I am pleased to announce that the Government have today published two updates to the March 2023 Powering Up Britain Energy Security Plan. The first sets out key considerations on the future role that gas storage and other forms of flexibility can play in the security of gas supply. The second sets out a proposed methodology for assessing medium range gas supply security.
Energy security is a priority for this Government as we transition to net zero. While we expect UK gas demand to decline as part of this transition, natural gas will continue to play a critical role in our energy system for decades to come. Alongside this reduced demand we are facing reduced domestic supply. With declining domestic gas production from the UK’s continental shelf, the UK will become more dependent on gas imports, including from global liquefied natural gas (LNG) supplies. As the gas storage and flexibility update highlights, natural gas LNG and interconnector imports are estimated to be approximately 11% of our total gas demand in 2023, rising to just
under 50% in 2045.
To slow this increasing dependence on gas imports and the risk of higher embedded emissions in them, the Government are backing the North sea oil and gas industry—so as to make Britain more energy independent. That is why we have introduced the Offshore Petroleum Licensing Bill to give industry certainty as to the future of licensing rounds. The continuing award of new oil and gas licences is essential to the UK’s energy security, further investment in moving the basin to net zero and in retaining the supply chain required for the transition. It will help slow the decline in the UK’s domestic production of gas as we consider the ongoing role of flexibility in the UK’s gas supply for the coming decades.
The role played by flexible sources of gas supply is expected to change over the coming years to provide two roles—continued and probably increased flexibility to respond to patterns of demand as well as making a contribution to baseload supply. For the gas system, the three forms of supply side, infrastructure-based forms of flexibility—geological gas storage, LNG and interconnectors—all share three key features: they can respond to peaks in demand, can be dialled up or down depending on demand across days and seasons, and their gas supply contribution is driven by market signals.
The gas storage and flexibility update therefore explores the future role that flexible sources of gas supply might play in gas security over the medium to long term, and the associated policy decisions for Government. We are proposing to launch a call for evidence on flexible sources in the coming months to support policy development on the future role of flexibility in gas security of supply.
The second update publication outlines a proposed methodology that could be used by the planned future system operator (FSO) to deliver a new medium range gas supply security assessment. This will be an annual assessment that will consider how the UK’s future estimated gas supplies compare against demand scenarios five and 10 years into the future. It will help Government and industry gain insight and plan for the UK’s future gas security. The Government will use this publication to engage with industry, academia, Ofgem, the system operators, and other stakeholders to further refine the methodology ahead of the FSO becoming operational.
I will place a copy of the documents: “The role of gas storage and other forms of flexibility in security of supply” and the “Medium range gas supply security assessment: methodology” in the Libraries of the House.
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