As experts say 'the lights could go out in Britain', what has caused UK's looming gas crisis?

Despite government assurances, analysts believe there is still a considerable risk that UK gas supplies could run perilously low.

Experts have warned that 'the lights could go out in Britain' due to a gas shortage (PA)

As energy experts claim that Britain faces a very real chance of 'the lights going out' due to an apparent energy shortage, homeowners have been left wondering how the UK ended up on the verge of a looming gas crisis.

The head of energy giant SSE, Ian Marchant, warned that the government was significantly underestimating the scale of the capacity crunch facing the country.

Ofgem's chief executive Alistair Buchanan, meanwhile, claimed Britain "would be very tight on power station capacity in three to five years' time".

Although the government hit back by insisting it was not being complacent and that they were confident of a 'comfortable amount of spare power'.

Energy minister John Hayes denied the government was being complacent, saying he was confident that its approach, combined with the responsiveness of the market, would provide secure supplies.

He said: "We're alive to the challenge facing us. The Bill before Parliament will set the conditions for the investment needed to keep Britain's lights on in the long term."

Analysts believe, however, that there is still a considerable risk that UK gas supplies could run perilously low.

'The coldest March weekend in 50 years'

During the 'Big Freeze' in 2010, the National Grid issued a warning to energy suppliers for only the second time ever.

They warned that gas demand was outstripping supply as the UK shivered in one of the coldest winters ever.

The sub-zero blasts saw a 30 per cent rise on normal seasonal demand and gas prices jumping significantly.

This year an unseasonably cold March has seen a spike in gas demand - with forecasters predicting this weekend could be the coldest in March for half a century.

Temperatures could drop to -3C in parts of the country, and the Met Office has already issued several severe weather warnings.

A study by Reuters claimed that if the current cold snap continues as forecast, Britain could run out of gas by April 8.

Should this happen some of the big industrial customers may be cut, meaning inevitable gas shortages.

The Met Office warned of "cold or very cold" weather into next week, while northern Britain "may possibly experience colder than average conditions during April with a risk of overnight frosts and perhaps further snowfall".

Lack of storage

It is thought that Britain currently has just two days worth of spare gas reserves.

The UK only ever holds 15 days of gas in reserve because of lack of storage space, compared to 100 days worth in France and Germany.

Roderick Bruce, analyst at IHS Global Insight, told Reuters: "The lack of incentives for storage investment appears indicative of the UK's wider gas sector, where investors currently see regulatory risk as an insurmountable hurdle."

The rapid depletion of gas storage sites has prompted operator Centrica, Britain's biggest power and gas provider, to restrict withdrawals owing to falling reservoir pressure, in a sign of the growing strain on the system.

Gas storage sites have been depleted by 90 percent, with the equivalent of less than two days' consumption remaining, data from Gas Infrastructure Europe shows.

Power stations winding down

SSE boss Ian Marchant said his firm plan to cut back on power generation at five sites.

Ofgem has also warned that power station closures could mean a 10% fall in capacity by April alone.
SSE say Ofgem didn't take into account its own plans to cut back, meaning the warnings are even more stark.

There has been a shortage in investment in power generation, and ageing British coal plants that have exhausted their operating lives are being closed, further constraining energy supply.

Related: Britain battered by widespread snow and flooding

Scottish Power's 1,200 megawatt (MW) Cockenzie power station near Edinburgh stopped operating after 45 years of service this month.

The British subsidiary of Germany's RWE will shut its 2,000-MW Didcot facility for good this month as well.

Unplanned outages

British gas prices rose more than 50 percent earlier this month after unplanned outages at North Sea facilities left the UK gas market severely undersupplied, pushing prices to a five-year high.

Norway's Nyhamna gas plant connected to Shell's giant Ormen Lange field in the North Sea, which primarily exports gas to Britain, had an outage on Saturday after stormy weather.

In addition to the Norwegian outage, flows through Britain's St. Fergus terminal were reduced by around 7 mcm/d on March 4, creating an extremely tight supply situation.

Serge Mozadila, energy market analyst at LG Energy group, said earlier this month: "With storage levels extremely low and supply from Norway falling from 70 mcm to 50 mcm, the system has become even more strained in the face of rising demand and more long positions as we struggle to meet demand with Rough outflows."