Europe Needs National Gas Reserves To Withstand Energy Shocks, RWE Chief Warns

Europe needs to build national gas reserves and move away from relying on just-in-time energy supplies to protect itself against future shocks, the chief executive of German energy giant RWE has warned, saying the continent currently has no buffer in its energy system to absorb major disruptions.

Markus Krebber said Europe's dependence on imported energy had left it exposed to supply disruptions, with the latest crisis highlighting the risks of having insufficient reserves. It is the second major energy crisis the region has faced in five years, he said.

“We have no buffers in the European energy supply system,” Krebber said, arguing that countries needed to reconsider how they secure supplies rather than rely on energy arriving when it is needed.

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He pointed to the possibility of a cold winter combined with low wind generation, which could leave countries struggling to meet demand. In such a scenario, higher prices could force industrial consumers to reduce their energy use, resulting in demand destruction.

Krebber said Europe needed more LNG import infrastructure and storage capacity, and raised the possibility of national gas reserves as a way to strengthen energy security.

The need for greater flexibility was also evident in how energy companies responded to the recent crisis. BP chief executive Meg O'Neill said the company had redirected fuel shipments between markets and adjusted refinery operations as supply concerns and prices changed.

BP moved diesel from the US and Europe to Australia during the crisis, O'Neill said. In Europe, the company adjusted refinery output to produce more jet fuel when concerns about availability increased, before changing production again as diesel prices rose.

The examples illustrated how companies can respond to changing market conditions by moving supplies across regions and adjusting what their refineries produce, provided they have the operational flexibility to do so.

But securing energy supplies is not only about fuel reserves and the ability to redirect shipments. The growing demand for electricity, particularly from data centres and artificial intelligence, is also putting pressure on power infrastructure.

Krebber said reliable electricity around the clock would require a combination of renewable energy, battery storage and generation that can provide power when solar and wind output is insufficient.

He also highlighted the growing gap between the speed at which data centres can be built and the time needed to develop the electricity infrastructure to serve them. Data centres typically take three to four years to build, while power systems, including generation and transmission infrastructure, can take five years or longer.

“We are always trying to catch up,” he said.

The comments point to a wider challenge for energy systems: ensuring that sufficient supplies, storage, infrastructure and flexibility are available not only during a crisis, but also as electricity demand continues to grow.

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