Europe’s highest energy costs expected in Britain as winter import needs grow

Imports could raise winter costs

Great Britain is expected to pay some of Europe’s highest energy costs this winter, with forecasts pointing to greater reliance on imports to maintain a steady supply. The outlook says prices could stay high if UK buyers compete more fiercely for liquefied natural gas cargoes. Gas storage levels across Europe are low, adding pressure to supply during periods of strong demand.

Gas supplies face constraints

The UK has some of Europe’s smallest gas stores, after decades of relying on North Sea production. Output is forecast to fall by 6% this year compared with last winter.

The newly approved Jackdaw gasfield was not fully included in the winter forecasts. It is expected to provide a modest supply boost when it starts up next month.

Weather adds to supply pressure

A recent rise in Europe’s gas benchmark brought prices to their highest level since December 2022, when Russia’s full-scale invasion of Ukraine sent prices sharply higher. Summer heatwaves lowered river levels across Europe, affecting French nuclear output and Norway’s hydroelectric reserves. Norway’s reserves have been below the 10-year minimum since late July.

Gas remains important at peak times

Great Britain is expected to use gas-fired power plants less overall this winter than in previous winters, as renewable energy levels rise. However, gas needs during power supply crunches could be 7% higher than previously assumed. Glenn Bryn-Jacobsen, a director at National Gas, said the combined trends had led to “tighter supply margins” during high demand and system stress.