National Grid warns of three-year energy crisis as emergency effort launched to cut factory power use – The Telegraph

Plans drawn up to pay industrial companies to shut down for next three winters
Industry chiefs are preparing for the energy crisis to last for another three years as National Grid draws up emergency plans to reduce power demand from factories across Britain.
Large industrial companies would be paid to cut gas usage every winter until 2025 as National Grid attempts to avoid uncontrolled blackouts that would cause "a major economic and societal impact".
It came as new forecasts from the consultancy Auxilione suggested that the energy price cap will top £6,500 a year in April after a fresh surge in gas prices, as Russia prepares a three-day shutdown of the Nord Stream pipeline to Germany for unscheduled maintenance.
Meanwhile, Britain’s biggest business group is warning that spiralling energy costs threaten to push thousands of UK companies to the brink of collapse.
The Confederation of British Industry (CBI) urged the Government to freeze business rates for another year and take quick and targeted action to prevent otherwise viable businesses from going bust.
National Grid’s draft proposals recommend making payments of up to £5m this winter for factories that cut production if the gas crisis escalates because of the war in Ukraine.
It has warned that factory owners face compulsory gas rationing if they do not put in bids for the so-called Demand Side Response (DSR) payments.
In a draft report circulated this week, National Grid said: "The gas supply picture is different for this winter, given the current uncertainty about whether sufficient Russian gas will be available to supply continental Europe, which may have consequences for Great Britain’s ability to attract gas if needed via the interconnectors at high demand conditions.
"We therefore believe that there is a need to incentivise the take-up of the DSR products so that the scheme can be utilised this winter if required."
Earlier on Tuesday, Philippe Commaret, EDF’s managing director for customers, warned Britain faces a “dramatic and catastrophic” energy crisis in the coming months and said there should be a cut to VAT on energy bills.
He told BBC Radio 4: "I think cutting VAT is really important, because with the rise in electricity and gas bills in fact the revenues for the Government are increasing. So it is not fair, I think."
Meanwhile, the BBC reported that Scottish Power chief executive Keith Anderson has told Kwasi Kwarteng and Jacob Rees-Mogg that they should freeze energy bills for two years at a cost of £100bn.
National Grid’s plans are intended to help avert the kind of severe shortages that would trigger an official Gas Deficit Emergency (GDE) and enforced rationing of supplies.
Its report said: "The potential impact on heating capability, gas fired electricity generation, interruption to industrial production and knock-on impacts into wider supply chains that a GDE is capable of causing could result in a major economic and societal impact for the country."
Arjan Geveke, director of the Energy Intensive Industries Users Group, said: "If you look at the forward curves for gas prices they are high at least for next winter as well. You don’t know whether these geopolitical issues will be resolved by next winter either, and there’s also a long-term strategy to become independent, which means the supply of gas will be without Russian gas
"Ideally National Grid wouldn’t like to trigger this but if necessary they will and if they have to trigger it to avoid an emergency."
"Energy intensive industries have to make some investments to be able to flex. The investments companies will make depends on how they will respond to this initiative."
Factories could switch to diesel fuel, reduce their production or start using combined heat and power units to provide heat and electricity for less energy-intensive processes such as chemicals, paper and food and drink production.
UK ministers were warned that energy-intensive industries were at risk from soaring energy prices by PwC in November 2021.
The Treasury commissioned a report as part of "Project Shrine" and were told industries including chemical and fertiliser manufacturers were particularly at risk from the energy crisis.
Two-thirds of businesses were facing a jump in their bills over the next three months, with a third of those firms facing increases of more than 30pc, the CBI said.  
Freezing business rates in 2023 would spare companies a double-digit increase next year. Rates are usually tied to September’s rise in the consumer prices index (CPI), which is expected to climb well above the 10.1pc rate recorded in July. It also urged the Government to give companies and the self-employed more time to pay their tax bills and provide easier access to pandemic-style loans to shore up their finances.
The CBI’s poll of almost 600 businesses also showed that while a third of businesses were trying to avoid passing on higher costs to customers, many had paused investment to cope with the price rises.
“While helping struggling consumers remains the number one priority, we can’t afford to lose sight of the fact that many viable businesses are under pressure and could easily tip into distress without action," said Matthew Fell, the CBI’s chief policy director. 
"Firms aren’t asking for a handout. But they do need autumn to be the moment that the Government grips the energy cost crisis. Decisive action now will give firms headroom on cash flow and prevent a short-term crunch becoming a longer-term crisis."
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