The UK’s energy system is under severe strain, which has caused the whole supply system to collapse. Serious concerns have been raised in relation to the impact of this collapse on the economic activities, which were previously affected by coronavirus pandemic legal restrictions. Factories, farmers, energy suppliers, and heavy industries will suffer the most due to such a crisis worsened by the current global pandemic. Residents are expected to incur many expenses in paying for power, and life might become hard for low-income earners’ households.
Various factors were propounded in trying to understand the causes of the UK’s energy system collapse.
China’s post-Covid bounce back
China is one of the most industrialized countries globally and has a huge “appetite for energy.” It’s high energy usage tends to influence global market prices and force others to either increase their prices or decrease.
After the relaxation of covid-19 restrictions laws and reopening of businesses, China went on a pursuit to revive the economy. This plan sparked a need for a lot of power, leading to a surge in energy use in Asia. Europe was also on an economic revival path, and it wanted energy for that to be possible. Because of the winter conditions in 2020-21, gas storage levels depleted as many UK residential areas were opting for this energy source. Stats show that gas prices in the UK surged by 70% [Source].
Such a demand for gas is happening in China. It was projected that China would demand more gas supplies, reducing imports to Europe, thus affecting the UK’s energy system and worsening the situation.
Russian gas games
Russian gas company Gazprom has been a reliable supplier of gas to Europe, but lately, the company has been giving small gas quantities. European authorities appealed to the European Commission to launch an investigation into Gazprom’s failure to meet the Europeans’ demand for gas. There is also an increased demand for gas on a global scale [Source]. It is very common for a large corporation to starve the market to rip off benefits of high prices, and Gazprom might be using this strategy to maximize its financial gains.
Also, the company is blamed for trying to force regulators to approve its plans of building the Nord Stream 2 pipeline aimed at supplying more gas to Germany using the Baltic Sea. But this has contributed to the collapse of the UK’s energy system.
In this aspect, the UK is found bleeding as harnessing power from burning fossil fuel is no longer reliable after causing problems in the electricity system. Problems keep on piling as the nuclear power plants were mandated to go under maintenance, shutting down a power cable used to import electricity from France because of a fire eruption and underperformance of wind turbines due to calm weather conditions. The UK is facing a deficit in gas levels for both residential and factories, thus leading to a power problem in the country.
Uncapped entry to a capped energy market
The British government allowed aspiring energy suppliers to join the market with competitive services. As winter conditions slowly loom, citizens will be forced to choose expensive suppliers to get adequate power. The government’s regulations that control the market prices contrast with rules that make a supplier eligible to join the market. This means that people will lose a lot of money in trying to get a reliable energy supplier.
Fossil-fuel heavy industry
Manufacturing factories and industries are going to feel the real sting of an energy crisis in the UK. Since these entities require vast volumes of energy, a lot of finances will be channeled towards that. The steel industry association UK Steel has already started limiting its processes to avoid huge bills. Tesside and Cheshire, fertilizer companies, were forced to shut down during the winter to curb electricity bills. The farming sector and food production departments are not spared in this crisis [Source].
This shows a national outcry to the government for the need for reliable and affordable energy before businesses crumble down and residents use up the whole budget for energy.