Germany must cut its gas consumption by a fifth to avoid a severe gas shortage this winter, the main grid regulator said as businesses and households brace for Europe's biggest energy crisis in a generation.

The head of the federal network agency (BNA), Klaus Müller, said that if we fail to achieve our goal [20% gas savings], then there is a serious risk that we will not have enough gas, the Financial Times reported.

Müller noted that Germany would also need about 10 gigawatts of additional supplies of gas from other sources to make up for the missing volumes from Russia - mainly liquefied natural gas from countries such as the United States. This is about 9 percent of current gas consumption.

Germany will also have to rely on gas imports from other European countries, he said.

Müller also warned that the long-term cost of ending Germany's dependence on Russia would be a very high gas price that could have big business implications.

Some production may be moved from Germany because gas has become too expensive, he said.

Germany fears a looming fuel crisis after Russian gas giant Gazprom suspended supplies via the Nord Stream 1 gas pipeline in mid-June due to technical problems. The main channel for the delivery of Russian gas to Europe is only 20 percent loaded.

Declining supplies pushed up gas prices, with the European benchmark rising from around €66 per MWh at the start of the year to €206. It also hurt Germany's attempts to fill gas storage facilities ahead of winter.

Berlin has already reached the second stage of the three-part national emergency plan. If things get to the final stage, which entails gas rationing to industrial consumers, BNA will have to decide which companies can no longer be fully supplied.

Mueller acknowledged that the responsibility for the decision, which will affect thousands of businesses, has made itself felt.