Energy securityExtreme weather tests U.K. gas security to the limit

By Michael Bradshaw

Published 5 March 2018

The National Grid, which manages the U.K.’s energy network, warned that it might not have enough gas to meet demand on March 1, due to plummeting temperatures and issues with supply. It has since withdrawn the warning, saying the market response has boosted supplies. But Britain’s lack of flexible energy supply is a serious issue. This isn’t the first time such a warning has been issued and it probably won’t be the last.

The National Grid, which manages the U.K.’s energy network, warned that it might not have enough gas to meet demand on March 1, due to plummeting temperatures and issues with supply. It has since withdrawn the warning, saying the market response has boosted supplies. But Britain’s lack of flexible energy supply is a serious issue. This isn’t the first time such a warning has been issued and it probably won’t be the last.

More than 80% of U.K. households use gas to heat their homes so the industry has to handle huge seasonal swings in demand. British weather is notoriously unpredictable and experiences fluctuations throughout the year. This requires flexible energy supply, especially when extreme weather events hit, such as the “Beast from the East”.

Historically, flexible supply came from simply producing more from the North Sea, but due to falling production that option has gone. Instead, flexibility today comes from four sources: from Norwegian offshore production that is delivered by pipeline directly to the U.K., from domestic storage facilities, from the U.K.’s three liquefied natural gas (LNG) terminals and gas from Europe via interconnector pipelines. What gas comes from where depends on the market price – in the U.K., Europe and globally – and the willingness of those that own the gas to sell it.

No surprises here
The industry was warning before winter that things could get difficult. The reason being that back in June last year Centrica, the U.K. energy group that owns British Gas announced that it was closing its long-term storage facility at Rough, a depleted gas field off the Yorkshire coast. Technical problems were making it increasingly costly to maintain. But it was the U.K.’s largest gas storage site.

Even before then, the U.K. was short on storage, with a capacity equivalent to 5.9% of total consumption in 2016. In some countries, including Germany, France and Italy, storage covers around 20% of demand. With the Rough facility gone, the U.K. is left with 1.4bcm of medium range storage – equivalent to 1.8% of 2016 consumption. This gets filled and emptied many times over the course of the winter. But, in an emergency such as this, it is quickly emptied and won’t refill while prices are high.