The UK's need for gas storage: a persistent and growing challenge

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01 November 2018

The UK's need for gas storage: a persistent and growing challenge

Report summary

Gas storage plays a critical part in guaranteeing energy security and supporting efficient use of gas supply infrastructure. Many countries in Europe have adequate storage to meet exceptionally high demand periods and supply outages, but with the loss of Rough storage in 2017, the UK looks to be more exposed than most. It is currently left with just 1.5 bcm of storage capacity to support a market of 78 bcm (2017), little more than 2% coverage or 7 days of average daily requirements. Whilst the loss of this important storage facility in the UK has increased NBP seasonal price spreads and price volatility, it remains to be seen if there is sufficient incentive for investors to build new gas storage plants in the UK. A number of projects are at an advanced stage of development, however none have taken FID. In this Insight we discuss some of the background issues and risks associated with developing new storage projects in the UK.

Table of contents

    • Summary
    • Why does the UK have so little gas storage?
    • Reliance on flexible imports continues to grow
    • How is the UK meeting seasonal gas requirements?
    • The market balanced just thanks to coal!
    • UK's supply security continues to rely heavily on continental storage
    • Is it time to invest in new UK gas storage?
    • The market has done well to reduce price volatility
    • But there are signs that it will return
    • Whilst lower volatility is good for consumers it creates unintended consequences
    • Does the UK Government need to intervene?
    • The market isn't going to build more storage alone
    • The lack of consistency across markets is skewing the outlook for storage across Europe
    • Conclusions

Tables and charts

This report includes 9 images and tables including:

  • Figure 1: Western Europe storage capacity & market coverage
  • Figure 2: European storage locations by location and type
  • Figure 3: UK supply sources 1st March 2018
  • Figure 4: UK gas balance 1st March 2018
  • Figure 5: Summer winter price spreads - TTF
  • Figure 6: UK NBP gas price monthly volatility
  • Figure 7: Forecast NBP seasonal price spreads vs required FID spread
  • Table 1: Potential UK storage sites
  • Figure 8: EU storage regulation

What's included

This report contains:

  • Document

    The UK's need for gas storage: a persistent and growing challenge

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