Report urges strategic thinking to protect UK's energy supply

The report, published by MPs on the Energy and Climate Change Committee, argues that gas storage capacity needs to be increased in the UK to minimise the potential damage from supply interruptions or price spikes.

It reveals that the UK’s current storage capacity amounts to only 14 days’ worth of gas supply — an amount they believe to be dangerously low compared with France, which has 87 days’ worth of gas storage, Germany, which has 69, and Italy, which has 59.

Tim Yeo MP, chair of the committee, said: ‘The UK will become more dependent on energy imports as North Sea oil and gas declines, but prudent planning can ensure this doesn’t reduce our energy security too drastically.

‘To keep the lights on and our transport moving, we need a diverse energy portfolio that does not rely too heavily on fossil fuels from unstable parts of the world or any one single technology at home.’

He added that the UK is already reasonably energy secure, but encouraging investment in gas storage and insulating more homes will improve its position and help to reduce the impact of rising energy prices.

The report concludes that the new electricity generation currently being built or planned will fill this ‘gap’. But it urges the government to ensure security of supply by delivering on its energy-efficiency targets, rolling out smart meters — that can balance demand — and maintaining a diverse energy mix.

The committee has said it is not convinced that the government’s Electricity Market Reform White Paper strikes the right balance between encouraging investment in new gas-fired power stations in the short term and the need to decarbonise the power sector by 2030. The proposed Emissions Performance Standard (EPS) could have been used to set out that pathway, but in its current form the MPs warn that it could lock the UK into a high-carbon, gas-dependent electricity system.

The MPs call on the government to publish a set of energy security indicators as promised in the Strategic Defence and Security Review. These should cover primary fuel supplies, energy infrastructure and energy users and include specific indicators on the overall level of energy demand, diversity of fuel supplies, energy prices, fuel stocks, spare capacity and capacity for demand side response.

Unexpected levies on North Sea oil and gas producers in the budget have undermined confidence in the sector, according to the report. The government needs to work closely with the sector to restore investor certainty. 

The committee also recommends that the government should set up an independent stock-holding agency — which would be operated by the oil industry — to manage privately held strategic oil stocks.

The Institution of Engineering and Technology (IET) welcomed the constructive recommendations in today’s report.

Helen Farr, IET principal policy adviser, said: ‘This is a wake-up call to all government departments, not just DECC [Department of Energy and Climate Change], to address the energy impact of their policies in a holistic way. Energy security is a complex problem and solutions with a positive impact in some areas could have negative effects in others.

‘For example, electrification of transport might reduce dependence on imported oil but would increase dependence on electricity infrastructure. The attention given to energy reduction and demand response is welcome, as is the recognition that people are part of the system.’