Interview: Imbalance between supply and demand, insufficient reserves and other factors trigger the BRITISH energy crisis – interview with Alexander Macdonald, CEO of the London Energy Brokers Association

LONDON, Nov. 1 (Xinhua) -- Interview: Imbalance between supply and demand, insufficient reserves and other factors have triggered the British energy crisis - Interview with Alexander Macdonald, CEO of the London Energy Brokers Association

Xinhua News Agency reporter Sun Xiaoling

Alexander Macdonald, CEO of the London Energy Brokers Association, said in a video interview with Xinhua News Agency a few days ago that the current energy crisis in the UK is caused by multiple factors such as the imbalance between supply and demand in the natural gas market and the lack of its own reserves.

Macdonald said the surge in wholesale natural gas prices in Europe this year has an important relationship with the imbalance between supply and demand. "(Wholesale prices) rose about 10 times in a short period of time, indicating an imbalance in the energy system, which is the result of much higher demand than supply."

Macdonald disagreed with the idea of a reduction in international gas supplies. He believes that international LNG supplies have continued to increase over the past three years due to facility expansions in the U.S. and the Middle East, "but global demand for LNG has grown even more."

In addition, the UK's insufficient energy reserves, including natural gas, are also one of the reasons for the current energy crisis. "Compared to other European countries, the UK has very few gas reserves and is more vulnerable than other countries when faced with market volatility." Macdonald said.

Macdonald also said that the new crown epidemic and insufficient wind power supply have also exacerbated the imbalance between energy supply and demand. The rapid resumption of economic activity after the unsealing of the pandemic has led to increased demand for energy, while Europe's increasingly dependent wind power supply has been sluggish this year. "In short, it was a 'perfect storm' that triggered the crisis in August, when the market was least prepared."

Speaking of the bankruptcy of more than 10 small energy suppliers in the UK this year, McDonald said that the soaring wholesale price of natural gas and the government's setting of a retail price cap have made it difficult for many energy suppliers to withstand the shock. He believes that some industries in the UK may face the risk of downtime this winter due to high energy costs. For millions of domestic energy users in the UK, the crisis could herald the end of an era of cheap gas and electricity.

McDonald argues that security of supply means that there can be no single supplier and that an energy supply network that can quickly fill gaps needs to be established. At the same time, it is also possible to buffer the tight energy supply by means of gas storage and electricity storage.

Founded in 2003, the London Energy Brokers Association is an independent industry body representing the interests of London energy brokers.