Great Britain is bracing for some of the highest energy costs in Europe this winter as its dependence on imports grows. Energy system operators assure that there will be enough gas and electricity to meet demand, but this will come at a premium due to higher market prices for securing imports. The latest winter energy forecasts were released just days after Europe’s gas market benchmark hit its highest level since December 2022, following Russia’s invasion of Ukraine.
National Gas, which manages Great Britain’s gas networks, secured an 11th-hour deal with the owner of a major Belgian pipeline to maintain gas flow into the country. This deal, approved by the energy regulator Ofgem, will add around 10p a month to the average gas bill. Without this intervention, there was a risk of gas shortages in extreme scenarios where critical parts of the gas network failed during severe cold.
The UK is expected to increase imports of seaborne liquified natural gas (LNG) cargoes by about 5% compared to last winter, at a time when market prices are three times higher than before the Middle East crisis disrupted Gulf supplies. Europe entered the cooler months with gas stores at their lowest level in 13 years, exacerbated by reduced exports from Qatar and increased summer consumption due to record heatwaves.
The UK’s gas production is forecast to fall by 6% this year, but the government’s recent approval of the new Jackdaw gasfield in the North Sea could provide a modest supply boost when it starts up next month. Additionally, Great Britain is forecast to be a net importer of electricity this winter, likely at a higher cost due to tighter European power supplies. The summer heatwaves have also reduced river levels, impacting French nuclear output and Norway’s hydroelectric reserves.
The UK spent a record £4bn on power imports over the year ending in August, with half of that spent on electricity from France. The country has also made near-record payments to operate gas plants while wind and solar farms have been paid to shut down due to grid bottlenecks. Despite using gas power plants less overall this winter, the need for gas during power supply crunches could be 7% higher than previously assumed.
Glenn Bryn-Jacobsen, a director at National Gas, noted that while supply diversity and flexibility remain sources of resilience, the trends in demand and supply have resulted in tighter supply margins during periods of high demand and system stress.