Mark Hanafin: We're not in any danger of running out of supply

Thursday 14 January 2010 01:00 GMT
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With Britain on course for what could be the coldest winter in 30 years, concerns have moved beyond the lack of road grit and focused on the spectre of energy shortages. But while the industry is by no means complacent, and we are watching the situation closely, the evidence is the UK gas market has proved flexible and responsive.

The giant Langeled pipeline from Norway, the BBL pipeline from the Netherlands and the three large new liquefied natural gas import terminals at the Isle of Grain and Milford Haven have at times accounted for over a third of the UK's gas in recent weeks. Yet only five years ago none of these massive import facilities existed.

Over that period, around £10bn of investment has been made as the UK moved from being a gas exporter in 2003 to importing enough to meet up to 50 per cent of its gas requirements today. Why did so much investment happen so quickly? Because this country has a liberalised energy market in which investors can make returns.

The recent National Grid gas balancing alerts were part of this market process, which aimed to ensure that enough gas was in the system after problems with Norwegian supply. Overall, we now have a much more diverse and resilient infrastructure. But we must keep on investing as UK gas reserves continue to decline, and as we attempt to drastically reduce carbon dioxide emissions.

The industry regulator, Ofgem, estimates that a further £200bn of investment will be required by 2020, focused on low carbon power generation. We are at a pivotal point in energy policy. Whatever the outcome of the general election, it is vital that momentum is not lost. Otherwise, the UK could not only miss its emissions reductions targets, but risk its good record of keeping the lights on.

Mark Hanafin is the managing director of Centrica Energy

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