UK industries and households brace for blackouts, gas shortage in January

The UK is planning for several days over the winter when cold weather may combine with gas shortages, leading to organised blackouts for industry and even households.

Under the government’s latest “reasonable worst-case scenario,” Britain could face an electricity capacity shortfall totaling about a sixth of peak demand, even after emergency coal plants have been fired up, according to people familiar with the government’s planning. Under that outlook, below-average temperatures and reduced electricity imports from Norway and France could expose four days in January when the UK may need to trigger emergency measures to conserve gas, they said. 

The scenario is “not something we expect to happen,” the government Department for Business, Energy and Indus­trial Strategy said in a statement. “Households, businesses and industry can be confident they will get the electricity and gas they need.”

While the UK doesn’t envisage such shortfalls und­er its base case, the analysis lays bare the difficult winter potentially in store for Liz Truss or Rishi Sunak when they succeed Boris Johnson as PM next month. If they materialise, the power cuts would come even as Britons face up to average annual energy bills possibly rising above £4,200 ($5,086) in January from just under £2,000 currently, stoking already soaring inflation. 

If the winter is particularly cold, Britain may have to rely increasingly on pipeline shipments of gas from mainland Europe — where supplies are already thin as Moscow curbs flows. That presents a dilemma for the UK, which has very little domestic storage capacity. The nation has been shipping record amounts of gas to the continent and will want the favor returned when temperatures plunge. 

The pound hit its weakest in two weeks against the euro following the report. It erased earlier gains against the US dollar to trade around $1.2080.

BEIS said that the UK isn’t dependent on Russian energy imports, has its own North Sea gas reserves and “steady imports from reliable partners.” It also pointed to the UK hosting the second largest LNG port infrastructure in Europe and “a gas supply underpinned by robust legal contracts.”

The UK’s main fall-back option was to restore Britain’s biggest natural gas storage site, Rough. Owner Centrica Plc says its initial return to service this winter would equate to 10 LNG cargoes, not really enough to make a significant difference.