UK will import up to 70 per cent of its gas by 2020, warns Centrica plc

The UK will rely on imports for up to 70 per cent of its gas needs by 2020, the Chief Executive of Centrica plc Sam Laidlaw warned today.

Sam Laidlaw told an international energy conference that investment in UK energy generation has almost ground to a halt because of political uncertainty.

He told the CERAWeek Global Gas Plenary in Houston, Texas the UK’s dependency on gas means that over time, shale gas has the potential to make a significant contribution to the UK’s future energy mix. But as yet, that potential remains unproven and many challenges must be addressed

He also said suppliers’ futures would depend on their ability to help customers take control of their own energy use through innovation.

Sam Laidlaw highlighted increasing political intervention in the energy market such as Labour’s planned price freeze, a potential inquiry into competition and talk of breaking up an already fragmented industry. He said:

“Political uncertainty is the enemy of investment. As a result, investment in new UK generating capacity has virtually ground to a halt.”

Sam Laidlaw used his speech to warn politicians security of supply risks becoming the “forgotten priority” of European energy policy. In the UK an estimated 3.7 Gigawatts of coal-fired generating capacity will be shut down by the end of 2015 as a result of European directives to curb emissions. The country’s reserve capacity is forecast to shrink to 4 per cent, increasing the risk of power cuts. Yet no new capacity is being built.

Chief Executive, Sam Laidlaw said:

“In primary energy, the UK’s production of gas is falling rapidly. North Sea oil and gas output has fallen by 38 per cent over the last three years. By 2020 we will be reliant on imports to meet 70 per cent of the country’s gas needs. So when it comes to security of supply, there is a pressing need for solutions.”

He told international industry leaders that with 80 per cent of UK homes heated by gas, the country must look to diversify sources. Centrica – which owns British Gas – last year signed a 20-year deal with Cheniere to export Liquefied Natural Gas from Louisiana with the first cargo due to be shipped in September 2018. It has also taken a stake in the Bowland shale licence in Lancashire.

He also said new technology and concerns about affordability have driven customers to take unprecedented control of their energy use.

British Gas’ Hive Active Heating lets customers control their heating and hot water remotely from a smartphone, tablet, SMS or via a website. Such technology could save up to £150 a year on energy bills.

Sam Laidlaw said:

“The old energy supplier model is dead. In the future we will have to deliver products which are tailored to our customers’ individual needs. They will determine the nature of those products. What they use, when they use it, where they use it, where they control it from. They will be in control.”