Ofgem decides against upgrade at St Fergus to safeguard gas transmission, says it is not needed with falling demand

National Grid Gas Transmission (NGGT) and Ofgem remain at odds over whether to replace two compressor stations that help pump gas around the national transmission system, and who should bear the costs.

NGGT thinks that if there is no upgrade at St Fergus it could disrupt activity at the key St Fergus gas terminal, exposing consumers to penalty payments and higher costs.
NGGT and the regulator have been debating the fate of nine compressor stations that currently fail to meet emissions standards set under the Industrial Emissions Directive.  They will also be hit by new standards that will apply under the Medium Combustion Plant Directive (part of the same suite of legislation) from 2030.

NGGT asked for funding to upgrade the sites or replace the compressors entirely. The regulator decided that upgrades for six sites should be funded by NGGT, but within its current price control instead of by raising customer prices. It allowed for £0.53 milion funding from customers for a sixth.

Now the regulator has published its decision on the last two sites, Hatton and St Fergus. It agrees a new solution is needed at Hatton, because it is required to keep the GB system within security requirements for extreme events and the alternative would require work at a number of other sites. But it has told NGGT to do more work on options for that upgrade, which could mean replacement or other solutions. It asked for consideration of a ‘brownfield’ option.

However the regulator thinks replacement is not needed for the compressor at St Fergus: it says the technical requirements can be met by other assets and generally falling levels of gas demand mean a new compressor will not be required. NGGT disagrees and it has support from some organisations who responded to a consultation. Others said no decision should be made until further forecasts are completed.

All the respondents agree that the current compressors have to be retired. It remains to be seen whether NGGT will continue to try to convince Ofgem that a new compressor is the right solution at St Fergus.

Read the full decision

Further reading

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