Gas Storage is crucial to energy security- Parliament hears from leading energy trade body

1st Nov 2018


‘UK must urgently review the case for more gas storage to minimise the risk to supply and maintain flexibility’ was the message delivered to Parliament by the Energy and Utilities Alliance, EUA’s Roddy Monroe, Independent Chair of the Gas Storage Operators Group, when he attended the gas storage inquiry evidence session.

Mr Monroe said;

“I firmly believe that there may be serious implications for UK energy security if policy makers rely solely on the market to deliver the right level of investment to meet broader Government’s objectives including transiting to a low carbon economy and providing access to affordable energy. 

Energy security is underpinned by long life, capital intensive investments which require long term financial certainty; these are not characteristics found in our energy market today. We have seen that the Government felt it necessary to intervene to help deliver positive changes to the electricity market, such intervention may now be necessary for the gas market if we are to provide the right level of gas security.

The UK currently consumes over 100 billion cubic metres of gas per year, but only has storage capacity equivalent to 2% of this- essentially 7 days’ worth- compared to a European average of 25%. Gas storage can make a significant contribution to achieving this by ensuring that gas supplies are maintained at times of major supply or demand shocks. It also protects consumers from price spikes ultimately reducing overall gas bills; therefore gas storage is vital for the efficient operation of the UK energy markets.

We urge Government to look, in detail, at the issue of gas storage, such as they did in 2013. Since then we have seen a number of material changes to the energy market which have the potential to worsen energy security and, in particular, significantly increase the exposure to extreme price volatility.

These changes include unprecedented reductions in flexible European gas production (mainly the massive Groningen gas field) and the loss of our own indigenous gas storage capacity most notably Rough which comprised 75% of capacity.  These detrimental changes to UK energy security are compounded by the uncertainty of the future energy arrangements post Brexit.

The ‘Beast from the East’ experience earlier this year, where we witnessed very sharp wholesale price spikes and, despite that, very little UK demand side response, was a real wake-up call and makes this review even more urgent.”