Some of Europe’s highest energy costs expected in Britain this winter

Great Britain is expected to pay some of the highest energy costs in Europe this winter as its reliance on imports to ensure a steady supply is forecast to deepen. Energy system operators have said the country will have enough gas and electricity to meet demand over the coldest months – in part because of paying higher market prices than neighbouring markets to secure imports. The official winter energy forecasts were published days after 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 runs Great Britain’s gas networks, set out its forecasts after striking an 11th-hour deal with the owner of a major Belgian pipeline to keep gas flowing into the country this winter by reversing a planned capacity cut. The energy regulator, Ofgem, approved the deal – which will add around 10p a month to the average gas bill. Without the intervention there was a danger of gas running out in the event of a worst-case scenario where an important part of the country’s gas networks failed as temperatures plummeted.

In addition to gas imports by pipelines, Great Britain is expected to increase imports of seaborne liquified natural gas (LNG) cargoes by about 5% from last winter, according to National Gas forecasts, at a time when market prices are three times higher than they were before the Middle East crisis severely disrupted Gulf supplies. Its winter outlook report suggested that prices could remain elevated if UK gas buyers need to compete more fiercely with countries in Europe 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 the slowdown in gas exports from Qatar, one of Europe’s biggest suppliers, and the increase in gas consumption over the summer to power refrigeration and cooling during the record heatwaves caused by the global climate crisis. The UK has some of the smallest gas stores in Europe after decades of relying on homegrown production from the North Sea.

UK production was forecast to fall by 6% this year compared with last winter, but the government’s controversial decision to approve the new Jackdaw gasfield in the North Sea earlier 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) separate outlook report.

That is also likely to come at a higher cost owing to tighter European power supplies compared with last winter. The summer heatwaves reduced river levels across Europe, in a blow to 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, according to figures from the Office for National Statistics this week, of which half was spent on electricity imported from France.

It has also made near-record payments over the past year 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 with 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 the most extreme electricity supply scenarios – when demand is unusually high and renewable output slumps – after noting over successive winters that gas plants have remained in high use when dark, still winter days lead to high electricity demand and lower renewable energy levels.

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.” Explore more on these topics Energy industry Energy storage Energy Europe news Share Reuse this content