Natural gas

A source of fossil energy with great flexibility

Natural gas is a fossil fuel formed by the slow degradation of biological material over millions of years. Odourless and colourless, it consists of about 90% methane. Natural gas currently accounts for about 23% of the EU’s electricity generation. Of the natural gas used in the EU 55% is produced in European countries, principally Norway, the UK and the Netherlands, while the rest is imported from other countries such as Russia, Algeria and Qatar. Europe’s import dependence will increase over the coming decades because indigenous production is decreasing rapidly and demand continues to increase.

Natural gas is mainly used for (district) heating and cooking, as a raw material in the (chemical) industry and as a fuel for electricity and heat generation. Several of Vattenfall’s markets, including Germany, Poland and the Netherlands, rely heavily on fossil fuels for their electricity supply. A change towards low-carbon energy sources will therefore take several decades. In the meantime, fossil fuels will continue to be needed for secure and affordable energy supply.

Natural gas is generally seen as a transition fuel towards a more sustainable energy supply. Natural gas is the cleanest fossil fuel and its flexibility makes it ideal for responding to the fluctuating supply of renewables like wind power. In addition, several initiatives are being taken to develop low carbon sources of gas, such as biogas and gasified coal with CCS, in order to further decrease the carbon footprint.

Vattenfall currently has 1.9 GW of new gas-fired power and heat generation capacity under construction. Vattenfall supplies a substantial amount of natural gas for heating purposes to households, small and medium enterprises, and industry mainly in the Netherlands, Belgium and Germany. The share of natural gas in Vattenfall’s electricity portfolio is relatively small and mainly comes from the assets that were acquired along with the Dutch energy company Nuon.

Although natural gas accounts for only a small part of Vattenfall’s energy mix, it will be a priority area of investment during the coming years. Currently these investments primarily pertain to operations in the Netherlands and will contribute to increasing generation capacity and improving supply reliability.