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Security of supply through security of demand
The EU calls on member countries to conduct stress tests before winter to work out how vulnerable they would be in the event the crisis over Ukraine leads to a major disruption of natural gas supplies from Russia. Russia is threatening to turn off Ukraine’s gas supply if they do not pay existing debts and pay in advance.
Ukraine acts as a key transit point for about half of European gas supplies from Russia and any restriction on supply will have a dramatic impact on prices. In the UK we rely on gas to meet about 70% of our heat and about 28% of our electricity, with over 45% of this gas imported, leaving us vulnerable to external forces if there was a sudden disruption to the European gas market.
EU member countries will meet in June to discuss what options are available to improve security of supply. The problem with the debate about how to improve the ‘security of our gas supply’ is in the word 'supply'. A new CHPA infographic shows that when these European leaders meet in a few weeks, if they want to address our security of supply, they need to equally think about the security of our demand.
In the UK, we are looking at squeezing more supply from its North Sea gas deposits, building liquefied natural gas terminals to import LNG tankers, and planning to drill hundreds of shale gas wells.
But each of these supply side measures has risks too. The North Sea deposits are in decline, LNG terminals often compete with high-priced Asian markets for LNG tanker deliveries, and shale gas drilling remains highly controversial.
The new CHPA infographic looks at how energy efficiency investments such as combined heat and power (CHP) vastly reduce gas import requirements equal to the production of many supply-side options.
Currently, our UK CHP capacity reduces our imports equal to eight LNG tankers or the annual production of 166 shale gas wells, while improving our balance of trade by more than £165m every year through reduced imports.
It is right to worry about how we will meet our gas demand at a time of increasing concern over gas security, and this infographic reminds us that by continuing to support energy efficiency investments like CHP, we strengthen the UK's energy security and stability.