There is no risk of power or gas outages during this winter in the UK, as there will be sufficient generation and gas supply, the National Energy System Operator has said in its early winter outlook.
In fact, NESO said it expected surplus electricity output at 5.5 GW for the period between October 31 and March 31 next year, “with an 8.8% buffer over expected peak demand.”
Things may yet change, however, the grid operator also said, noting factors to watch such as electricity generation in continental Europe, gas market developments, and the weather. NESO said the supply and demand situation is most vulnerable to unforeseen events in January.
Electricity security may be ensured for the winter, but it will not be cheap. Per Reuters, UK front-month gas and electricity prices are up by 180% and 120%, respectively, from February this year, before the war in the Middle East began.
The UK has become a lot more dependent on gas imports over the past decade or so, as it shrank its own production as part of decarbonization efforts. The island nation is also increasingly dependent on electricity imports from its continental neighbors, including France, Belgium, Denmark, the Netherlands, and Norway.
This dependence now exposes the UK to the European Union’s gas troubles: gas storage is barely above 70% full, and withdrawals have already started, ING commodity analysts wrote in a note earlier today. This may result in a supply squeeze down the road as the weather gets colder, even if the winter overall turns out milder than last year’s.
Despite that risk, the UK earlier this week reinforced this exposure, as Ofgem, the energy market regulator, approved a deal between National Gas and Interconnector Limited to keep the gas pipeline with Belgium operating, even at lower flows. These lower flows were the result of higher operating and maintenance costs, Reuters said in a report on the news.
By Irina Slav for Oilprice.com
