According to experts in the field, a cold winter could force Britain to restrict business’s energy supply, shutting down factories dating back to the three-day week of the 1970s.
Rising natural gas prices forced the business secretary, Quasi Quarteng, into crisis talks with energy providers over the weekend. It has brought the security of the country’s energy supply into the limelight, revealing vulnerabilities that government advisers claim have repeatedly worked with the government to no avail.
The business secretary in a statement to parliament on Monday stressed Britain’s ability to produce around 50 per cent of the gas needed last year and also suggested that major energy ally Norway could help make up for the shortfall elsewhere . He dismissed suggestions that there could be any shortfall in supply in the coming months.
However, UK gas production has declined this year and net imports of gas to the UK more than doubled in the three months to June compared to the same period last year. Latest figures released in August Has shown. During this period, exports declined by more than three-quarters (76 per cent) and imports increased by 31 per cent.
According to academics and consultants who have advised the UK on energy security and market potential, UK gas storage will deplete within weeks if a severe winter in Europe leads to supply shortages. Supply shortages will most likely affect Britain in February and March: the worst months for storage levels in recent years, according to data collected by the National Grid, which has overseas energy infrastructure.
Gas Storage Level Data Collected by the National Grid
“height=”454″ width=”650″ srcset=”https://static.independent.co.uk/2021/09/20/18/gas_20.09.21.png?width=320&auto=webp&quality=75 320w, https ://static.independent.co.uk/2021/09/20/18/gas_20.09.21.png?width=640&auto=webp&quality=75 640w” layout=”responsive” i-amphtml-layout=”responsive” Gas Storage Level Data Collected by the National Grid
Gas Storage Level Data Collected by the National Grid
Nick Wai, director of energy consultancy Waters Wai Associates, said the inclement weather seen in 2018 could leave the UK “at the mercy of global demand and foreign players”. “we [the UK] may find themselves to disrupt the supply for the customers,” he said. According to Mr. Wai, storage stocks fall sharply each year during January and February, and by March and February “this could mean very high prices, or at worst demand destruction and enforced cuts”.
Further lockdowns could also put pressure on gas demand due to a spike in Covid-19 hospitals, with a higher number of people working from home. This increased domestic demand for gas by 10 percent in January 2021 compared to the same period in 2020. According to statistics from the Department of Trade.
Higher prices are the result of greater demand for gas in Asia as its industries recover from the pandemic, and reduced supplies of liquefied natural gas from the US in the aftermath of Hurricane Ida. Meanwhile, production in the UK has fallen and Russia has shown reluctance to increase gas flow to Europe via Ukraine. The UK may still get some supplies from Norway, which has indicated it will increase production.
Imposing limits on the energy used by companies has not been common in Britain since the 1970s, when a three-day week was introduced to conserve electricity supplies, ending with strike action on coal mines. It was done
Ole Hansen, head of commodity strategy at Saxo Bank, said: “The risk we cannot ignore from an industrial perspective is that the price rises so high that it stifles activity and economic recovery.” “We may reach a point of rationing energy, and politicians don’t want people to freeze in their homes, so the other option is to shut down the industry.”
Energy-intensive industries will be the first to be affected, Mr Hansen said, pointing to nitrogen fertilizer companies that suspended production last week. These concerns are in contrast to the government’s statements on Monday after a meeting with energy companies.
Mr. Quarteng said: “While we are not complacent, we do not expect a supply emergency this winter. This is a very important point: it is not a question of security of supply.
“There is no question of lights going out or people unable to heat their homes,” he said. “There is no question of lights going out or people unable to heat their homes. There would be no three-day work week or fallback to the 1970s. This kind of thinking is dangerous, unhelpful and completely misleading.”
An emergency plan drawn up by the UK’s trade department in November 2019 details the steps the UK trade secretary would have to follow if the country could run out of gas too soon. There are four levels of energy distress, from normal (white) to emergency (red). A government spokesman reiterated the trade secretary’s claim that she did not anticipate a supply emergency this winter.
At the red level, “non-market measures are to be introduced”, which would include restricting energy use by energy-intensive industries, said a person familiar with the development of the plan. This would require a reduction in those hours until supplies return to normal and stores begin to refill. The Foreign Office will have to monitor any formal requests for international support as planned.
Fears of an energy crisis across Europe have drawn renewed attention to Russia’s role as a major gas producer. Its production could prove critical this winter, warned Mr. Vai and other experts. If the country chooses to limit supplies to Europe, it could exacerbate price increases, and potentially exacerbate shortages. Bad weather in the US, including Hurricane Ida, has also reduced production of liquefied natural gas, a critical source for the UK according to the government’s 2020 Safety Supply Report.
Recent auction data collected by Bloomberg suggested that Russia is holding off on increasing supplies in Europe, even in the face of rising prices. The Russian state-owned company Gazprom has not booked any additional rooms for gas transport …
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