Vattenfall: Rising oil and gas prices “a call for more electrification”
Image: Tesla
According to Vattenfall, the current debate over rising gas and oil prices shows that Germany imports not only fossil fuels but also their price and inflation risks. Geopolitical conflicts have increased energy costs for households and businesses, while also risking additional inflation as higher energy prices affect products, services, and mobility throughout the entire value chain.
From the energy company’s perspective, the solution lies in accelerating the development of renewable energy, as well as grids, flexibility, and storage capabilities, along with a consistent electrification of heating, transportation, and industry. Every kilowatt hour of fossil energy avoided reduces dependence on volatile global markets and enhances price stability, competitiveness, supply security, and resilience domestically.
“Current developments once again show how heavily Germany and Europe remain dependent on international energy and commodity markets,” says Vattenfall’s Germany head, Robert Zurawski. “As long as we have to import fossil fuels, we are also importing geopolitical risks and their impact on prices.”
The European benchmark price for natural gas (TTF, front year) has risen by about one-fifth since the end of August and at times reached its highest level since early 2023. Meanwhile, the international benchmark price for crude oil also increased significantly. This has concrete consequences: while rising gas prices affect heating costs for millions of households, high oil prices directly impact gasoline and diesel prices. Additionally, higher inflation looms as increased energy costs affect production processes, raw materials, transportation, and services—a risk that the European Central Bank (ECB) is currently warning about as well.
According to the European Commission’s estimates, the EU imports around 90 percent of its fossil energy sources. Germany spends approximately 80 billion euros annually on importing oil, natural gas, and coal. “High dependence on fossil fuels makes economies and consumers vulnerable to global crises and price fluctuations,” said Zurawski.
However, the current situation is not comparable to the energy crisis in 2022, says Vattenfall. Europe now has more LNG capacity and significantly more renewable electricity generation, which already helps to stabilize prices. For many households and businesses, affordable and predictable energy costs are currently a top priority. Long-term electricity and gas contracts could cushion short-term price swings. Energy efficiency and conservation efforts would help reduce consumption and thus lower costs.
"Electrification reduces price risks"
According to Vattenfall, electrifying heating, transportation, and industry reduces long-term dependence on volatile oil and gas markets. It offers a key advantage: renewables have no fuel costs. "Every additional heat pump, every electric vehicle, and every electrified industrial process reduces the need for fossil fuels and thus vulnerability to global price shocks," emphasizes Zurawski.
The transformation of the energy system also requires funding. However, while most expenditures on fossil fuels went abroad year after year, investments in renewable energy, grids, and storage largely supported domestic value creation. If electrification could reduce Germany’s demand for fossil fuels by a quarter, fossil fuel import costs of around 20 billion euros per year could be avoided at unchanged prices—more than double the current government’s energy relief package, which includes grid fee subsidies and the abolition of the gas storage levy.
"Electrification is by no means just a matter of climate protection anymore. It is also an important factor for price stability, supply security, and the competitiveness of Germany and Europe," emphasizes Vattenfall’s Germany head. At the same time, electrification enhances the resilience of the energy system. Combined with accelerated development of renewable energies, robust power grids, and additional storage solutions, an energy infrastructure is created that relies less on imports and geopolitical tensions while being more environmentally friendly and economically efficient.
Also interesting
About the author
Thomas Langenbucher is an expert in electromobility with professional experience in the automotive industry and finance sector. Since 2011, he has been covering electric vehicles, sustainable technologies, and mobility solutions for ecomento.de. Learn more.
Reader interactions