Great Britain is expected to face some of Europe’s highest energy costs this winter as the nation relies heavily on expensive imports to maintain steady supply. While officials confirm that gas and electricity levels should meet demand during the coldest months, this stability will be achieved by paying higher market prices than neighboring countries to secure necessary resources.
These winter energy projections arrived shortly after European gas market benchmarks reached their highest levels since December 2022, a period marked by price spikes following the full-scale invasion of Ukraine.
To mitigate potential shortages, National Gas finalized an 11th-hour agreement with a Belgian pipeline operator to maintain flow, reversing a previously planned capacity reduction. The energy regulator, Ofgem, confirmed the deal, which is expected to add approximately 10p to the average monthly gas bill. This intervention was deemed critical to avoid potential outages in a worst-case scenario where major infrastructure failed during freezing temperatures. 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.
National Gas anticipates a 5% increase in seaborne liquified natural gas (LNG) imports compared to last winter. These purchases are occurring while market prices remain three times higher than pre-crisis levels. Furthermore, competition for LNG is expected to remain intense, as Europe entered the colder season with gas reserves at their lowest point in 13 years, influenced by a decline in exports from Qatar and high summer consumption caused by record-breaking heatwaves. 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. 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, 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. 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.
Great Britain’s reliance on imports is further compounded by a long-term decline in domestic North Sea production. Although the government recently approved the Jackdaw gasfield, it is expected to provide only a modest supply boost when operations begin next month. Projections indicate a 6% drop in overall UK production this year compared to the previous winter. 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.
The electricity sector faces similar pressures, with the National Energy System Operator (Neso) designating Great Britain as a net importer for the winter. This adds to the financial burden, as the country spent a record £4 billion on power imports in the year ending in August, with half of that total allocated to electricity from France. Recent climate conditions, including summer heatwaves, have constrained European power output by lowering river levels, which impacted French nuclear production and Norwegian hydroelectric reserves. In a blow to French nuclear output and Norway’s hydroelectric reserves, which have remained below the 10-year minimum since late July, the summer heatwaves reduced river levels across Europe.
Operational data shows that while renewable energy integration has reduced the general need for gas-fired power, requirements during supply crunches could be 7% higher than initially projected. National Gas observed that gas plants are frequently needed when renewable output drops during dark, still weather. Consequently, the company has increased its demand forecasts for extreme scenarios.
Glenn Bryn-Jacobsen, a director at National Gas, noted that while the system benefits from supply diversity and flexibility, the convergence of these demand and supply trends has resulted in tighter margins during periods of high system stress.
