The winter energy crisis: A global perspective
According to Associate Professor of Global Energy, Warwick Business School, Michael Bradshaw, the current price cap set by Great Britain's energy regulator Ofgem is £1,834 per year until December 31 for a typical household paying by direct debit.
He said in an article published by The Conversation that the price cap sets the amount you pay for each unit of gas and electricity that you consume.
Factors influencing the winter energy bill
According to Bradshaw’s report, this winter's typical energy bill will be driven by three factors: the unit price for gas and electricity, the standing charge and the lower level of government support. "We know what to expect from the latter two factors, so the unit charge is the only unknown. The way this will affect your energy bill this winter will come down to changes in supply and demand that will influence where Ofgem sets the cap from January 1 next year," according to Bradshaw in The Conversation.
Global energy supply and demand
Bradshaw claims that a complex web of variables affecting the global balance between energy supply and demand revolves around UK households. Due to Russia's ongoing invasion of Ukraine and, more recently, the danger of a wider Middle East conflict following Israel and Hamas fighting in Gaza, supply is still a problem this winter.
The role of Russia and Europe
His article argues that Russia is still supplying Liquefied Natural Gas (LNG) to Europe and that Russian pipeline gas is still entering southern Europe through Turkey and Ukraine. However, any cuts there might lead to a surge in prices. This year, Europe has stored more gas than ever before, yet there is still a "tight" supply of LNG worldwide, claims Bradshaw.
Impact on other markets
The primary concern is whether or not LNG demand from Asia, especially China, would increase over the previous year and thus decrease gas supply to Europe. The demand in Northeast Asia and Europe will also be influenced by the weather. According to Bradshaw, an extended cold period would further tighten LNG prices and magnify any supply concerns.
Renewable energy in Europe
The availability of renewable energy in Europe is also impacted by the weather. Long stretches of chilly, overcast weather without wind drive up gas consumption in the winter to make up for the absence of renewable energy sources, according to Bradshaw.
Saving energy
Although the price cap is significantly lower than it was last winter, he encourages being responsible and making use of the available advice on how to save energy and reduce your costs because energy may be even more expensive this year for many people.
