Info check, please (I guess this is for felstedrider).
(based on reading of news reports)
The UK has very very little gas storage, compared to the EU.
UK gas usage is very low compared to the EU.
UK gas storage is currently nearly full.
Therefore the issues with energy suppliers is purely that they can't afford to pay the wholesale prices.
Why were some factories, such as CO2 producers, asked to cut back on gas use? Was that purely to maintain the cushion of gas in the limited storage facilities?
Running back a little. Gas prices high because :-
- Late Spring with cold temps
- European gas storage stayed low and has not been replenished in time for Winter
- Flows from Russia lower than expected
- LNG cargoes going to the Far East as prices are higher there
The UK is suffering as it's at the end of the supply chain and we hardly have any storage. Flows from the North Sea and Norway are maxed out. If we get a cold Winter then supply will be short.
All this is a perfect storm and gas prices are now about £2.50/Th which is 5 times higher than previous Winters. Power generation remains at 40-50% coming from gas so power prices are up as well.
Suppliers are failing as 1) they haven't hedged* and 2) the existing price cap generates annual losses of circa £500 per customer on average usage. Why bother continuing to run a business that just generates a loss ? This is actually the tail end of what has been a race to the bottom for supply - there's been no money in it for ages and too many participants. The high prices have just brought forward what may have happened anyway.
Large consumers have been turning off because prices are high and they can't pass the increased costs onto their customers. Some of them may be on interruptible contracts which allows Grid to turn them off on days when demand is high. For some reason these businesses are worth saving but energy suppliers aren't.
*hedging is actually really difficult for domestic suppliers. Liquidity, shape an collateral being the biggest issues. Kwarteng's comments about suppliers being irresponsibly run is not entirely correct.