The official winter energy forecasts were published as Europe's gas market benchmark climbed to its highest level since December 2022, when Russia's full-scale invasion of Ukraine sent prices rocketing. National Gas, which operates Britain's gas networks, secured an 11th-hour deal with the owner of a major Belgian pipeline to reverse a planned capacity cut, ensuring continued gas flow into the country. The energy regulator, Ofgem, approved the deal, which will add around 10p a month to the average gas bill. Without this intervention, there was a danger of gas running out in a worst-case scenario if an important part of the country's gas networks failed during severe cold weather.
In addition to pipeline imports, Great Britain is expected to increase its imports of seaborne LNG cargoes by about 5% from last winter, according to National Gas forecasts. This comes at a time when market prices are three times higher than before the Middle East crisis severely disrupted Gulf supplies. The winter outlook report suggested prices could remain elevated if UK gas buyers need to compete more fiercely with other European countries for LNG cargoes, amid low gas storage levels across the continent. Europe ended August on course to enter the cooler months with gas stores at their lowest level in 13 years, owing to a slowdown in gas exports from Qatar and increased summer consumption for refrigeration during record heatwaves.
The UK has some of the smallest gas stores in Europe after decades of relying on homegrown production from the North Sea. UK production is forecast to fall by 6% this year compared with last winter. The government's controversial decision to approve the new Jackdaw gasfield in the North Sea this week, which was not fully accounted for in the winter forecasts, is expected to offer a modest boost to supplies when it starts up next month.
Great Britain is also forecast to be a net importer of electricity over the colder months, according to the National Energy System Operator (Neso). This is also likely to come at a higher cost due to tighter European power supplies. The summer heatwaves reduced river levels across Europe, impacting French nuclear output and Norway's hydroelectric reserves, which have remained below the 10-year minimum since late July. The UK paid a record £4bn on power imports over the year ending in August, of which half was spent on electricity imported from France. It has also made near-record payments to fire up gas plants while wind and solar farms have been paid to turn off due to bottlenecks in the grid.
Even though Great Britain will use gas power plants less overall this winter compared to previous winters thanks to rising renewable energy levels, the need for gas to play a role during power supply crunches could be 7% higher than previously assumed. National Gas lifted its gas power demand forecasts for extreme electricity supply scenarios, when demand is unusually high and renewable output slumps. Glenn Bryn-Jacobsen, a director at National Gas, said: "While supply diversity and flexibility remain sources of resilience, taken together these trends in demand and supply have resulted in tighter supply margins during periods of high demand and system stress."