Grid operators assure winter supply security as energy costs and consumer confidence collapse

Britain’s energy system operators say the country will have enough gas and electricity to meet demand this winter, even as soaring household costs drive a sharp collapse in consumer confidence. GfK’s consumer confidence index fell 11 percentage points in October to -24, the fastest single-month decline outside the Covid pandemic since the Brexit vote.

The National Energy System Operator published its winter outlook report this month, declaring the country’s electricity system “resilient to the challenges it may face” during colder months. NESO warned there could be “tight days” but said deploying notices for additional generation was routine and not a warning of power cuts. Wind power was the largest generator of electricity in Britain last year, accounting for almost 30% of all power, marginally above gas.

National Gas, a private company separate from NESO that owns and runs Great Britain’s gas network, published its own winter outlook report. It forecast that gas for power generation would increase at peak demand due to the intermittent nature of renewables, and warned that the need for gas during power supply crunches could be 7% higher than previously assumed. Glenn Bryn-Jacobsen, a director at National Gas, said: “While supply diversity and flexibility remain sources of resilience, taken together these trends in demand and supply have resulted in tighter supply margins during periods of high demand and system stress.” National Gas lifted its gas power demand forecasts for the most extreme electricity supply scenarios after noting over successive winters that gas plants have remained in high use when dark, still winter days lead to high electricity demand and lower renewable energy levels.

Belgian pipeline reversal averts worst-case scenario

An 11th-hour deal was struck with Interconnector Limited, the Belgian owner of a major pipeline, to keep gas flowing into Britain this winter by reversing a planned capacity cut. Ofgem approved the deal, which will add around 10p a month to the average gas bill, or £1.19 per household per year. The arrangement was needed to address a worst-case scenario where an important part of the country’s gas networks failed as temperatures plummeted. An Ofgem document said the deal was “the only currently available intervention identified” to address the immediate security of supply position for winter 2026/27.

Thin storage, falling domestic output

The UK has some of the smallest gas stores in Europe after decades of relying on homegrown North Sea production, and Britain still imports almost 60% of its gas. UK North Sea gas production was forecast to fall 6% this year compared with last winter. Great Britain is expected to increase imports of seaborne LNG cargoes by about 5% from last winter. The government approved the new Jackdaw gasfield in the North Sea earlier this week, expected to start up next month and offer a modest boost to supplies. Centrica’s Rough facility in the North Sea is currently due to close next spring. NESO warned almost a year ago of an “emerging risk to gas supply security” in 2030. The government’s interim response came in August, but no timetable was given, and the final response is not due until next year.

European squeeze drives import costs to record

Europe ended August on course to enter the cooler months with gas stores at their lowest level in 13 years, owing to a slowdown in gas exports from Qatar and increased summer gas consumption for cooling during record heatwaves. Europe’s gas market benchmark climbed to its highest level since December 2022. Market prices for gas are three times higher than before the Middle East crisis severely disrupted Gulf supplies. Summer heatwaves reduced river levels across Europe, hitting French nuclear output and Norway’s hydroelectric reserves, which have remained below the 10-year minimum since late July. The UK paid a record £4bn on power imports over the year ending in August, of which half was spent on electricity imported from France. Great Britain is forecast to be a net importer of electricity over the colder months, likely at higher cost owing to tighter European power supplies. The UK has also made near-record payments over the past year to fire up gas plants while wind and solar farms have been paid to turn off due to grid bottlenecks.

Whistle-blower probe finds cultural issues at NESO

An independent investigation by law firm Eversheds Sutherland found “high levels of stress and concern” within NESO’s Electricity National Control Centre, and a “significant disconnect” between control room staff and NESO’s leadership. The probe was prompted after Conservative shadow energy secretary Clare Coutinho said in July she had been contacted by a whistle-blower alleging NESO had been hiding information about grid security. One claim alleged staff were encouraged to conceal or alter records to avoid a paper trail linked to efforts to stabilise the grid during extreme heat in June. The investigation did not substantiate whistle-blower allegations but identified “cultural, governance and control issues.”

Confidence collapses as bills loom

The GfK index last fell by this much in a single month in July 2016, following the EU referendum leave result. Its largest ever fall was 25 points in March 2020, just after the start of the first UK lockdown. Headline inflation rose to 3.5% last month, more than expected, while the government deficit was a worse-than-forecast £24.5bn. The major purchase index fell 14 points to -22 in October, suggesting consumers could be bracing to cut back on spending over the winter. Consumer energy bills could reach £2,000 a year from January for the typical household. Over the past five years, UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills, per TUC analysis. CBI figures show investment intentions among manufacturers were subdued as cost pressures remained high in the three months to October. Neil Bellamy, consumer insights director at GfK, said: “Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer.”