Despite assurances on supply, National Grid warns of steep price hikes in UK electricity
Britain will be able to keep its lights on and homes warm through the winter even if imports of European electricity and gas come to a halt, according to National Grid.
The energy system operator said the UK’s first winter outside of the European Union would pose no extra challenges to securing the UK’s gas and power supply.
Brexit is not expected to completely disrupt UK-Europe energy trading, but even if no imports are possible from continental Europe the UK will have more gas and electricity than it needs.
But National Grid’s annual winter forecast revealed that weaning the UK off European imports would come at a price to energy bill payers.
The system operator said it expects the wholesale price of electricity to be higher in the UK market than in Europe this winter, so importing less electricity via mega-cables to France, the Netherlands and Belgium would lead to higher prices overall.
The UK will be more exposed to steep gas price hikes on global energy market costs if it needs to compete with energy-hungry Asian countries for regular shipments of liquified natural gas (LNG).
The cargoes are bought and sold on the international market which is well supplied, but a cold snap in Japan could mean higher energy bills in Britain, even during a mild UK winter.
A report commissioned by National Grid before the 2016 referendum predicted that energy bills could climb by £500m every year by the 2020s if the UK left the EU’s internal energy market.
Its latest findings come following the government’s leaked no-deal planning report, Operation Yellowhammer, which predicted a marked increase in energy prices for homes and businesses if the UK crashes out without a deal.
Other sources of gas for the UK include North Sea reserves and Norwegian gas imports.
The UK will need more gas this winter than last year, despite using more renewable electricity in place of gas-fired power plants, in part because homes are using more gas for heating.
National Grid expects the UK to burn 11.7bn cubic metres (bcm) of gas to generate electricity this winter, compared to 12.3 bcm last winter. Meanwhile, homes will need 30.6 bcm of gas, compared to 28.7 bcm last year.
National Grid blamed a slowdown in the UK’s home energy efficiency efforts for the growing demand for gas to heat houses.
It findings come ahead of fresh calls from 30 companies, including energy suppliers, green groups and the CBI, to make home energy efficiency a national infrastructure priority.
Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit, said: “Action on cutting energy waste at home has slowed, while the approval of more gas-fired power stations would drag the UK further off track.”
He added: “With British gas reserves dwindling, now would be the time to crack on with reducing reliance on fossil fuels in general, bringing in a cleaner, cheaper future.”