Gas shortages highlight firms' exposure to energy security risks

National Grid yesterday sought to downplay reports that businesses are having their gas supplies "cut off" as it battles to cope with the increased demand brought about by the on-going cold smap.

The Guardian revealed yesterday that 94 businesses on " interruptible" contracts have had their supply of gas cut off for the first time since the 1970s as energy firms seek to avert the risk of a gas shortage.

The National Grid, which operates the UK transmission networks for both electricity and gas, confirmed the gas transmission network in certain parts of the country was operating at full capacity and that firms with "interruptible" contracts had been asked to fulfill the terms of those contracts.

However, a spokeswoman for the company told BusinessGreen.com that no company had had its gas supply halted without its prior agreement. "They are not being cut off, those on interruptible contracts have the option of paying to remain connected," she said.

Under the terms of "interuptible contracts" firms have the option of paying less for their gas in return for potentially having their supply interrupted. Many firms are likely to pay a surcharge to avoid seeing their gas cut off, although National Grid could not say how many were exercising this option.

In addition to approaching firms on "interuptible contracts", National Grid also issued two "gas balancing alerts" on Monday and this morning – asking power firms and large industrial users to voluntarily cut back gas use.

The shortages are largely being blamed on technical problems that have led to a shortfall of 52m cubic metres from the Langeled pipeline, which pumps gas from Norway, rather than a danger that gas will run out.

The firms affected are largely in the West Midlands and the North East and many will have alternative energy sources such as generators.

However, environmental and business groups were quick to highlight the incident as evidence that the UK needs to diversify its energy supplies for both environmental and energy security reasons.

"This is a good example of why we need to diversify away from reliance on foreign gas imports," said a spokeswoman for the Renewable Energy Association (REA), adding that increased investment in biomass boilers, solar thermal energy systems, combined heat and power plants and landfill gas technologies could all serve to reduce the risk of future gas shortages.

The REA is currently calling for thegovernment to bring forward plans to implement a Renewable Heat Incentive feed-in tariff scheme that would allow businesses and households to generate revenue from heat generated by renewable energy sources.

The spokeswoman said that the scheme would encourage "businesses to meet their heat requirements through a wider range of technologies, rather than relying on imported foreign gas".