Will the UK suffer energy shortages after Brexit?

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The UK could suffer gas supply shortages and increased energy costs when it leaves the EU, according to industry experts.

It’s thought that the UK’s reliance on gas imports could cause problems post-Brexit, as EU countries could restrict supply during colder periods to cater for their own citizens.
This, in turn could lead to shortages across the UK, alongside higher energy bills for households and businesses.

What’s the problem?

In short, the UK is too reliant on imported natural gas supplies, following the winding-down of its own North Sea gas supply and the subsequent closure of much of its gas storage infrastructural capacity.

You may not realise it, but around 40% of the gas we use in the UK comes from Norwegian and other European pipelines, while around 6% of electricity is generated in France, the Netherlands and Ireland.

This over-reliance on imported gas is a particular problem, especially during the winter months, as highlighted during last year’s cold snap.

Marco Alvera, head of European industry body GasNaturally, explained: "In the week when we had the 'Beast from the East' very cold spell coming, the system was already under a lot of strain, and the UK was taking a lot of gas from Europe that was stored in Europe."

If this happens again, we could have a situation whereby EU nations strangle the supply to the UK to ensure there is no shortage in their own countries.

Why is a reliable gas supply so important?

Alongside wind, solar and nuclear power, gas is an essential part of the UK’s energy mix, with more than three quarters (80%) of the UK’s 25 million homes powered by it.

Even those that aren’t directly dependent upon a reliable gas supply would feel the effects of any disruption, as over a third (39%) of the UK’s electricity supply is generated from natural gas. Gas-fired power plants are one of the most flexible ways to generate electricity, as they can quickly provide power during periods of high demand.

A shortage in the UK’s gas supply could also affect electricity generation. This, in turn, could lead to shortages of both gas and electricity, as well as an increase in prices, as higher demand is one of the primary drivers behind energy rate rises.

Where does the UK get its gas from?

Over half of the UK’s gas supply is imported, here’s how it breaks down:

  • European pipelines – 47%
    • Russia – 36%
    • Norway – 21%
  • Domestic production – 44%
  • Liquefied natural gas (LNG) imports - 9%

What’s the solution?

Amazingly, there seems to be a relatively simple solution to the potential supply crisis – according to Mr Alvera, the UK could solve it by converting old, out-of-use North Sea gas fields into gas storage facilities.

As far as beating any Brexit price hikes goes, signing up to a fixed-rate deal is the only thing to do. But with a few more months to go until the UK is due to leave the EU, and the potential of another 18 months if a transition period takes us to a leaving date of December 31, 2020, it’s difficult to know when the best time to switch is.

There are a few options open to you:

  • Sit tight on your current deal and switch to a 12-month fixed rate deal around the start of October (although you can switch instantly online, the actual switch can take up to three weeks to complete).
  • Switch to a longer-term fixed rate deal, to potentially lock rates in for two years or longer.
  • If your current deal is due to end, you need to switch before your contract expires and you’re put onto your supplier’s more expensive standard variable rate. If you want to switch again before the end of your new deal, you should switch to one that doesn’t charge and early exit fee.

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