‘Significant risk’ of gas shortages this winter, Ofgem warns
3 October 2022, 14:34
The regulator said the country might face a ‘gas supply emergency’ after the war in Ukraine
Britain faces a “significant risk” of gas shortages this winter, regulator Ofgem has warned as the supply from Russia to Europe has been all but cut off.
The regulator said the country might face a “gas supply emergency”, in a letter obtained by The Times.
Great Britain produces a lot of its own gas, but the majority is still imported. It has pipeline connections to Norway, which supplies a large amount of the country’s gas.
Britain imported very little Russian gas before the war, but will still be affected by the shortages likely to be faced in Europe.
During winter cold snaps Britain normally imports gas from storage sites in mainland Europe – it has very little storage of its own. But now European countries are likely to need this gas themselves after losing the supply from Russia.
Ofgem wrote: “Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter 2022/23 in Great Britain.
“As a result, there is a possibility that GB could enter into a gas supply emergency.”
More than eight in 10 UK households use gas to heat their homes and more than 40% of the electricity generated in Britain over the last year came from gas-powered plants.
If a potential supply emergency gets bad enough this winter, these power plants, and other big gas users, might be cut off temporarily, Ofgem said.
1) Government has signalled to LNG markets it will allow utilities to pay any price for imports, by enacting Energy Bills Support which may (I'm simplifying here) cap the cost consumers pay but allows wholesale procurement costs to be *anything* as buyers will be compensated
— Tom Haddon (@TomH_Analyst) October 3, 2022
Tom Haddon, a senior consultant at Arcadis, said shortages are “viable”; however, he argued that they are “so unlikely that it still sits in the red herring paddock”.
He said the Government’s promise to top up payments for people’s energy bills regardless of what price the market sets, will mean suppliers bring their liquid natural gas (LNG) to British ports.
“Government has signalled to LNG markets it will allow utilities to pay any price for imports, by enacting Energy Bills Support,” he wrote.
Mr Haddon added: “Now, the bit missing is that super peak demand (cold, dark evening) where we would expect the gas to start flowing from Netherlands-based storage into the UK.”
He said the LNG capacity in the UK “still covers us, just”, but warned of massive price spikes.
