22/09/2022 | Energy markets

LNG imports would have to rise by nearly 150% at cost of £30bn to billpayers without renewables

22 September 2022 - RenewableUK press release


New analysis from RenewableUK shows that Liquified Natural Gas (LNG) imports would need to more than double if the UK was not generating electricity from renewable sources. Renewables generated 122 terawatt hours in 2021, equivalent to using 144% of the LNG the UK imported last year.


Replacing the electricity generated by renewables in 2021 would require an additional 21.2 billion cubic metres (BCM) of gas to be burned for power. Last year LNG imports totalled 14.7 BCM and importing additional LNG to replace renewable generation would cost nearly £30bn at current prices of about 400p/therm. That would also make the UK reliant on imports for nearly four-fifths (78%) of our gas.


Demand for LNG is rising following Russia’s decision to halt gas exports to Europe via the Nord Stream pipeline, which prompted gas prices to hit new record highs in recent weeks. If the UK were to meet the demand covered by renewable energy without additional imports, domestic gas production would have to rise by 65%.


Earlier this month, the Government’s independent advisers on National Infrastructure and Climate Change wrote to the new Prime Minister urging her to “double down” on “efforts to end our dependence on gas” and warning that “gas reserves – offshore or from shale – are too small to impact meaningfully the prices faced by UK consumers”. At the same time, oil & gas representative body Ocean Energies UK has cautioned that increased UK gas production would not “swing prices back down to what they were a few years ago”.


Commenting on the new analysis, RenewableUK’s CEO Dan McGrail said:


 “At a time of increasing concern about costs and security of supply, renewables are cutting our dependence on gas and avoiding huge additional energy imports. As gas pipelines to Europe are being cut off by Russia, increasing demand for LNG is pushing up prices and the best way to avoid those costs is not using gas in the first place”.


“North Sea gas producers have increased output in response to higher prices but that can only go so far, and new gas fields can decades to develop. New renewables are more than five times cheaper than the price of gas and can come online in a fraction of the time - less than a year for an onshore wind farm”.


“Our overreliance on gas has forced the Government into a £100bn-plus subsidy for energy bills and gas prices remain sky-high going into winter. If we want cheaper, secure energy supplies, we need to make rapid progress on home-grown renewables and cut our reliance on expensive shipments of gas from across the globe”.


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Notes


RenewableUK’s members are building our future energy system, powered by clean electricity. We bring them together to deliver that future faster; a future which is better for industry, billpayers, and the environment. We support over 400 member companies to ensure increasing amounts of renewable electricity are deployed across the UK and access markets to export all over the world. Our members are business leaders, technology innovators, and expert thinkers from right across industry.


Data on LNG imports (14.7BCM), total gas imports (66.1BCM) and domestic production (32.6BCM) and usage available from BEIS Energy Trends Gas tables here.


Total electricity generation from gas in 2021 was 132.2TWh, using 23.1BCM of gas equates to 0.174 million cubic metres gas per GWh. Renewables generation of 122.2TWh in 2021 equates to 21.2BCM of gas usage for power generation. BEIS 2021 generation statistics here.


UK Natural Gas trading price has averaged c.400p/therm for the last month. Details here. 1 therm = 2.851 cubic metre of gas. 21.2BCM gas = 7.44bn therms = £29.8bn.


Letter from the CCC and National Infrastructure Commission to the Prime Minister here


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