Boosting Energy Security: Centrica Set to Double UK Gas Storage Capacity
Centrica has received approval to resume gas storage operations at its Rough storage facility, potentially doubling the UK's gas storage capacity.
Gas storage plays a crucial role in ensuring energy security and stability for both consumers and industries.
Located beneath the seabed off the east coast of England, Rough is the largest gas storage facility in the UK. After closing in 2017, activities resumed in October 2022, with its capacity subsequently doubling during the summer of 2023.
Rough currently accounts for half of the UK’s total gas storage.
Russia's actions in Ukraine have prompted the UK to focus on energy security. The UK energy regulator, Ofgem, recently exempted Centrica from negotiating storage access with third parties to enhance energy security measures.
With current UK gas storage at approximately 1.5 billion m3, projections from Ofgem suggest that Rough could provide an additional 0.8 billion m3 of storage this winter.
Although the UK has pipeline connections with other European nations, and three LNG import terminals to access gas from sources beyond its own offshore production centres, it has some of Europe's lowest gas storage levels. On average, the country possesses supplies equivalent to 12 days' consumption or 7.5 peak winter days.
Rough is not a silver bullet for energy security, but it plays a critical role in increasing capacity and supply confidence over the winter months.
Supply issues could force industry closures
Gas shortages pose significant risks to UK manufacturing, leading to potential disruption in operations, resulting in supply chain interruptions, increased expenses, and job losses.
Industries forced to suspend or scale back operations due to gas shortages may be forced to lay off workers, including gas engineers and other skilled professionals. Job losses can have ripple effects throughout the economy, impacting local communities and businesses that rely on consumer spending.
Energy security: why is it important?
Recent geopolitical events, have forced the UK government to consider the importance of safeguarding gas supply.
The timeline for resuming operations at Rough and the funding arrangements remain uncertain. The company has yet to disclose how it intends to finance the necessary safety upgrades, with reports suggesting potential funding through a levy on energy bills.
Reuters estimates that Centrica's investment in the project could reach up to £2 billion (US$2.4 billion).
Gas storage benefits:
- Demand fluctuations: gas consumption varies throughout the year, with increased demand during winter months. Storing excess fuel during the milder months allows the UK to meet peak demands and stabilise the prices in the gas market
- Energy security: storing energy reserves in the UK protects against any supply issues
- Industrial Operations: Many industries rely on gas as a primary fuel source for manufacturing, power generation, and heating. Adequate storage ensures a continuous supply for operations, supporting economic growth, job retention, and competitiveness in global markets.
How could hydrogen help with energy security?
Hydrogen is a promising solution to improve energy security.
Introducing hydrogen into the UK's energy mix offers a pathway to diversify energy sources, reducing reliance on imported fossil fuels and mitigating risks associated with supply disruptions.
For more than three decades, the Rough reservoir has served as a secure storage site for natural gas. Rough holds the potential to fulfil approximately half of the UK's hydrogen storage needs too. This also benefits local communities and paves the way for the creation of local employment opportunities.