Energy Series: Gas Balancing
In case you missed our recent Energy Series webinar on Gas Balancing, here's all you need to know on this insightful topic!
This webinar is part of a series where we take a look at some of the key areas within the energy industry. We'll be covering everything from gas balancing to French nuclear power to offshore wind, brining you our expert insight and opinions.
What is gas balancing?
Gas balancing is essentially how much gas is put into the National Grid Transmission System (NTS) at any one time on a 'gas day' which is 5am to 5am. NTS is a high-pressure pipeline which transports gas at a national level. In the UK, shippers are incentivised to put as much gas into the system each day as their customers take out - hence the term 'balancing'.
Balancing is done to ensure that NTS pressure stays within safe limits. If more gas goes in than come out, the pressure increases. Too little gas and the pressure drops.
With over 4,700 miles of NTS gas pipeline in the UK, National Grid, who own these are responsible for ensuring the system pressure is stable and at the end of the day, the 'linepack' remains as close to the level at the start of the day as possible. But what is linepack?
Linepack: the volume of gas within the system at any given time. Opening linepack is the actual volume set at 5am, the start of the gas day, and Closing linepack is the expected volume at the end of the gas day.
How is gas balanced?
On-the-day Commodity Market (OCM) is the balancing market.
There are various ways to ensure the NTS is balanced, and balancing is performed by market players and National Grid. Up until the day of delivery, trades can be done on the futures market for various products such as spot contracts, months, quarters, and seasons on the NBP (National Balancing Point) via exchanges. Forward market balances look into future purchases and the prediction of spot prices for the future.
Where does the UK get its gas to balance?
The below map shows the key pipeline import routes into the UK and the various LNG terminals where we received liquified gas from. The UK is well connected to balance from a multitude of sources such as via the North Sea and Norway, the UK Continental Shelf and the interconnectors between Belgium, Netherlands, and the UK.
Since the Russian invasion of Ukraine, there's been a large change in terms of market dynamics and where gas is sourced from. Prior to the invasion, the UK was receiving around 3-4% of supply from Russia, this is now at 0% and so we're not reliant on Russian gas. Any shortages of gas throughout any of the pipelines or LNG hubs can result in a rise in prices.
Source: Bruegel
Renewables and gas demand:
Weather conditions can impact demand considerably, especially when looking at temperatures. The warmer the temperature, the lower the demand or consumption, the colder the temperature, the higher the demand or consumption. Its therefore key that demand is forecast taking this into consideration, however, renewables and industrial output also now need to be factored in as they can also heavily impact demand. Renewables have a large role to play in terms of gas balancing as they are intermittent by nature, making balancing the system more difficult. For gas balancing to remain accurate, demand needs to be accurate.
The future of gas balancing:
As we progress with the energy transition, to reach net zero, the increase in renewables in the energy mix brings a certain amount of risk when it comes to balancing the system. By 2030, more electricity will come from low carbon options such as wind and solar, and the system will need an increase in flexibility to ensure efficient supply during challenging periods. We touched on this briefly in our Future Energy Scenarios blog last year, with flexibility measures playing a key role in balancing and securing a stable energy system.
To watch the Gas Balancing webinar with our Energy Management Team, click HERE. Keep an eye on our Blog pages for more Energy Series content coming soon!
