Rising Energy Prices In UK Explained
The UK is in an energy crisis. The industry is dominating the headlines, and the price of gas has rocketed in recent weeks, putting nine energy suppliers out of business (so far) and prompting warnings of food shortages in UK supermarkets.
Wholesale gas prices have soared by 250% since the beginning of the year, including a 70% rise since August, according to the Oil & Gas UK trade body.
How reliant is the UK on gas?
The gas market is crucial to the UK’s energy supply because of its role in heating, industry and power generation.
More than 22 million households are connected to the gas grid. In 2020, 38% of the country’s gas demand was used for domestic heating, 29% for electricity generation and 11% for industrial and commercial use.
So why have wholesale gas prices increased?
An unusually cold winter in 2020–21 prompted higher demand and has led to a “much tighter gas market with less spare capacity”, says the UK government.
Russia accused of pushing up gas prices
The European Commission has been asked to investigate the role of Russia’s state-backed gas company Gazprom in soaring gas prices across the continent.
A group of 40 MEPs has said the company’s behaviour made them suspect market manipulation to push up gas prices.
In a letter, the MEPs said they were suspicious of Gazprom’s “effort to pressure” Europe to agree to a fast launch to its Nord Stream 2 gas pipeline, which still has to clear regulatory hurdles that could take months to complete.
The MEPs cited recent shut-ins of Gazprom’s production and said the company had refused to book gas transport capacities through existing pipelines.
UK’s wind power hit by calmer weather
Calm weather over the past two weeks has cut output from the UK’s 11,000 wind turbines, which usually account for more than 20% of electricity generation, according to Bloomberg.
It has meant that demand for natural gas to produce electricity has increased, and the UK has turned to coal-burning stations to fill the energy shortfall.
Less LNG for the UK
High demand for liquidity natural gas in Asia has meant less than expected has reached Europe.
Gas platforms closed for maintenance
In the UK, several gas platforms in the North Sea have also closed for maintenance that was paused during the pandemic.
Fire puts critical power cables out of action
Meanwhile, cables that import electricity from France were damaged last week following a fire. Essential maintenance means that the National Grid site at Sellindge in Kent be offline until 25 September, and only half of its two-gigawatt capacity is available until March 2022.
Why have food suppliers been hit?
The steep rise in gas prices has caused two large fertiliser plants in Teesside and Cheshire, which produce carbon dioxide (CO2) as a by-product, to shut at very short notice, hitting supply to the food industry. Those plants accounted for about 60% of the CO2 produced in this country.
CO2 is used to stun animals when slaughtering 80% of pigs and poultry. This disaster comes at a time when staff shortages have left British farms crammed with roughly 100,000 extra pigs.
At one point, Nick Allen, chief executive of the British Meat Processors Association, said that meat manufacturers had between five and 15 days’ supply left, and the country was two weeks away from British meat disappearing from supermarket shelves.
The crisis is hitting supermarket shelves in other ways, too. CO2 is also used in packaging to extend the shelf life of food and for the “dry ice” that keeps items frozen during delivery, as well as giving soft drinks and beer their fizz.
The risk to our food supplies is so great that the government has stepped in to help get a fertiliser plant running again, at least for a few weeks.
What may happen to our food prices?
Tighter fertiliser and CO2 markets could quickly push up global food prices, which are already near a decade-high. At some point, farmers may not be able to afford to buy fertilisers, or Europe will increase cheaper imports. In China, authorities have been urged to ensure stable prices and prioritise supplies of raw materials and energy to fertiliser companies.
How can we stop an energy crisis like this from happening again?
The UK needs to speed up its transition to a low carbon economy and be as energy independent as possible from the rest of the world. However, this will take some time, but at Efficient Homes, we believe we can also make a difference by taking individual action.
How can you be energy independent?
Solar panels enable you to generate your energy for free, so you are no longer vulnerable to commodity price increases. If you install a battery storage system, you can be completely energy independent and off-grid.
Keen to learn more about solar?
We are always happy to chat about solar. Please do contact us on our website, EfficientHomes.org
