The regulator Ofgem has warned that the UK is facing a “significant risk” of gas shortages and Brits will face a “challenging” winter which could see power stations being turned off.
Ofgem’s head of wholesale market management, Grendon Thompson, said in a letter to SSE PLC there will be a second stage emergency of network gas supply leading to “load shredding” and asked for the situation to be addressed as there is a risk of possible insolvencies.
There will be a “massive” imbalance of charges and credit which could force them to become insolvent SSE warned if the generators are switched off.
SSE added, “Even if such an emergency does not occur, the risk that it could occur is likely to force generators to reduce their forward and day ahead trading, reducing liquidity in electricity markets, and raising costs for electricity consumers.”
Ofgem has warned “this winter [will] be more challenging than last year” and they are currently taking “reasonable regulatory steps to mitigate and reduce the risks.”
Ofgem has stated there is a risk of “potential insolvency of gas-fired generators” and has said the issue needs to be resolved quickly to prevent a “significant impact on the safety and security of the electricity and/or gas systems.”
The Head of National Control at National Grid, Craig James told the industry last month to “secure the network across a series of fault potentials or supply conditions, there’s a requirement to take out extra operating margins of gas.”