Wednesday, January 13, 2010

Letter to FT

Jeremy Nicholson of the Energy Intensive Users Group and Stephen Radley of the Engineering Employers Federation have written a letter to the FT which is published today.

The link gives the letter.

The conclusions are:
Easily accessible gas from British North Sea fields is accounting for an ever smaller share of our supply. The longer and more complex gas supply chains become, the greater the risk a disruption will occur at one link along the chain. There is, therefore, a real risk that disruptions to supply could become more frequent. Further cut-offs would hit manufacturing hard, especially energy intensive industries, and risk damaging the UK's reputation as well as future inward investment.

Short, medium and long-term problems remain with our energy system and need addressing urgently. EEF, the manufacturers' organisation, and the Energy Intensive Users Group are therefore reiterating our long-standing call for an urgent and thorough review of the options available to ensure that adequate gas storage facilities are built and stocked.


Blogger Will Dean said...

One cannot argue with the general thesis of this letter - i.e. that there are short, medium and long term problems which nobody on the currently political landscape has the cojones to address. (And some of which were caused by the government of the last Prime Minister who did have any cojones.)

However, I do take issue somewhat with the idea that 'if there was nobody on interruptable tarrifs, then we'd have a real problem'. This is narrowly true but utterly uninteresting - demand-side balancing mechanisms are not fundamentally different to supply-side balancing mechanisms. If you don't have enough room to balance, then you have a problem which you need to solve, and you might choose (or it might be easiest) to solve it on either side of the equation.

The world in which there are only firm contracts but in which the network has carried-on as though it has interruptable customers is hypothetical. There's no reason to think that demand-side options are going to suddenly go away.

To me, one of the more interesting facts of the last couple of weeks is that, other than at the evening peak, we've been exporting electricity to France pretty much flat-out, and about 40% of that is just gas in electric form.

It is a strange feature of the market that as we struggle to pump gas into the right-hand of the map, a good lot of it runs out of the bottom...

3:39 PM  

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