-saving plan

For months, Habeck has been calling on citizens to save energy. Although over 40% of electricity is from wind and solar power, 14% is still generated with gas.

Berlin has decided to switch off the lights at 200 tourist attractions. In many municipalities, the water temperatures in swimming pools have already been lowered, and only cold water comes out of showers.

Hanover, the capital of Lower Saxony, is one of the first municipalities in Germany to present a comprehensive savings plan. In the next heating period, the room temperature in municipal buildings is to be a maximum of 20C (68 F), with a range of 10C to 15C for technical and storage rooms. Landmark buildings will no longer be illuminated, and all public fountains will be turned off, as will the hot water in the showers of swimming pools and gymnasiums.

How to check on consumers?

Private households account for one-third of total gas consumption in Germany. It will be difficult to mandate reductions because residents are protected by law.

Habeck has recommended shorter and colder showers, and reducing household room temperatures. He has also floated the idea of banning heating private swimming pools but has acknowledged that would be hard to enforce.

"I don't think the police will visit pool owners to see if the pools are warm," Habeck said.

Economists do not think much of the idea of capping the price of gas or of handing out financial assistance beyond the one-off energy subsidy of €300 that has already been decided.

In a letter obtained by DW, a scientific advisory board of 41 economists warns Habeck that a common sense appeal is unlikely to achieve much.

"A high gas price is the most efficient incentive to limit consumption," the letter reads. "If companies or private households know that they will be supplied with gas at a fixed price, no matter what, they will have no incentive to save on gas consumption."

Instead, the advisory council suggests regulating the gas market in such a way that customers receive a certain percentage of their previous year's consumption at a capped price. Households that consume more would have to pay a significantly higher price, which may encourage them to rethink and cut back.

Back to the home office

With another rise in COVID-19 infections expected for the fall, many companies may encourage their staff to work from home again. Empty, unheated office buildings could save 5% of energy, according to studies.

That would likely trigger a demand that companies pass their savings onto employees, who would be paying more for heat and electricity during working hours at home.

There is a lot of uncertainty.  In a recent interview with public broadcaster ARD, Chancellor Olaf Scholz expressed concern over possible social unrest if winter heating bills rise suddenly and drastically. "That's social dynamite," the chancellor said. His government was doing everything possible to protect the energy supply, he said.

Just how great the uncertainty is was evident at an appearance by Habeck in Bayreuth. Germany's most popular politician and vice-chancellor was there for a talk with citizens on a market square. But his appearance was accompanied by loud whistles and boos from a small crowd of protesters.

But if in the coming weeks more and more gas customers receive high bills that they cannot pay, the protest is likely to grow significantly. Robert Habeck, who promised in Bayreuth that people would not be left alone to deal with energy costs, knows this.