The recent spat between Russian and the Ukraine over gas supplies may not have directly effected those on this island, but it does bring into question as to how robust is UK energy supply security.

The Russian’s have huge reserves of natural resources, including oil and gas, and are not shy in using them as a political cudgel with which to beat other nations around the head. Ukraine is a major gas hub and from there, supply lines reach countries such as Greece, Turkey, Italy and France. So when the former Soviet satellite Ukraine is accused of ‘syphoning’ off some gas for itself and the Russians switch the tap off to teach them the error of their ways, most of mainland Europe goes into a panic.

Fortunately for the UK, although wholesale prices might go up as the Russian bear stomps around, it only gets around 2% of its gas from the former Soviet Union, so the supply is not threatened directly.

Indeed what’s happened in the past, is that when Russia closes the stopcock, some British gas has been sent back into mainland Europe to help them out. Not through altruism of course, but because modern energy suppliers tend to migrate to the best priced market.

A fifth of the UK’s gas needs are still sourced from its own North Sea fields, although these are now in a state of decline and will gradually run out over the next couple of decades.

Most of the slack from the old North Sea fields is made up from a new pipeline which is pumping a lot of gas from Norwegians plentiful offshore fields. A further 25% of the country’s requirements will eventually come from liquefied natural gas (LNG) which is being imported from Qatar via specially built ships to two new terminals at Milford Haven, West Wales.

The risk with gas is clear though. The bulk will have to be soon imported, meaning that supplies could be cut, or severely affected, by circumstances, or events outside the country’s control.

Oil, as for many Western nations, is a precarious commodity for the UK. There remains a reliance on overseas reserves, still mainly in the Middle East. And with North Sea fields running down, this situation will only get worse. There is hope of course that the current test drilling around the Falkland Islands will produce oil for the UK’s future needs and allow it to pay off the billion-pound deficit, but initial tests weren’t that positive.

Electricity is also becoming a contentious issue. Although this form of energy lights most homes and powers most household appliances, it is not the preferred choice for heating. Its high cost, compared initially to oil and then to gas, has ruled out its widespread use as a heating provider.

It’s also created by fossil-fuel hungry power stations that so antagonise the environmentalists. Try as they might, engineers will have a hard time making these monsters from a previous age ever become carbon neutral, despite schemes to funnel the nasty fumes back into exhausted oil and gas fields.

And the very large elephant in the room that everyone is choosing to ignore, is nuclear power. To many, this is the only sensible, and indeed viable, option for the coming century. Nuclear power stations are cost-effective and produce bucket loads of energy, as long as you don’t mention the words Chernobyl, or nuclear waste, or planning permission.
But the new Government will have to go down the nuclear route, if they are to reach the emissions targets set by the previous regime. And ironically, British Nuclear is now mostly owned by French energy giant EDF.

And for those looking at wind, solar and tidal solutions, renewables are still in a state of infancy and will not come riding to the rescue.

So where does that all leave UK energy supply security? On the edge of the abyss many reckon.

Ofgem recently published a major report on Britain’s energy supplies. They claimed it was the most comprehensive review of the country’s energy supplies yet. The main conclusion was that UK energy supply was likely to hit a ‘perfect storm’ by 2015 and that
it will cost the UK some £200 billion to not only secure energy supplies, but also meet carbon targets. That’s about £200 billion more than the Government has in the kitty.

The Ofgem report, which was labelled Project Discovery, ran various scenarios and highlighted the various challenges that face UK energy in terms of gas and electricity supplies. Not least are the worries that the country is highly exposed to the volatile gas market and traditional power stations coming to the end of their natural lives.

The gas market will do what it will do; but the question of what happens when the heavyweight power stations begin to decommission, is more in the hands of policy makers. Power stations have a finite life, so that is one constant of the equation. Renewables are by no means able to take the strain and even if a nuclear power station building programme is started now, it’s unlikely that any will be operational until 2020.

The perfect storm is just around the corner. If the UK stays in recession, then the Government, nor much of the private sector will feel like pioneering a new age of energy supply. If the recession ends and a upsurge of activity begins, then power will become a very expensive commodity as companies vie for what’s available before changes to infrastructure can cope with the challenge of a rapid growth in demand.

The conclusion can only be, whichever way you look at, energy will be like gold dust over the coming years. The gas market will price itself for the highest bidder and the ageing electricity generating sector will have to price-in increasing costs and infrastructure failures. And let’s not dwell on oil, whose future will lie with political regimes thousands of miles away.

And that leads to another meaning of the word security. The nightmare scenario of Russian once again become the cold war enemy and breaking out aggressively across mainland Europe, would mean that the UK would be extremely vulnerable and could be literally strangled to death.

One thing is for certain though, everyone in the UK, the public and the commercial sector, will have to dig deeper to pay for energy.