LONDON (Reuters) – Britain has enough gas supply capacity to meet demand, adequate gas in storage and a range of tools to manage supply and demand this winter, grid operator National Grid said in a report on Thursday.
The report comes as British wholesale gas prices exceeded 3 pounds ($4) per therm for the first time this week, having surged around 500% since the start of the year, amid a global energy price surge.
European wholesale gas prices have been rocketing due to lower-than-usual gas stocks this summer, reduced supply from Russia, the onset of colder temperatures and infrastructure outages.
High gas prices have also lifted power prices as gas plants account for around 40% of electricity generation in Britain.
This all has knock-on effects for consumers and businesses, who face higher retail bills this winter and contributed to the failure of many small energy suppliers. In Britain, on a dual fuel bill (electricity and gas), the wholesale cost can account for 40% of the total.
In its winter gas outlook report, National Grid said total UK gas demand this winter is expected to be 49.4 billion cubic metres (bcm), slightly lower than the past five winters which have ranged from 50.7-53.3 bcm.
The maximum supply capability from all sources, such as pipeline gas, domestic gas production, liquefied natural gas imports, is comparable to last winter, it added. Last year, National Grid said peak supply for that winter was 61 bcm.
According to Gas Infrastructure Europe data, Britain’s gas storage is 100% full.
“We have a positive gas supply margin in all of our supply and demand scenarios, and there is a positive storage position as we enter the winter,” said Ian Radley, director of gas system operations.
The gas supply margin is the difference between gas supply and demand. A positive margin indicates supply is greater than demand.
“We have a range of tools available to manage any operational requirements that we might encounter,” Radley added.
Such tools include issuing a gas balancing notification, when market participants are asked to provide more gas or reduce demand. Only one of these has ever been issued, in March 2018.
However, Britain needs to attract sources of supply such as LNG from other parts of the world as it competes with Asia for cargoes where demand is high also.
The National Grid electricity system operator, which is a legally separate business within National Grid, also issued its winter power outlook separately on Thursday.
