Wedoany.com Report-Oct 30 , Germany’s energy consumption is poised to drop to a record low for a second consecutive year as Europe’s largest economy stalls, according to research group AG Energiebilanzen.

Significant production declines in the manufacturing and processing industries this year reduced energy use despite a recent uptick in demand, Energiebilanzen said in a report. The 1.7% drop in consumption to 10,453 petajoules (2,904 terawatt-hours) projected for 2024 follows a slump to a previous all-time low last year.

Germany avoided a technical recession in the third quarter, with a slight and unexpected expansion. But the economy remains stagnated as the country’s once mighty manufacturing sector, plagued by high energy costs, struggles to compete with global powerhouses such as China. Industrial production slumped in 2022, the year that Russia invaded Ukraine and sent natural gas prices soaring, and has continued to decline since.

“In a world in which, at least in manufacturing, China has become the ‘new Germany’, Germany’s old macro business model of cheap energy and easily accessible large export markets is no longer working”, ING economist Carsten Brzeski said in a note.

Benchmark European natural gas prices have come down from a record reached in August 2022, but they are much higher than in places like the US. Gas futures are up 27% this year, while month-ahead power prices have gained 7%, according to exchange data on Bloomberg.

Meanwhile, the country’s energy transition became more evident. Coal and lignite consumption fell by 15% in the first nine months of the year, while the consumption of renewable energy and natural gas rose each by roughly 3%.

The use of coal for power generation plunged by 39%, thanks to the increasing consumption of renewable energies and electricity purchases from neighboring countries.