Global Gas Shortage Stings U.K., Showing Shortcomings in Its Energy Transition

U.K. is more vulnerable than most other advanced economies to surge in demand for natural gas, analysts say

By Max Colchester, Joe Wallace and Benoit Faucon of The WSJ. Excerpts:

"A lack of natural-gas storage facilities in the U.K., where capacity has been allowed to dwindle in recent years, has amplified the risks of a global shortage of the fuel and raised concerns that energy supplies won’t hold up if there is a cold winter.

The U.K.’s rapid shift to renewable energy, which has helped it cut greenhouse-gas emissions by 44% in the past three decades, is lauded by many in the industry. But the country’s experiences offer a reminder that decarbonizing an economy must be carefully managed."

"U.K. natural-gas prices have risen more than fivefold over the past year to €73.10 a megawatt-hour Wednesday, equivalent to $84.83"

"more than four times the price in the U.S."

"But the U.K. is more vulnerable than most to gas shortages, analysts say. After a major storage facility shut down in 2017, the U.K. can now hold a week’s worth of natural-gas stocks. That compares with three months in Germany, according to industry body Gas Infrastructure Europe.

High reliance on renewable energy, mainly wind, and low coal use has left the country heavily dependent on imported natural gas for electricity generation when the wind doesn’t blow. A jump in energy prices leaves the U.K. “a victim of its own progress on lowering emissions,” economists at Dutch bank ING Groep NV wrote in a note this week.

The lack of storage follows a decision back in 2013 by the U.K. government not to subsidize loss-making gas-storage facilities. Output from the North Sea gas fields was declining, leaving the country more dependent on imports, at the same time as a transition from coal-powered electricity to renewables was under way."

"By 2020, the U.K. relied on wind for 24% of its power-generation mix but didn’t have a backup plan when it fell to 2% of supplies in late summer this year"

"In late summer, it was less windy than normal, resulting in turbines sitting idle.

Britain’s gas policy is based on faith that the market would produce a robust supply. But the government has intervened, imposing a moratorium on fracking projects and capping domestic energy prices to protect consumers from higher bills."