Russia-Ukraine tensions may exacerbate UK energy crisis

The price of gas has already seen a growing number of energy firms collapse, while UK customers see bills go through the roof. Geopolitical tensions could be about to deepen the UK energy crisis, however, as hostilities between Russia and Ukraine threaten the gas supply of Eastern Europe.

The UK finds itself in a difficult position when it comes to its energy infrastructure. The nation is increasingly dependent on the North Sea reserve – which has enabled the UK to be a big supplier of gas since the mid-1960s, but is dwindling even as demand for its resources increase.

At the same time, Britain’s gas reserves are lower than many of its mainland equivalents. Data from Gas Infrastructure Europe shows that the UK can bank on just under 9 terawatt-hours in its national reserves – or an output of around 9 trillion watts for one hour.

While that may seem like a lot, Statista research suggests consumption of electricity in the UK was around 287.58 terawatt-hours in 2020. In comparison, France, Germany and Italy all have more than ten-times as much gas storage capacity, meaning that while they have been impacted, the rise in gas prices has been more keenly felt in Britain.

Throughout 2021, the UK’s energy market has been in an ever-deepening crisis. With gas prices having spiked to record rates, many small and mid-market suppliers have seen their operating margins decimated. Following the likes of PFP Energy and Bluegreen Energy, Together Energy has become the 27th such supplier to collapse in the last year.

And that crisis looks set to deepen further in the coming year, thanks to escalating hostilities between Russia and Ukraine. With sanctions being mooted to dissuade Russian forces from crossing the border into Ukraine – as military experts speculate an invasion may be on the cards – gas pipelines have already become a key weapon of NATO.

For example, the proposed Nord Stream 2 pipeline sending natural gas from Russia to the European Union will be off the cards, in the event of any attack. US state department spokesperson Ned Price has confirmed that the administration of President Joe Biden was already “working with Germany” to ensure it could withstand the loss of the pipeline.

Should this policy apply to other gas supplies, it would cause further issues for the UK energy market. While the UK still relies on its own production for the largest portion of its gas supply, that now accounts for less than half of its energy intake.

Meanwhile, of the countries the UK imports gas from, Russia is the fifth most prominent. According to data from the Department for Business, Energy and Industrial Strategy, imports of pipeline gas and liquid natural gas from Russia totalled 24,635 gigawatt hours in 2020.