National Grid PLC (LSE:NG.) has warned of a three-year energy crisis as an emergency effort is launched to reduce factory power consumption, according to reports.
Attempts are being made by National Grid to avoid uncontrolled blackouts that would have a major economic and societal impact by paying large industrial companies to cut their gas usage every winter until 2025, the Telegraph reported.
The UK's biggest business group, Confederation of British Industry (CBI) has warned that spiralling energy costs threaten to bring thousands of firms to their knees and has called on the government to freeze business rates for another year and act quickly to prevent business closures.
A draft proposal from National Grid proposes making payments of up to £5mln this winter to factories that cut production if the gas crisis worsens due to the war in Ukraine, according to the Telegraph.
Factory owners who do not submit bids for the Demand Side Response (DSR) payments also face compulsory gas rationing.
As National Grid revealed in a draft report circulated this week: "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."
National Grid's plans aim to prevent the kind of shortages that would trigger an official Gas Deficit Emergency (GDE) as well as rationing of gas.