UK to import 70% of gas needs by 2020

The UK will rely on imports for up to 70% of is gas needs by 2020, according to Centrica CEO, Sam Laidlaw.

Laidlaw told the CERAWeek Global Gas Plenary in Houston that investment in UK energy generation has almost come to a standstill because of political uncertainty.

Future energy mix

Speaking at the international energy conference in Texas, he explained that the UK’s dependency on gas means that over time, shale gas has the potential to become a significant part of the UK’s future energy mix. However, that potential currently remains unproven, and there are a number of challenges that must be addressed.

He added that the future of suppliers would depend on their ability to help customers take control of their own energy use through innovation.

Political uncertainty

In his speech, Laidlaw highlighted increasing political intervention in the energy market, a potential inquiry into competition and talk of breaking up an already fragmented industry. “Political uncertainty is the enemy of investment. As a result, investment in new UK generating capacity has virtually ground to a halt,” he explained.

Laidlaw used his speech to warn politicians security of supply risks becoming the ‘forgotten priority’ of European energy policy. In the UK an estimated 3.7 GW of coal-fired generating capacity will be taken offline by the end of 2015, as a result of European directives to curb emissions. The country’s reserve capacity is forecast to decrease to 4%, increasing the risk of power cuts. However no new capacity is being built.

Gas imports

Laidlaw commented: “In primary energy, the UK’s production of gas is falling rapidly. North Sea oil and gas output has fallen by 38% over the last three years. By 2020 we will be reliant on imports to meet 70% of the country’s gas needs. So when it comes to security of supply, there is a pressing need for solutions.”

Diversify energy sources

He told international industry leaders that with 80% of UK homes heated by gas, the country must look to diversify its energy sources. Last year Centrica, which owns British Gas, signed a 20-year deal with Cheniere to export LNG from Louisiana, with the first cargo due to be shipped in September 2018. The company also has a stake in the Bowland shale licence in Lancashire.

Energy control technology

Laidlaw said new technology and concerns about affordability have driven customers to take unprecedented control of their energy use. British Gas’ Hive Active Heating allows customers to control their heating and hot water remotely from a smartphone, tablet, SMS or via a website. Such technology could save up to £150 a year on energy bills.

In conclusion, Laidlaw said: “The old energy supplier model is dead. In the future we will have to deliver products, which are tailored to our customers’ individual needs. They will determine the nature of those products. What they use, when they use it, where they use it, where they control it from. They will be in control.”

Adapted from press release by Katie Woodward

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