According to the industry regulator, the United Kingdom faces a “high risk” of gas shortages this winter, which might impair electricity supplies.
Ofgem stated that a “gas supply emergency” could occur in the United Kingdom owing to Russia’s conflict with Ukraine.
This would result in gas supplies being cut off to power plants that use gas to generate electricity for the country.
It puts businesses in danger of bankruptcy due to the astronomical fees they must pay if they cannot furnish electricity.
Ofgem responded to SSE, which operates four gas-fired power facilities in the United Kingdom that generate energy, with a letter.
SSE is concerned that operators of gas-fired power stations could face penalties of millions of pounds if they are unable to fulfill commitments to produce electricity “due to factors beyond their control.”
Ofgem said: “Due to the war in Ukraine and gas shortages in Europe, there is a strong possibility that Great Britain may experience gas shortages during the winter of 2022-23. Consequently, there is a chance that Great Britain will experience a gas supply problem.”
If this were to occur, gas supplies would be cut off to “the greatest gas users,” who would presumably be “huge gas-fired power stations that produce energy for the National Electricity Transmission System.”
In the case that electricity supplies are interrupted, generators would be required to pay “imbalance charges.” These pay the costs incurred by National Grid for procuring electricity from other sources to meet demand.
This, according to Ofgem, “may result in the possible insolvency of gas-fired generators in the event of a gas supply emergency.”
The Times, which first reported the letter, stated that a power plant of typical size might be charged around £276 million per day if it cannot provide electricity. This might go to $475 million for a larger facility.
Ofgem stated in its letter that it would examine the issue of charges as a matter of urgency due to its “major impact on the safety and security of the energy system.”
SSE stated that by bringing the matter to the attention of Ofgem, it would “maintain supply security by ensuring that gas-fired power plants can offer vitally flexible generation during hard periods.”
A spokeswoman stated, “There is broad industry consensus on the need to investigate this matter, with the ultimate decision being made by Ofgem.”
Since its initial invasion of Ukraine, the Kremlin has reduced Europe’s energy supply, and numerous nations have committed to diversifying their oil and gas sources away from Russia.
Even while the United Kingdom is not dependent on Russian oil and gas, any disruption has a significant influence on international supplies.
The two main Russian gas pipelines to Germany, Nord Stream 1 and Nord Stream 2, have lately been found to have leaks. Although neither facility was operational, the EU, the US, and NATO have suggested that the damage was purposeful. Russia has denied participation.
