RE: The Telegraph17 Nov 2018 22:17
s,” says a fresh report from energy consultancy Wood Mackenzie.
“This has come at a time when the UK is about to leave the EU, is closing down all of its coal-fired power plants and indigenous production is continuing to fall. This poses questions about future security of gas supply.”
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The immediate “standstill period” on the capacity market prevents the Government from holding any capacity auctions or making any payments to power generators which have already won contracts.
A permanent closure of the scheme could trigger an exodus of existing coal and gas plants totalling 20GW “which could create serious security-of-supply issues,” according to analysts at brokerage Jefferies.
The move threatens a return of price spikes over the winter, which could be made worse by growing fears over access to gas supplies. Behind closed doors, the industry is calling on ministers to prioritise policies which can help to keep a lid on prices.
The growing reliance on foreign sources for gas does little to calm jitters that the UK could be held to ransom amid a winter gas supply crisis. It has just 1.5bn cubic meters of gas storage capacity, or 2pc of the total gas system, following the closure of the Rough gas storage facility in 2017.
This means that without a constant stream of imports, Britain’s gas would last just seven days based on current demand from homes and businesses, which means that during the cold, dark days of winter, stores would run dry far quicker.
Meanwhile Germany, France and Italy are equipped to cover between 25pc and 35pc of total needs from storage facilities if necessary.
The laissez-faire approach to stockpiling is, in part, a hangover from the heady North Sea heyday when gas was cheap, plentiful and on the nation’s doorstep. However, the North Sea’s steady decline is taking place against a backdrop of quietly rising demand.
An unintended consequence of Britain’s turn away from coal power is a growing reliance on gas-fired electricity. If gas market prices climbed too high in the past, generators would switch on coal plants instead.
gas flame
“It is clear that the UK is reliant on flexible gas supply sources from the continent to support its market during periods of extreme weather conditions” CREDIT: YUI MOK/PA
Last year gas accounted for 39.7pc of the UK’s electricity, while coal accounted for only 6.7pc. This winter, a bitterly cold, windless night will rely almost entirely on gas plants.
Yet ministers are defiant in the face of growing concern over energy supplies. Business Secretary Greg Clark defended the Government’s hands-off approach to gas security.
“The UK has consistently enjoyed a high level of gas security over the last decade. This is the upbeat lesson that I take from last winter’s Beast from the East,” he says.
The cold snap drove Britain’s demand for gas up by a third from usual levels in early March, causing market prices to spiral sixfold to 12-year
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