DECC has asked regulator Ofgem to look into whether further action is needed to ensure that medium- to long-term gas supplies for consumers remain secure. The news comes after DECC reported to Parliament on the risks facing the UK over security of supply as much of our old plant is due to come offline in the coming years.
Chris Huhne, Energy Secretary, said: “As our old coal and nuclear power stations shut down, gas can provide flexible and reliable backup electricity to complement the next generation of renewable and nuclear energy. Our analysis shows that it is likely to remain significant beyond 2030-particularly with commercial carbon capture and storage.”
According to DECC UK gas supplies are relatively secure in the short term. In the past 10 years more than £10 billion has been invested in new gas importation facilities. However, last year Ofgem’s ‘Project Discovery’ identified issues in both the gas and electricity markets given the need to find £200 billion of investment between now and 2020.
Ofgem Chief Executive, Alistair Buchanan said: “Project Discovery also identified the challenges posed by Britain’s growing exposure to a volatile global gas market. We have seen this recently where political instability in the Middle East and the impact of Fukushima have helped push up wholesale gas prices for this winter by 40%.”