Britain’s energy regulator has warned that the country faces a possible “gas supply emergency” this winter as a result of Russia’s squeeze on natural gas exports to Europe.
The admission by Ofgem came in a response to a request by the FTSE 100 energy group SSE for a modification to a rule that would trigger heavy fines for operators of gas-fired power stations should they be unable to generate the electricity they are contracted to supply.
The watchdog noted in the letter that “due to the war in Ukraine and gas shortages in Europe, there [was] a significant risk that gas shortages could occur during the winter”, adding: “As a result, there is a possibility that [Britain] could enter into a gas supply emergency.”
The UK’s gas emergency plan allows for supplies to be cut off to large users, such as power stations, should appeals to the public and businesses to limit usage prove insufficient to avoid destabilising the system. Other measures include suspending exports to other European countries via undersea pipelines.
Ofgem said in its letter, dated September 30, that SSE’s proposed changes should be “progressed on an urgent basis” because very high penalties for gas-fired power stations could “result in [the] potential insolvency of gas-fired generators if a gas supply emergency occurs”.
The admission by the regulator, first reported by The Times, will increase fears of energy shortages this winter.
The government and National Grid, which is responsible for ensuring Britain has enough supplies of gas and electricity, have been carrying out stress tests in the event of energy shortages this winter.
Officials have so far insisted that their “central case” suggests there will be adequate supplies, although privately they have admitted the crisis is putting “extreme” pressure on the energy system.
National Grid is due to release its winter outlook reports on Thursday, which will set out in detail its assessment of whether there will be sufficient supplies available to avoid power cuts.
Energy companies and analysts have grown increasingly concerned about shortages during the coldest months since Russia suspended gas exports to the EU via the Nordstream 1 pipeline in early September.
LCP Energy Analytics has estimated that Britain could experience 10 hours of insufficient electricity supply this winter.
Britain’s energy market is closely linked to those on the continent and normally relies on gas and electricity imports through the subsea pipelines and cables from the EU and Norway to make up for shortfalls.
Russia’s gas export squeeze has been compounded by other problems in some of the countries that Britain regularly relies on for energy imports.
Norway, one of Europe’s biggest electricity exporters, warned in August that it may have to limit exports this winter if water levels for its hydropower stations remain low. France has been hit by outages across its fleet of nuclear reactors and has warned that it expects to rely on imports from neighbouring countries this winter.
To bolster domestic supplies, the UK government has ordered three coal-fired power plants that were due to shut down last month to remain on standby this winter. But ministers were criticised for failing to act soon enough to prevent the Hinkley Point B nuclear power plant from closing in July.
The government did not immediately respond to a request for comment on Ofgem’s warning.