Germany has triggered an emergency plan to manage gas supplies that could see Europe's largest economy ration power if Russia demands it pay for fuel in rubles, leads to a disruption or halt of supply.

Moscow's order that its gas payments be made in rubles, a response to crippling Western sanctions over the Ukraine conflict, has put EU states on alert over energy supplies; Russian gas accounts for a third of the bloc's annual energy needs.

However, Berlin's unprecedented move is one of the clearest signs yet that the bloc is preparing for the Kremlin to cut supplies unless payments are made in Russian currency. Italy and Latvia have already activated warnings.

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Western countries have so far rejected the demands, saying that paying in rubles would breach energy contracts while simultaneously softening the impact on its currency amid Western restrictions on Moscow's access to its foreign exchange reserves.

Germany Economy Minister Robert Habeck announced his implementation of the "early warning phase" of an existing gas emergency plan on Wednesday, meaning a crisis team from the economics ministry, the regulator and the private sector will monitor imports and storage.

He said that Germany's gas supplies were solid for now but urged German citizens and companies to reduce consumption, saying that "every kilowatt-hour counts."

If supplies fall short, Germany's network regulator could start rationing its gas, with industry stocks expected to be cut first. The last to be affected would be private households, hospitals and other critical institutions.

Even without the possibility of gas shortages, Germany could face a recession as energy costs have already forced companies, including steel and chemical makers, to limit production.

German industry is at particular risk, the Federation of German Industries Association said on Wednesday, demanding government assistance to prevent firms from going bust.

The government's council of economic advisers on Wednesday cut its growth forecasts for this year by more than half down to 1.8 percent.

Half of Germany's 41.5 million households heat with natural gas, with Russian supplies accounting for 40 percent of imports in the first quarter of 2022. 

Berlin has vowed to end its energy dependency on Moscow but it will not achieve full independence before mid-2024, according to Habeck.