UK Cost of Living: The European Energy Crisis Explained: Why is the cost of living in the UK and Europe rising and why? | Daily News Byte

UK Cost of Living: The European Energy Crisis Explained: Why is the cost of living in the UK and Europe rising and why?

 | Daily News Byte


The gas supply situation in the United Kingdom looks strained due to the war in Ukraine and Russia, and energy costs in the North continue to rise. The general public is turning off their heaters more often, and this is mainly due to the incentives offered by the gas company. The gas company encouraged households not to use gas during peak hours. For example, if a household avoids turning on their heaters between 5 PM and 7 PM, the power company will reimburse the household in cash. This scheme of providing incentives by power operators is called Demand Flexibility Service. The 5-7 PM timeline is set, keeping in mind people returning home from work and school and starting to set up for dinner.

The power sector unveiled a new set of contingency plans when freezing temperatures were experienced earlier in the month. This created a natural demand for energy in households. The Electricity System Operator (ESO), part of the National Grid, requested to start supplying the two coal power plants immediately.

The country experienced a cold spell earlier this month, with temperatures falling below freezing with snowfall in many parts of the country. The power sector was under pressure to increase support for heating supplies, and many questioned whether it would be possible. Questions were raised about whether the UK’s electricity supply would be able to supply electricity. The power sector warned that a nationwide blackout was possible due to non-availability of gas.

So, what pressured the power sector to issue these warnings and how are global factors weighing on it? National Grid was not sure they could source the extra supply given the heating demand. The main reason for this was the ongoing war between Ukraine and Russia. The grid planned a three-hour mandatory blackout throughout the winter. Now operators say there is a remote chance of this happening.

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The war has disrupted supplies to the UK and other parts of Europe. Unable to cope with the sanctions, Russia has cut its supplies to Europe by almost 90%. Because of these tensions, wholesale gas prices have risen 210% since the war began. If supplies are not replenished, the chances of a blackout will increase, as conservation plans must be in place to tide over the harsh winter months. On the other hand, the Netherlands, Belgium and France cannot rely on normal electricity supplies as those nations need to adjust to meet the need to meet their supply needs. 43% of the UK’s power sector relies on gas, and if supply were to drop, the grid would not be able to operate at full capacity.

Extreme cold, like in 2018, can also disrupt supply as the grid is affected.

Energy bills head north as prices rise around the world, putting a huge strain on the grid. In 2021, when the energy crisis began, wholesale gas prices increased by 250%. This led to the bankruptcy of at least twenty small power supply companies. Initially, companies bore the burden of price hike, and when in October 2021, the burden was reduced by lifting the price cap. Some smaller companies such as Pure Planet and Avro Energy had to shut down operations. In summary, high gas prices are mainly due to increased demand due to severe winters across Europe, supply shortages and Russia’s invasion of Ukraine.

Frequently Asked Questions:

  1. How many employees work for National Grid?
    23,683 has been kept
  2. When was National Grid established?

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