National Grid PLC (LSE:NG.) said it has enough capacity to meet UK demand for electricity this upcoming winter.
The supplier said the country will need 49.4bn cubic metres of gas this winter, which is lower than the 50.7-53.3bn cubic metres seen in recent years.
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The report comes as British wholesale gas prices continue rocketing, reaching GBP3 per therm this week – a 500% surge since the start of the year.
Wholesale gas prices continue to rise as the reopening of worldwide economies has prompted a surge in demand that is outstripping supply.
Nine UK energy suppliers covering 1.7mln customers have folded since September, with more expected in the coming months.
“European natural gas prices are also surging over 20% also at a record high. Britain has been hit hardest by the crisis with around 40% of its energy coming from gas. There is a major imbalance in the market with some describing this as the global financial crisis for commodities,” said Victoria Scholar, head of investment at Interactive Investor.
“Expectations for a cold winter ahead, low investment in substitute fossil fuels and unusually low levels of wind to power renewables turbines are all adding to the pressure.”
Meanwhile, analysts at Cornwall Insight reckon that next year’s price cap could be as high as GBP1,660, a 30% on the current level. Ofgem is due to update the price cap next April.
“With supplier exits since the start of August already into double figures, the prospect of further claims – and additional costs for consumers – is apparent, although when these costs will reach bills is unclear,” said senior consultant Dr Craig Lowrey.
“While they have historically been comparatively small amounts in terms of their impacts on bills, the extent and frequency of the supplier exits risks pushing the normal approach of cost recovery into uncharted territory and having unknown impacts on an already stressed retail supply sector.”
“The explosion of choice and innovation seen in the sector in the last decade by challenger suppliers has been fundamentally altered in a matter of months, and while all eyes will inevitably be on this winter, the need for an enduring solution to ensure that the gains experienced by almost three decades of competition are not lost.”
Shares in National Grid were flat at 903.7p on Thursday afternoon.