Electricity supply in the United Kingdom will be tighter this winter compared to previous years, the chief executive of the UK’s National Grid told a Financial Times conference on Wednesday, noting that consumers and businesses will see no respite from the record-high gas prices soon.
This winter, the margin between supply and demand could be the tightest in five years, National Grid CEO John Pettigrew said during the Financial Times’ Energy Transition Strategies Summit today.
When margins between supply and demand are tight, the cost of additional supply to balance the grid impacts electricity bills.
While the head of the National Grid was warning about tighter power supply in the next few months, the British day-ahead natural gas price surged again to a record high on Wednesday, along with the gas price at the Dutch TTF hub, the benchmark gas price for Europe.
On Tuesday, the benchmark European gas prices jumped to an equivalent of a $205 oil barrel amid a wider energy commodity rally driven by supply concerns ahead of the winter.
Expectations of low wind speeds and colder than usual temperatures in the UK also contributed to the surge in natural gas prices this week.
In just 24 hours, the UK wholesale gas prices rallied by 37 percent, as per estimates from the BBC.
Meanwhile, UK businesses using a lot of energy have called on the government to help them keep running throughout the winter.
Some industries, including British Steel, the second-largest steel producer in the UK, warned last month that electricity prices were “spiralling out of control,” and a 50-fold jump in quoted power rates makes production unprofitable at certain times in the UK.
On Wednesday, the Energy Intensive Users Group of the UK said, via chairman Richard Leese: “We have already seen the impact of the truly astronomical increases in energy costs on production in the fertiliser and steel sectors.”
“Nobody wants to see a repeat in other industries this winter, given that UK EIIs [energy intensive industries] produce so many essential domestic and industrial products and are intrinsically linked with many supply chains,” Leese said, as quoted by the BBC.
By Tsvetana Paraskova for Oilprice.com
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