(Montel) The UK will not experience any significant gas shortages over the next quarter century thanks to diverse supply sources and declining demand but it will remain exposed to price spikes, TSO National Grid said on Monday.
“Our analysis shows that there is sufficient gas supply between now and 2050 to ensure security of supply,” the TSO said in its latest future energy scenario report.
“This is due to diverse sources of natural gas available to the UK and because we expect natural gas demand to decline due to increased renewable power generation, industrial fuel switching and energy efficiency improvements.”
It expected the UK’s LNG supply portfolio to continue to diversify over the coming years amid the development of new LNG production projects around the world and the growth in trade of the liquid fuel.
“The diversification of the UK’s LNG supply portfolio will help ensure that the UK has access to reliable and affordable gas supplies in the future,” it said.
The country could also call on storage as an additional source of flexibility and security, it said, noting there was currently around 15,000 GWh of storage capacity available.
Vulnerable to volatility
Yet, the UK would still be exposed to price fluctuations in global energy markets – for both gas and power – if gas remained in demand for heat, power and industrial processes, including hydrogen production, it said.
For example, UK gas prices more than doubled in the 12 months to March 2023 after sanctions imposed on the Russian energy industry, following the invasion of Ukraine, saw a significant drop in Russian exports to Europe, it said.
“The events of the past year have brought gas import dependency into sharp focus,” it said, noting that although the UK imported only a small amount of gas from Russia, the need to import gas left it susceptible to global prices.
Gas currently met 40% of total UK energy demand, the TSO said, noting the renewable integration achieved to date had been successful in part due to the ability of the gas generation fleet to flex output in times of low wind or sun.
