UK's National Grid Proposes Paying Factories to Cut Gas Usage in Winter

The UK National Grid has already extended its emergency gas shortage drill from two days to four as fears of an energy crisis this winter begin to mount.

UK factories are going to be paid to cut gas usage every winter until 2025 as the National Grid struggles to avoid energy shortages during the year's colder months, British daily newspaper, The Daily Telegraph has reported.

The National Grid's draft proposals recommend paying up to £5Mln ($6Mln) in winter to factories that cut production to save gas.

“The gas supply picture is different for this winter, given the current uncertainty about whether sufficient Russian gas will be available to supply continental Europe, which may have consequences for Great Britain's ability to attract gas if needed via the interconnectors at high demand conditions,” the National Grid said.

The National Grid's suggestions are designed to prevent the kind of severe shortages that would trigger an official Gas Deficit Emergency (GDE).

"The potential impact on heating capability, gas-fired electricity generation, interruption to industrial production and knock-on impacts into wider supply chains that a GDE is capable of causing could result in a major economic and societal impact for the country," the National Grid said.

Recent predictions from independent energy consultancy Auxilione suggest that the energy price cap could exceed £6,500 a year in April as a consequence of Russian energy giant Gazprom halting gas transportation via the Nord Stream pipeline from 31 August to 2 September to carry out maintenance and technical work, The Daily Telegraph said.

The Nord Stream 1 pipeline, which is the main gas supply route to Europe, had been operating at 40 percent of its capacity since mid-June. Russian energy giant Gazprom attributed its underperformance to delays in the return of the Siemens turbine from Canada, where it was sent for repairs, because of western sanctions. On 25 July, because of the failure of another turbine, Gazprom further curtailed supplies, and the pipeline at present is operating at 20 percent of its capacity, which is approximately 170 million cubic meters per day.

After Russia launched a military operation in Ukraine in February 2022 and Brussels imposed several sanction packages against Moscow, the energy situation in Europe deteriorated considerably. Since 1 April, the UK Office of Gas and Electricity Markets (Ofgem) raised the allowed maximum annual electricity bill limit from £1,400 to £2,000 ($2195 to $2440), with the next revision scheduled for October 2022.