UK grid warns energy costs could skyrocket amid Russia gas curbs

Britain faces “knock-on impacts” for the country’s energy supplies such as rocketing prices if Russia cuts off natural gas flows to Europe.Only about 6% of the UK’s gas imports come from Russia, a statistic the government has so far used to play down the risks of reduced flows to the UK energy system. The grid operator’s warning is the first time it has openly addressed the threat of Moscow’s decision to throttle fuel supplies.“It is clear that the cessation of flows of gas into Europe could have knock-on impacts, including very high prices,” National Grid said Thursday in its early outlook for winter.

Britain’s gasoline market is linked to Europe by means of its community of pipelines to the continent and Norway, and summer time costs are already 4 instances larger than regular. However with restricted gasoline storage capability, the UK is reliant on Europe for exports in winter and uncovered to additional disruptions in Russian flows, which Kremlin insiders say are prone to proceed in retaliation for European sanctions. Higher prices would put even more strain on consumer bills that are already projected to reach record levels in October before rising again in January. There’s mounting pressure on the government to do more beyond the £400 discount on household tariffs already pledged.

Keeping the lights on is going to be more difficult too. System margins, or the buffer National Grid needs to keep in reserve, are expected to shrink this year. The network operator’s base case margin is 6.7%, or 4 gigawatts, down from 7.3% last year, according to the report published Thursday.The UK will need to rely on imports of electricity on its power cables to France, Norway, Belgium and the Netherlands when supplies run short.