UK energy regulator warning on gas could have knock on effects on Ireland

Ireland is facing a renewed threat this winter after the UK’s energy regulator warned of a “significant risk” of natural gas shortages.

The Office of Gas and Electricity Markets (Ofgem) has revealed that the UK could enter a “gas supply emergency” this winter because of the war in Ukraine.

Gas-fired power stations generate between 40 per cent and 60 per cent of the UK’s electricity. Ireland imports 75 per cent of its natural gas via Britain through a pipeline called the Moffat Interconnector, which also supplies Northern Ireland and the Isle of Man.

Ofgem wrote a letter in response to SSE, which operates four gas-fired power stations in the UK that produce electricity. SSE fears it will be forced to pay hundreds of millions of pounds to customers if it cannot supply them according to their contracts. Ofgem warned that gas-fired power stations generating electricity will be the first to have their supplies curtailed.

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In response to SSE, which also operates in the Republic, Ofgem’s head of wholesale market management Grendon Thompson explained: “Due to the war in Ukraine and gas shortages in Europe, there is a significant risk that gas shortages could occur during the winter of 2022-23 in Great Britain. As a result, there is a possibility that Great Britain could enter into a gas supply emergency.”

Ireland’s Commission for Regulation of Utilities (CRU) said in the event of curtailment of gas in the UK, the same would also apply to gas arriving in the State through the interconnector. “In the event of a natural gas supply emergency being declared by the network emergency co-ordinator in Great Britain, the Moffat Interconnector will be treated in the same way as Great Britain’s distribution network,” a spokesman said.

He added that the scenario of a gas shortage as a result of curtailment in the UK is tested on an annual basis through emergency exercises.

Ireland sources around a quarter of its gas from the Corrib gas field, but this is factored into the supplies that are piped to Ireland so the impact of shortages would be the same in Britain as in Ireland. The CRU said that Irish gas-fired electricity generators can run on oil if natural gas supplies are disrupted, and have stored the required fuel to ensure it would be available.

In response to the UK regulator’s warning, Labour leader Ivana Bacik said the development “underlines the importance of Labour’s call for the Government to consider temporary nationalisation of the Corrib gas field”.

“This would help to secure a significant portion of our supply needs and to lower costs for consumers too,” she said.

Jennifer Whitmore, the Social Democrats’ climate spokeswoman, said the Government “must urgently undertake a risk analysis” to examine the implications of any such measures in the UK and put contingency plans in place. “This is uncharted territory and Government must be prepared for all possible eventualities,” she said.

Sinn Féin’s environment spokesman Darren Rourke said that a gas supply emergency would have a “unique and direct impact on Ireland, given our reliance on gas via Britain”.

“This exposure serves to highlight the spectacular failure of successive Governments here to ensure energy security - most notably in terms of gas storage and the rollout of renewables, especially offshore wind.”

Mr O’Rourke added: “Incredibly, those shortcomings continue, as the Government enters yet another consultation on energy security and deficits in our planning system and ports infrastructure see the prospect of new renewable generation capacity slip further away.”

A Department of the Environment spokesman said: “Ireland is one of the countries in Europe that is least reliant directly on Russian gas. Around 25 per cent of our gas comes from the Corrib gas field. The remaining 75 per cent comes from the UK via gas interconnectors.

“The UK does have a diverse supply of gas including: UK and Norwegian originated gas; deliveries to LNG terminals in the UK; gas storage in the UK; and gas interconnectors with Belgium and the Netherlands.”

The spokesman added: “Gas supplies from Russia to Europe have been severely reduced over the last year and continue to be a cause for concern for Europe’s energy security. This has resulted in wholesale gas prices that are approximately ten times the levels seen just two years ago. The continued supply of gas to Ireland has not, to date, been reduced or interrupted as a result of the war. Like all other European countries, we continue to monitor the situation closely and must remain vigilant.”

Of the Moffat Interconnector with Britain the spokesman said: “In the unlikely event of a curtailment on the National Grid Primary System, any reduction in supply to the Moffat Interconnector would be based on the ‘principle of proportionality’.

“This procedure is documented between National Grid and Gas Networks Ireland. This is tested on an annual basis during the NEC annual emergency exercises. More broadly, there is ongoing contact between Gas Networks Ireland and National Grid, and between Department officials and their counterparts in the UK.”

He also said the Commission for Regulation of Utilities “has a programme of actions to safeguard our electricity supply over the coming winters, in a context where roughly half of our electricity is from gas-fired power stations.”

Cabinet memo

Meanwhile, the Cabinet is also expected to consider a memo on energy measures announced in the Budget.

It is understood to include proposals for the legislation to allow for the payment of the three planned €200 electricity bill credits for all households.

There is a provision to ensure members of the Travelling Community who may pay their Local Authorities for energy bills get the credit.

The memo also covers the reduction of the National Oil Reserves Agency (Nora) levy and plans for the exchequer to pay into the climate action fund.