Can the UK fix its gas storage problem? Our CEO speaks to The New Statesman

The UK’s lack of gas storage leaves it vulnerable to price fluctuations, but it might be too late to intervene in time for next winter, writes The New Statesman’s Emma Haslett.

This weekend it was reported that in recent weeks the UK government walked away from its discussions with Centrica over increasing capacity at the Rough gas storage facility, off the coast of Yorkshire. Centrica wants revenue guarantees from the government before it undertakes the £150m of work necessary to increase it to full capacity; the Financial Times reported that a government source has accused Centrica of being “too greedy”.

This appears foolhardy. The UK is, we are told, uniquely vulnerable to volatility in the price of gas because, firstly, we are one of Europe’s largest consumers of it (40 per cent of our energy comes from gas, compared with the 34 per cent European average) and secondly, we have comparatively little storage capacity (less than 1 per cent of our annual usage, versus about 25 per cent for the rest of Europe). Although the UK was significantly less dependent on Russia for gas than nations such as Germany, other countries have reduced their dependency through increased storage capacity, which means they can stock up on gas when demand, and prices, are low, and use up stored gas when producers are asking more.

The UK, however, takes a “just in time” attitude to energy supply: it depends more heavily on Liquefied Natural Gas (LNG), which fulfilled about 17 per cent of demand in 2021 and is delivered on ships to huge terminals in Kent and Pembrokeshire.

Somayeh Taheri, the chief executive of the renewable energy exchange UrbanChain, agrees that a lack of storage is usually not an issue, at least until “harsh moments, like the Beast from East in 2018”, appear to suddenly increase demand, which happens every few years. She adds that having more storage tends to reduce speculation from energy traders, and therefore volatility in prices. “It’s about them knowing that we have enough energy, so they can’t play with us.”

To read the full article in The New Statesman click here

Photo credit from The New Statesman article: by Chris Ratcliffe/Bloomberg via Getty Images