Had to chuckle as the Grauniad sub-heads its story on the UK’s dwindling gas reserves “Exclusive: Severe weather …” Yes folks, some industrial gas users have had their supplies interrupted, and some gas storage inventory has been drawn down. So what ?
Politicians being what they are, it was perhaps inevitable that the Conservatives would try to spin the bad weather ...
"I have repeatedly warned that Britain lacks the essential back-up plans needed for situations like this one". Clark said
… but at best this is a cheap shot and at worst it’s just erroneous.
It’s a fact that Dan Dan the Gas Supply Man lives in dread of very cold weather in December. That’s because, although gas storage is generally full to bursting by November (certainly it was this winter), statistically it is mostly required for Jan / Feb: even March is often colder than December. So a cold snap earlier in the winter presents an acute dilemma: it’s bad now, but what if it’s even worse in Feb ?
Interrupting large industrials who have chosen to accept the material price discounts applying to interruptible contracts is a very conventional second line of defence – and has been from the earliest days of the natural gas industry, long before there was any seasonal storage at all. In financial terms the interruptible aspect of these contracts is an option, sold by the gas consumer to the supplier. Simples.
The nature of climate change is that we may expect more extreme weather. In these circumstances all forms of flexibility and optionality – storage, interruptibility, fuel-switching (which many of the industrials are now employing), diversification of sources – are at a premium.
There are some uncomfortable choices: for example, fuel-switching is becoming more difficult because of environmental restrictions on burning oil. As always there are trade-offs between emissions policy and security of supply: for example, the growing proportion of wind turbines in the power-plant fleet makes everything more difficult (wind has been performing at a pitiful 27% of notional capacity through Dec / Jan – but that’s exactly the rubbish level of performance built into the National Grid’s planning assumptions, so no surprise there). Coal (yup, you guessed) has been shouldering the largest share of the burden, followed closely by gas. Think about that, greenies.
If the current weather pattern had happened in 2004-5, things would have been much worse. Then, we were on the cusp of self-sufficiency in gas, and the new sources of imports hadn’t come on line. Now, we have newly-developed import capacity (LNG + new lines from Norway) that exceeds national demand – and we still get 50% of our supply from indigenous sources. This makes us the best-diversified major energy economy in Europe (arguably the Dutch are even better off due to colossal indigenous reserves) – and all built by private enterprise, in response to market forces. With one signal exception (my favourite story) the government’s role has been merely to grant licences.
Bottom line: though a cold Feb would be hairy after a cold Dec and Jan, this has always been the case. In keeping with all our major EC confreres, we are successfully managing an import-dependent system. We are very well diversified indeed, and currently the system is taking it in its stride. We will need more, not less flexibility over the coming years, and this is in direct conflict with several strands of emissions policies
Watch out, Greg Clark, for you may find yourself wrestling with worse problems than those of Jan 2010.
photo (c) N.Drew 2010