Given the warm weather that some of us have seen recently, it’s easy to forget that only a few weeks ago, much of the country was in the grip of the “Beast from the East”.
It’s at times like this that the challenges of ensuring security of supply are brought into sharp focus, and I’m proud of the part Uniper played – and continues to play – in ensuring there’s power and gas when it’s needed. All our generation plants, for example our gas-fired power stations at Grain in the South East and Connah’s Quay in North Wales, reliably delivered. Our fast-cycle gas storage facility at Holford in Cheshire also helped ensure, in spite of the extreme weather conditions and the demand on the system, that National Grid was able to balance gas supply and demand.
It was a demonstration of the importance of being able to call upon a diverse mix of both power and gas supply sources, showing the UK could indeed manage the combination of unseasonably cold weather, high demand on the gas network, and a reduction in supplies due to the unavailability of some of the gas infrastructure. It also highlighted that a reliable gas supply from pipelines cannot be guaranteed; the same could easily be the case for electricity interconnector flows, responding to market prices across countries which experienced similar conditions.
There was inevitably comment about volatile and high gas prices during the cold weather but these price spikes are a feature of a well-functioning market, providing a price signal to incentivise the correct response from market participants and attracting the necessary supply.
The “Beast” showcased the value of existing fast-cycle gas storage facilities. Responding to National Grid’s first gas deficit warning in eight years, with lowering national transmission system pressures across the system, Uniper’s facility at Holford ensured additional gas could be delivered at this time of need.
We successfully and safely delivered additional gas above Holford’s usual maximum flow rates, supporting system pressure and contributing towards a UK supply and demand balance.
This supply mix is important. There is a well-documented slow decline of domestic production from the UK Continental Shelf, combined with a reduction in seasonal gas storage. At the same time, we are beginning to see more use of LNG. In other words, the UK market is attracting the cargoes when they are needed.
Uniper is already a global player in commodity markets including natural gas and LNG. As well as maximising our output from our gas storage facility, we utilised our diverse portfolio to ensure supply across various markets during this critical period.
Gas will undoubtedly continue to be an important fuel during the energy transition, as we decarbonise the power sector and address the important challenge of climate change. Natural gas, too, can play a role in decarbonising transport, particularly in the logistics sector.
The challenge of decarbonising heat has been something of “the elephant in the room” in the UK, and it is good to see that the government is now turning its attention to the heating sector. Here, there is a clear role for hydrogen.
The UK is well placed to “repurpose” its extensive gas infrastructure to transport hydrogen. And with the UK’s potential to utilise wind as a resource – converting power generated by wind turbines to hydrogen, we have an important technology for the generation of truly green gas. Uniper already has some experience in this area: it’s a route we believe the UK government could explore.
Felix Lerch will be speaking at Utility Week Energy Summit in Westminster in June