David Cox and Andrew Nind, Poyry Energy Consulting
The delivery of significant quantities of reliable, new gas supplies is required to meet future demand for gas, and there are a number of large infrastructure projects currently under development that will bring new commercial supplies of gas to the UK. There is some debate, however, as to whether the level of security of supply that will be delivered by the market, under its current regulatory structure, is as high as may be economically, socially or politically desirable.
In addition there are a number of factors that have led to calls to examine the question of the long-term security of supply:
There is the possibility of an emerging ‘gap’ between supply and demand. We define a gap as emerging when commercial gas supply fails to meet commercial demand. The only option left for supply to balance demand is for involuntary firm demand load shedding to occur, with the consequent interruption to industry and industrial production. Forced interruption of firm gas demand would cause industry to incur unexpected costs through loss of production. There may be a basis for government intervention if the costs of the market failure are sufficiently high. In this study, we analyse the costs and benefits of such intervention, and alternative options for addressing long term gas supply security in the UKStrategic_storage_and_security_of_gas_supply_in_the_UK_2006_pres1.pdf 996.09 KBStrategic_storage_and_security_of_gas_supply_in_the_UK_2006_pap.pdf 306.77 KB