Once again gas suppliers are arguing that consumers should underwrite more gas storage for Great Britain. The argument is that GB ‘nearly’ ran out of gas during the ‘Beast from the East’, and the BEIS Select Committee has duly announced an inquiry.
Sometimes it’s worth consumers underwriting infrastructure. But let’s look at a few points to consider before agreeing to take on that cost for gas storage.
- It’s always worth remembering that ‘nearly‘ is ‘didn’t‘ – ie, we didn’t run out of gas during the ‘Beast from the East’. This is despite the fact that Centrica’s Rough store is now largely out of operation and, as National Grid says in its Winter Outlook consultation, “very low temperatures contributed to the formation of ice on many offshore platforms. This led to issues with asset operation and resulted in onshore supply losses. As a result, forecast supply for 1 March was much lower than expected, particularly in the first part of the day.” But when prices rose (that’s the market working), “gas flowed into GB through the interconnectors. As assets were brought back on line, more gas was able to flow into the NTS from the UK Continental Shelf and Norway.”
- Gas use is falling – and will continue to do so. It could fall faster: in its Future Energy Scenarios, National Grid notes that, “Improving the thermal efficiency of most homes by one EPC rating gives the potential for a 14% reduction in residential gas demand in 2030, a 17% reduction in 2040, and a 23% reduction in 2050. In 2050 this equates to 18TWh.”
- Supplies are diverse. During the Beast from the East, LNG supplies arrived at GB terminals – but they were mostly not called on.
- We do have access to storage. European gas storage is extensive, and available to GB customers (Brexit notwithstanding) through the interconnector. And IUK is large – it can import 20bcm/y, almost a third of our annual demand.
- The problem is often not having gas supplies, but having them in the right place. National Grid’s system was designed to transport gas from north to south, but now the pattern of use is very different, causing growing problems with maintaining pressure in specific areas. Some gas shippers exacerbate this problem: they are supposed to inject gas consistently through the day, but they wait until late and ‘catch up’ at the end of the day.
- Increasingly, gas is about local issues and operability. Building storage in the wrong location may simply worsen that problem. In contrast, injecting gas (from anaerobic digestion) at beneficial points in the system, or inviting companies to flex their use is a more ‘smart, flexible’ (and greener) solution.
What’s the upshot of this? It may be worth investing in more gas storage, but first, we must:
- Invest in energy efficiency. That will reduce gas and power needs for ever. Once we understand how much investment storage proponents require, a cost benefit comparison against energy efficiency should be run before any decision is made.
- Consider location and operability. We need to operate the system as efficiently as possible. Check that shippers are acting to maintain network pressures and operability. Make sure that potential storage sites are beneficially located for current and future supply scenarios. Look at ‘green’ gas storage and AD as an alternative.
- Look at ‘smart, flexible’ solutions and – as with ‘Power Responsive’ – widen the market for demand response.